Amanufacturing company that produces a single product has provided the following data related to its operations during May: Manufacturing costs: Variable costs per unit: Direct materials $22.50 Direct labor $20.00 Variable manufacturing overhead Fixed manufacturing overhead costs (total) $7.50 $875,000 Selling and administrative costs: Variable per unit Fixed (total) $5.00 $900,000 The product sells for $125 per unit. The company produced 35,000 units and sold 30,000 units in May. There is no beginning inventory. Required: a) Compute the breakeven sales dollars and margin of safety in sales dollars. b) Determine the unit product cost under: (2 marks) (3 marks) Absorption costing. ii. Variable costing. c) Prepare an income statement for the month using absorption costing. (5 marks)

Amanufacturing company that produces a single product has provided the following data related to its operations during May: Manufacturing costs: Variable costs per unit: Direct materials $22.50 Direct labor $20.00 Variable manufacturing overhead Fixed manufacturing overhead costs (total) $7.50 $875,000 Selling and administrative costs: Variable per unit Fixed (total) $5.00 $900,000 The product sells for $125 per unit. The company produced 35,000 units and sold 30,000 units in May. There is no beginning inventory. Required: a) Compute the breakeven sales dollars and margin of safety in sales dollars. b) Determine the unit product cost under: (2 marks) (3 marks) Absorption costing. ii. Variable costing. c) Prepare an income statement for the month using absorption costing. (5 marks)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...

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The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
During the week of August 21, Parley Manufacturing produced and shipped 4,000 units of its machine tools: 1,500 units of Tool SK1 and 2,500 units of Tool SK3. The cycle time for SK1 is 0.73 hour, and the cycle time for SK3 is 0.56 hour. The following costs were incurred: Required: 1. Assume that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost, and comment on its accuracy. 2. Assume that Tool SK1 is responsible for 60% of the materials cost. Calculate the unit cost for Tool SK 1 and Tool SK3, and comment on its accuracy. Explain the rationale for using units shipped instead of units produced in the calculation. 3. Calculate the unit cost for the two models, using DBC. Explain when and why this cost is more accurate than the unit cost calculated in Requirement 2.
Natur-Gro, Inc., manufactures composters. Based on past experience, Natur-Gro has found that its total annual overhead costs can be represented by the following formula: Overhead cost = 264,000 + 1.42X, where X equals number of composters. Last year, Natur-Gro produced 30,000 composters. Actual overhead costs for the year were as expected. Total overhead for per unit was a. 1.42 b. 8.80 c. 11.63 d. 10.22
Cool Pool has these costs associated with production of 20,000 units of accessory products: direct materials, $70; direct labor, $110; variable manufacturing overhead, $45; total fixed manufacturing overhead, $800,000. What is the cost per unit under both the variable and absorption methods?
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