The variable costs the materials are 10 cents per jaw breaker or 3600 010 per

The variable costs the materials are 10 cents per jaw

This preview shows page 12 - 16 out of 41 pages.

The variable costs, the materials, are 10 cents per jaw breaker, or $3,600 (= $0.10 per jaw breaker × 3,000 jaw breakers per month × 12 months) for the year. 3. If demand changes from 3,000 to 6,000, Yumball will need a second machine. Assuming Yumball buys a second machine identical to the first machine, it will increase capacity from 5,000 jaw breakers per month to 10,000. The annual relevant range will be between 0 and 120,000 jaw breakers (10,000 jawbreakers × 12 months).Assume the second machine costs $6,000 and is depreciated using straight-line depreciation over 10 years and zero residual value, just like the first machine. This will add $600 of depreciation per year. Fixed costs for next year will increase to $13,200. Total fixed costs for next year equal $600 (depreciation on first machine) + $600 (depreciation on second machine) + $12,000 (rent and other fixed overhead costs). The variable cost per jaw breaker next year will be 90% × $0.10 = $0.09. Total variable costs equal $0.09 per jaw breaker × 72,000 jaw breakers = $6,480. 2-25 (20 min.) Unit costs for making decisions1. (a) $120,000 ÷ 2,000 = $60.00 per package (b) $120,000 ÷ 6,000 = $20.00 per package (c) $120,000 ÷ 10,000 = $12.00 per package (d) [$120,000 + (10,000 × $9.60)] ÷ 20,000 = $216,000 ÷ 20,000= $10.80 per package
The unit cost to ECG decreases on a per-unit basis due to the first $120,000 payment being a fixed cost. The $9.60 amount per package beyond 10,000 units is a variable cost. The cost function is: 2.ECG should not use any of the unit costs in requirement 1 when predicting total costs. Up to 10,000 units, the total cost is a fixed amount. Beyond 10,000 units, the total cost is a combination of a fixed amount plus a per-unit (beyond 10,000 unit) variable amount. The total costs at different volume levels cannot be predicted by using the unit cost at a specific volume level. The total cost should be predicted by combining the total fixed costs and total variable costs rather than by multiplying a unit cost amount by the predicted number of packages sold. 2-26 (20 min.)Computing cost of goods manufactured and cost of goods sold.Schedules: Cost of Goods Manufactured and Cost of Goods SoldSchedule of Cost of Goods Manufactured For the Year Ended December 31, 2016 (in thousands) Direct materials used $104,400 Direct manufacturing labour costs 40,800 Indirect manufacturing costs: Property tax on plant building $ 3,800 Plant utilities 20,400 Depreciation of plant building 10,800 Depreciation of plant equipment 13,200 Plant repairs and maintenance 19,200 Indirect manufacturing labour costs 27,600
Indirect materials used 13,200 Miscellaneous plant overhead 5,800 114,000 Manufacturing costs incurred during 2016 259,200 Add beginning work in process inventory, Jan. 1, 2016 24,000 Total manufacturing costs to account for 283,200 Deduct ending work in process inventory, Dec. 31, 2016 31,200 Cost of goods manufactured $252,000 Schedule of Cost of Goods Sold For the Year Ended December 31, 2016 (in thousands) Beginning finished goods, Jan. 1, 2016 $ 32,400 Cost of goods manufactured (above) 252,000 Cost of goods available for sale 284,400 Ending finished goods, Dec. 31, 2016 40,800 Cost of goods sold $243,600 2-27 (20 min.) Income statement and schedule of cost of goods manufactured Howell Corporation Income Statement For the Year Ended December 31, 2016 (in millions) Revenue . $1,140 Cost of goods sold: Beginning finished goods, Jan. 1, 2016 $ 84 Cost of goods manufactured (below) 774 Cost of goods available for sale 858
Ending finished goods, Dec. 31, 2016

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture