hw_solution_2 - 2-21 a b c d e f g h i Variable production...

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2-21 a. Variable production cost per unit ($120 + $20 + $5 + $10) ...................... $155 b. Variable cost per unit. ($155 + $15) .......................................................... $170 c. Full cost per unit. [$170 + ($50,000 ÷ 500 units)] ..................................... $270 d. Full absorption cost per unit. [$155 + ($30,000 ÷ 500)] ............................ $215 e. Prime cost per unit: (labor + materials + outsource) ................................. $145 f. Conversion cost per unit. (labor + overhead + outsource) ........................ $210 g. Contribution margin per unit. ($300 – $170) ........................................... $130 h. Gross margin per unit. ($300 – full absorption cost of $215) ................... $85 i. Suppose the number of units decreases to 400 units per month, which is within the relevant range. Which parts of ( a ) through ( h ) will change. For each amount that will change, give the new amount for a volume of 400 units. Full cost = $170 + ($50,000 ÷ 400) = $295 Full absorption cost = $155 + ($30,000 ÷ 400) = $230 Conversion costs = $120 + $10 + ($30,000 ÷ 400) + $20 = $225 Gross margin = $300 – $230 = $70 c, d, f and h will change 2-28: Secol Machining Company Cost of Goods Sold Statement For the Year Ended December 31 Beginning work in process inventory .................. $ 58,000 Manufacturing costs: Direct materials: Beginning inventory ..................................... $ 48,000 Purchases .................................................... 310,000 Materials available ................................... 358,000 Less ending inventory .................................. 59,000 Direct materials used ............................... $299,000 (a)* Other manufacturing costs .......................... 785,200 ** Total manufacturing costs ........................ 1,084,20 0 (c) Total costs of work in process ..................... $ 1,142,200 Less ending work in process .................... 56,000 Cost of goods manufactured ................ $ 1,086,200 (b) Beginning finished goods inventory .................... 43,800
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Finished goods available for sale ....................... $ 1,130,000 Ending finished goods inventory ......................... 45,000
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