Based on the details provided in the table below, prepare and interpret accurate incomestatements for the company using a range of management accounting techniques, such asmarginal and absorption costs. Synergy Manufacturing Co. Ltd. manufactures Product A and Product B.The following information is available for March 2020Product AProduct BProduction (units)5,0003,500Sales (units)4,6003,200Opening inventory (units)Financial data:Product AProduct BUnit selling price£ 180.00£ 150.00Unit cost:direct materials£ 30.00£ 24.00direct labour£ 36.00£ 24.00variable production overheads£ 24.00£ 16.00fixed production overheads£ 60.00£ 40.00variable selling overheads£2.00£2.00Fixed production overheads for the period were £210,000 and fixed administration overheads were£54,000.Please note that fixed production overheads and fixed administration overheads are shared based on thenumber of production units for Product A and Product B.

The MC considers variable cost as product cost and fixed…

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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 4CE: Refer to Cornerstone Exercises 2.2 and 2.3. Next year, Pietro expects to produce 50,000 units and...

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Thomas Corporation produces heating units. The following values apply for a part used in their production (purchased from external suppliers): D = 12,500 Q = 250 P = 45 C = 4.50 Required: 1. For Thomas, calculate the ordering cost, the carrying cost, and the total cost associated with an order size of 250 units. 2. Calculate the EOQ and its associated ordering cost, carrying cost, and total cost. Compare and comment on the EOQ relative to the current order quantity. 3. What if Thomas enters into an exclusive supplier agreement with one supplier who will supply all of the demands with smaller, more frequent orders? Under this arrangement, the ordering cost is reduced to 0.45 per order. Calculate the new EOQ and comment on the implications.
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the annual ordering cost. 2. Compute the annual carrying cost. 3. Compute the cost of Ottiss current inventory policy. Is this the minimum cost? Why or why not?
Prepare a cost of goods sold budget for MacLaren Manufacturing Inc. for the year ended December 31, 2016, from the following estimates. Inventories of production units: Direct materials purchased during the year, 548,000; beginning inventory of direct materials, 36,000; and ending inventory of direct materials, 23,000. Totals from other budgets included:
Comprehensive The following information for 2019 is available for Marino Company: 1. The beginning inventory is 100,000. 2. Purchases returns of 4,000 were made. 3. Purchases of 300,000 were made on terms of 2/10, n/30. Eighty percent of the discounts were taken. 4. At December 31, purchases of 20,000 were in transit, FOB destination, on terms of 2/10, n/30. 5. The company made sales of 640,000. The gross selling price per unit is twice the net cost of each unit sold. 6. Sales allowances of 6,000 were made. 7. The company uses the LIFO periodic method and the gross method for purchase discounts. Required: 1. Compute the cost of the ending inventory before the physical inventory is taken. 2. Compute the amount of the cost of goods sold that came from the purchases of the period and the amount that came from the beginning inventory.
Cost of goods sold Pine Creek Company completed 200,000 units during the year at a cost of 3,000,000. The beginning finished goods inventory was 25,000 units at 310,000. Determine the cost of goods sold for 210,000 units, assuming a FIFO cost flow.
Information concerning sales and production for ABC Co. for November 2019 are summarized asfollows:A. Estimated Sales:Product X: 80,000 units at $60, per unitProduct Y: 40,000 units at $130 per unitB. Estimated inventories, November 1, 2019Material A: 8,000 lbs Product X: 6,000 units at $34 per unit $204,000Material B: 7,000 lbs Product Y: 5,400 units at $70 per unit 378,000Total $582,000C. Desired inventories at November 30,2019Material A: 6,000 lbs Product X: 5,000 units at $34 per unit $170,000Material B: 5,000 lbs Product Y: 4,000 units at $70 per unit 280,000Total $450,000D. Direct materials used in productionProduct X Product YMaterial A 1.4 lbs per unit 7.0 lbs per unitMaterial B 2.4 lbs per unit 3.6 lbs per unitE. Unit costs for direct materialsMaterial A: $ 8.0 per lbMaterial B: $ 4.0 per lbF. Direct labor requirementsDepartment 1 Department 2Product X 0.8 hr per unit 0.30 hr per unitProduct Y 1.2 hr per unit 0.50 hr per unitWhat to do:1. Prepare a sales budget for November2.…
The following information relates to Unique Ltd for the year 2020: Annual Demand 408,375 units Annual cost of Holding £1.50 Annual cost of placing an order £ 500Required:(i) Calculate the EOQ
The following information relates to Unique Ltd for the year 2020: Annual Demand 408,375 units Annual cost of Holding £1.50 Annual cost of placing an order £ 500Required: (iii) Calculate the total annual ordering cost
Cari Furniture has the following information in respect of Coffee tables for 2021: Production specifications: Beginning Target Ending Inventory Inventory Direct Materials: Particle board 20,000 b.f. 18,000 b.f. Teak 25,000 b.f. 22,000 b.f. Finished goods Coffee tables 5,000 units 3,000 units Revenue expected for 2021 are: Selling price $392 per table Units sold 52,000 coffee tables Each coffee table requires 9.00 b.f. of particle board and 10.00 b.f. of Teak. Costs for 2020 and expected for 2021 include: 2020 2021 Particle board (per b.f.) $ 3.90 $ 4.00 Teak (per b.f.) $ 5.80 $ 6.00 Laminating labor (per hour) $24.00 $25.00 Machining labor (per hour) $29.00 $30.00 Required: Part 1 Prepare the following budgets for 2021: Direct…
Cari Furniture has the following information in respect of Coffee tables for 2021: Production specifications: Beginning Inventory Target Ending Inventory Direct Materials: Particle board 20,000 b.f. 18,000 b.f. Teak 25,000 b.f. 22,000 b.f. Finished goods: Coffee tables 5,000 units 3,000 units Revenue expected for 2021 are: Selling price $392 per table Units sold 52,000 coffee tables Each coffee table requires 9.00 b.f. of particle board and 10.00 b.f. of Teak. Costs for 2020 and expected for 2021 include: 2020 2021 Particle board (per b.f.) $ 3.90 $ 4.00 Teak (per b.f.) $ 5.80 $ 6.00 Laminating labor (per hour) $24.00 $25.00 Machining labor (per hour) $29.00 $30.00 Prepare the materials usage budget.
ABC Company uses FIFO costing and applies lower of cost and net realizable to its inventories. At the beginning of year 2020, 5,000 units were on hand with per unit cost of P 10. During 2020, 10,000 (Purchased date: October 15, 2020) and 25,000 (Purchased date: June 15, 2020) units of inventories were purchased at P 12 and P 15, respectively. Also, 35,000 units of inventories were sold at P 20 each. At what amount will the inventory be reported at the end of the year, assuming estimated selling price of the unit and estimated cost to sell are P 22 and P 7 respectively? a. P 110,000 b. P 75,000 c. P 50,000 d. P 60,000
ABC Company uses FIFO costing and applies lower of cost and net realizable to its inventories. At the beginning of year 2020, 5,000 units were on hand with per unit cost of P 10. During 2020, 10,000 (Purchased date: October 15, 2020) and 25,000 (Purchased date: June 15, 2020) units of inventories were purchased at P 12 and P 15, respectively. Also, 35,000 units of inventories were sold at P 20 each. At what amount will the inventory be reported at the end of the year, assuming estimated selling price of the unit and estimated cost to sell are P 22 and P 7 respectively?