End Nov2011 Wa

vi) Goodwill- The beginning balance for Goodwill was determined by finding the difference between Total Assets and Total Liabilities at the beginning . Goodwill accounts for all the intangible assets that were transferred from the old company to the new company, including brand name, as well as a premium paid for the company. Goodwill was not amortized in this model.

1- The total unit cost = Total Variable Cost + Production Fixed Expenses + Advertising Expense + Selling and Administrative Expense = 3.23 + 1.20 + 0.30 + 0.19 = 4.92.

10. If 12,500 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

2. What is the total cost? How much of the total cost are labor costs? Capital costs?

The product cost per unit under absorption costing is $15.00 and under variable costing are 10.60.

The budget analysis shows that the labor hours of the firm are higher than the budgeted amount. As such, the firm needs to evaluate the cost benefit analysis of making or buying their products. To make this decision, various factors need to be considered. Before making the decision, Peyton needs to evaluate the marginal costs and revenue of making versus buying the products. The firm should take the option which provides the highest marginal profit which is the

Since material cost is one of the key cost drivers for the production of the units, it is best to take

Unit Break-even Volume = Total Fixed Costs/Contribution per unit = $525,000 - $6.40 = 82,031.25units

The Kenton Company processes unprocessed milk to produce two products, Butter Cream and Condensed Milk. The following information was collected for the month of June:

Assume the company has a P/B (payback) policy of not accepting projects with life of over 3 years.

Estimated machinery life: 3 years (after which there will be zero value for the equipment and no further cost savings)

costs $350,000, that will have a useful life of eight years, and that will have a salvage value of $25,000. If this

8. I would like to remove allocated costs and fixed overheads and see what would be the variable cost. If this is done, you can see that the variable cost hovers around 7 FF. ( Not many of you have done this)

a. Assuming the most current operational cost levels, what sales must it generate to recoup the above investment?

Variable Cost per Unit = ( $59,000 − $38,000 ) ÷ ( 3,000 − 1,250 ) = $12 per unit