ORIE 3150 Homework _10 ANSWERS - ORIE 3150 Homework #10 Do...

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Unformatted text preview: ORIE 3150 Homework #10 Do for Tuesday, November 24, 2009 1. Toehold Industries manufactures 3 models of boatlifts, Standard, Premium, and Deluxe. The sales and cost structure in the last year was the following: Standard Premium Deluxe Sales(units) 500 250 180 Sales($) $2,000,000 $1,500,000 $1,368,000 Variable costs per unit Manufacturing, direct labor $200 $250 $320 Manufacturing, direct materials $800 $900 $1100 Manufacturing, overhead $500 $750 $960 Selling and Admin. $300 $300 $300 Fixed costs per year Manufacturing $323,000 Selling and Admin $412,000 a) Assuming that the above sales mix remains constant, what is the breakeven point in number of units of each type sold? Assemble a basket of 50 Standards, 25 Premiums, and 18 Deluxe models. The variable cost of a basket is 1800(50) + 2200(25) + 2680(18) = $193,240 The selling price of a basket is 4000(50) + 6000(25) + 7600(18) = $486,400 BE F 735,000 X 2.507 S V 486,400 193,240 = = =-- baskets So, we have to sell Standards: 50(2.507) = 125 Premiums: 25(2.507) = 63 Deluxes: 18(2.507) = 45 units b) Toehold assigns overhead using direct labor dollars. Find the cost of goods sold for each of the three product lines on a per unit basis. We see that the total amount of direct labor is 500(200) + 250(250) + 180(320) = $220,100 The fixed manufacturing cost is $323,000. Hence we must assign 323,000/220,100 = $1.47 per direct labor hour to each product. Standard: 200 800 500 + 200(1.47) $1,793.50 Premium: 250 900 750 + 250(1.47) $2,266.88 Standard: 320 1100 960 + 320(1.47) $2,849.60 c) What was the operating income (or loss) for Toehold last year, before taxes? Sales 4,868,000 Cost of Goods Sold (1,976,400) Gross Margin 2,892,000 Selling and Admin. (691,000) Net Income (Loss) 2,201,000 2. Pi Pi Manufacturing has the following data from its factory, collected on a monthly basis over the past eight months. Production (Units) Cost of Goods Sold ($) 967 121940 1214 144749 1994 224519 1609 187378 1364 167144 1703 203842 819 106239 2239 249701 a) Using linear regression, find the fixed cost per month and the variable cost per unit for the factory. Slope = variable cost per unit = $101.61 Intercept = fixed cost per month = $24,426.45 b) Using linear regression, predict the cost of goods sold on a per unit basis for a month in which 1400 units were manufactured Total Cost = (101.61)(1400) + 24,426.45 = $166,683.61 Cost per unit = $166,683.61/1400 = $119.06 3. Hicks Corporation seeks your assistance with their budget. At July 30, the company has cash of $5,500, A/R of $437,000, inventory of $309,400, and A/P of $133,045. has cash of $5,500, A/R of $437,000, inventory of $309,400, and A/P of $133,045....
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ORIE 3150 Homework _10 ANSWERS - ORIE 3150 Homework #10 Do...

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