Final - 1 Cost formula Variable Costs Indirect Materials...

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1. Cost formula Actual Costs Budget Variance Variable Costs: Indirect Materials: 11.62 4182 4148 34U Electricity: 7.1 2536 2414 122U Total: 18.72 6718 6562 156U Fixed Costs: Admin: 6540 6500 40U Rent 6310 6400 90F Total: 12850 12900 50F Total Cost: 19568 19462 106U 2. Relevant - irrelevant = change in profits. (negative = decrease) Relevant Irrelevant DM 342 x 1000 units Cost from alternative supplier DL 80 x 1000 $850 x 1000 units VOM 48 x 1000 Trace = 468 x 1000 Trace = 10% decrease of fixed MOH 938000-850000 = 88000 increase in profits. Hanson should accept the offer. 3. Variable Costing pg 279 Sales 1020000 -Variable expenses Beginning Inventory 0 Variable COGS 442000 Variable selling and admin 34000 Contribution Margin 544000 -Fixed expenses Fixed MOH 170000 Fixed Sell and Admin 32000 Net Operating Income 342000 The variable and absorption costing totals for net income are the same because there is no difference in the ending inventory balance. The company produced and sold 17000 units and did
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Final - 1 Cost formula Variable Costs Indirect Materials...

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