Solutions -- Week 6

Solutions -- Week 6 - WEEK CLS DATES [M-W] 6 DATES [T-Th]...

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GNB Problem Solutions – Week-by-Week page 1 of 24 WEEK 6 GNB ASSIGNED PROBLEM SOLUTIONS BUAD 250B – FALL 2009 CLS DATES [M-W] DATES [T-Th] TOPICS READINGS ASSIGNMENTS [TO BE COMPLETED BY DATE ASSIGNED] 10 Sep 28 Sep 29 Cost-Volume-Profit Relationships Ch. 6 BE: 6-2, 4, 5, 6, 7, 8, 9 PR: 5-16; 6-20 In-class: 6-22 Optional: 5A-5 (Excel based) 11 Sep 30 Oct 1 Cost-Volume-Profit Relationships Ch. 6 PR: 6-24, 29 In-class: 6-29, 32 Intro: Ch. 7 Problem 5-16 1. March—Low June—High 6,000 Units 9,000 Units Direct materials cost @ $6 per unit . ........................ $ 36,000 $ 54,000 Direct labor cost @ $10 per unit . ............................ 60,000 90,000 Manufacturing overhead cost* . ............................... 78,000 102,000 Total manufacturing costs . ...................................... 174,000 246,000 Add: Work in process, beginning . ........................... 9,000 32,000 183,000 278,000 Deduct: Work in process, ending . ........................... 15,000 21,000 Cost of goods manufactured . .................................. $168,000 $257,000 *Computed by working upwards through the statements. 2. Units Produced Cost Observed June—High level of activity . ................................ 9,000 $102,000 March—Low level of activity . ............................... 6,000 78,000 Change . ............................................................... 3,000 $ 24,000 Change in cost $24,000 = = $8.00 per unit Change in activity 3,000 units Total cost at the high level of activity . ............................................ $102,000 Less variable cost element ($8.00 per unit × 9,000 units) . ................................................... 72,000 Fixed cost element . ....................................................................... $ 30,000
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GNB Problem Solutions – Week-by-Week page 2 of 24 Therefore, the cost formula is $30,000 per month plus $8.00 per unit produced or Y = $30,000 + $8.00X 3. The cost of goods manufactured if 7,000 units are produced: Direct materials cost (7,000 units × $6.00 per unit) . ................................... $ 42,000 Direct labor cost (7,000 units × $10.00 per unit) . ........................................ 70,000 Manufacturing overhead cost: Fixed portion . ........................................................................................... $30,000 Variable portion (7,000 units × $8.00 per unit) . ....................................... 56,000 86,000 Total manufacturing costs . .......................................................................... 198,000 Add: Work in process, beginning . ............................................................... 0 198,000 Deduct: Work in process, ending . ............................................................... 0 Cost of goods manufactured .
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This note was uploaded on 11/14/2010 for the course BUAD 250B taught by Professor Jackson during the Spring '07 term at USC.

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Solutions -- Week 6 - WEEK CLS DATES [M-W] 6 DATES [T-Th]...

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