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ACG2-17 - the fixed manufacturing overhead constituent of...

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COST BEHAVIOR SELLING OR PRODU Direct Materials 430,000 430,000 General Office Salaries 110,000 110,000 Factory supervision 70,000 Sales commissions 60,000 60,000 Depreciation, factory building 105,000 Depreciation, office equipment 2,000 2,000 Indirect materials, factory Factory labor 90,000 90,000 Advertizing 100,000 100,000 Insurance, factory 6,000 General Office Supplies 4,000 4,000 Property taxes 20,000 Utilities, factory 45,000 TOTAL 625,000 417000 276000 520,000 1,042,000 276,000 766 2) Average product cost per bookcase $766,000/4,000=$191.5 COST ITEM VERIABLE FIXED ADMINISTRATIVE COST DIRECT 3) If the production drops from 4,000 bookcases to 2,000 bookcases, the average product cost will increa
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Unformatted text preview: the fixed manufacturing overhead constituent of the total product cost. 4) The two wil probably disagree. The President of the neighbouring company will want to include only di cost at his "at cost" price estimation. The President of the factory will include all the product costs in his " Since the factory operates at full capacity, the President could charge only the variable cost to the custom and call it "at cost" price. All the fixed costs would be already absorbed. CT COST 70,000 105,000 6,000 20,000 45,000 246000 6,000 INDIRECT ase due to irect material "at cost" price. mer...
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