(08)_APADMS_2510_Winter_2009_Final_Examination

6 9420 21980 in the short term any offer below 21980

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Unformatted text preview: ain Relevant cost per client: $219.80 Fixed cost per client: $94.20 Indiference point is when: RP price + unavoidable fixed costs = variable costs per client 125.6 + 94.20 = 219.80 In the short term any offer below $219.80 should be accepted. In the long term any offer below $125.6 should be accepted because all fixed costs are avoidable in the long term. c) If the offer from RP Inc. is a $50,000 lump sum, for which they would advise up to 300 clients, should the offer be accepted? Explain Relevant cost per client: $219.80 Total relevant cost for existing clients = $219.80 × 250 = $54,950 Yes, the $50,000 offer should be accepted. Question 4 (20 marks – estimated time required: 30 minutes) The following information is given for Harper Manufacturing Company for the year ended December 31, 2008: Beginning inventory, direct material Ending inventory, direct material Direct material used Sales Beginning inventory, Work in Process Ending inventory, Work in Process Cost of products completed during the year Actual manufacturing overhead costs incurred Selling and administrative expenses Beginning inventory, Finished Goods Ending inventory, Finished Goods $ 30,000 45,000 420,000 950,000 120,000 150,000 840.000 200,000 150,000 180,000 140,000 Harper Manufacturing Company uses the “normal costing” method. It was estimated that manufacturing overhead would be $180,000 for 2008. Direct labour cost was estimated $300,000. It was determined that direct labour cost would be the cost driver used for assigning manufacturing overhead to its products. REQUIRED: Compute the following: (4 marks for each part) a) Cost of direct material purchased. a. Increase in DM inventory DM used RM purchased b) Cost of direct labour. b. Increase in WIP Cost of Goods Manufactured WIP cost to account for $ 15,000 420,000 $435,000 $ 30,000 840,000 $870,000 $870,000 - $420,000 = $450,000 $450,000 = X + 0.60X $450,000 = 1.60X $281,250 = X = Direct Labour Cost c. c) Applied manufacturing overhead 281,250 × 0.60 = $168,750 d) Cost of Goods Sold before closing underapplied or overapplied ma...
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This note was uploaded on 02/11/2014 for the course ADMS 2510 taught by Professor Beavis during the Spring '08 term at York University.

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