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SOLUTION Question #1 (7 marks, suggested time 7 minutes) Job Order Costing Required: 1. If overhead is applied on the basis of direct labor hours, what is the overhead rate? (2 marks) CMP EDIT: note that there are no direct labour hours given; use labour dollars instead. Applied overhead – Job 65 $840 = 120% Direct labor 700 2. Calculate cost of goods sold for January (5 marks) Jobs finished - Job 67 Job 68 Beginning WIP $6,180 -- Materials 520 1,600 Direct labor 300 1,300 Overhead applied 360 1,560 Total costs $7,360 $4,460
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Question #2 (34 marks, suggested time 34 minutes) Cost Volume profit Analysis and Activity Based Management PART A: Required: 1. How many customers do PSR usually serve in one day? (4 marks) Waiter tips of $77,760/18.00/.12/300days = 120 customers 2. Calculate the breakeven number of salmon and prawn dinners. (6 marks) Sales price 18.00/dinner Pink salmon 4.00/dinner Prawns 3.50/dinner Contribution 10.50/dinner Total fixed costs Other food $325 x 300 = $ 97,500 Cooking staff 105,000 Rent 20,000 Waiting staff 90,000 $312,500 312,500/10.50 = 29,762 dinners per year to break even. CMP EDIT: for this answer to be valid, we should probably be assuming that the wasted salmon/prawn is included in the contribution margin. Otherwise, we should probably include wasted food in total fixed cost. Not accounting for the wasted food will likely mean marks off. 3. A customer has asked PSR if they could book the restaurant one day for a wedding that has 110 guests. They would like to serve the salmon and prawn buffet and use PSR’s regular staff. Calculate the minimum amount you would charge the customer. (8 marks) CMP NOTE: the solution below assumes that there is no opportunity cost to this wedding
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This note was uploaded on 08/05/2011 for the course COMM 294 taught by Professor Aziz during the Winter '09 term at The University of British Columbia.

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