hw_solution_2

# 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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