ACCT420-1104B-01 Cost Accounting

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ACCT420-1104B-01 Cost Accounting

AssignmentName:

Unit 3 Individual Project

Deliverable Length:

single excel worksheet

Details:

With the help of your CFO, you have put together the following preliminary budget figures based on last year’s numbers for a planned production and sales level of 4,000 units per month:

Building depreciation

$200,000/yr.

Machine operators

$100,000/yr.

Management staff

$400,000/yr.

Direct materials

$4,000,000/yr.

Other expenses that seem to vary based on production levels

$3,000,000/yr.

Other expenses that don’t seem to vary

$1,300,000/yr.

Selling price per unit

$5,000/unit

Utilities:

This category is difficult to analyse; a part of it is related to the building’s heat and light, whereas a part of it is used in the manufacturing process itself. You have the following data to which you will apply the high-low method:

· When there is no production, utility costs are $20,000/month

· When production levels reached 4,000 units/month, utility costs totalled $40,000/month

You are planning for the future and working on a report based on data from last year’s actual performance. You are going to use the breakeven formula to determine the businesses breakeven point and to answer some important questions regarding your data.

Using only the data from last year’s actual performance write a report answering the following questions:

  1. Which of these 8 cost categories would be considered variable, and which fixed, and explain why?
  2. Which costs would be considered mixed (i.e., semi-variable or semi-fixed)?
  3. Ignoring utility costs altogether, compute the contribution margin per unit, in dollars and in percentage and the breakeven level of sales?
  4. Ignoring utility costs altogether, if instead of breaking even, the firm wants to make $10,000/month profit, answer the following:

oHow many units must be sold each month?

oTo how many sales dollars is this unit volume equivalent?

  1. In year 2, the CEO plans to add $300,000/yr. expense in added administrative salaried headcount. Ignoring utility costs altogether, how many additional units must be sold just to pay for this added expense?

Show ALL calculations.

Please submit your assignment.

The following rubric will be used for grading:

Grading Rubric

10%

Which of the 8 cost categories would be considered variable, and why?

10%

Which of the 8 cost categories would be considered fixed, and why?

10%

Which costs would be considered semi-variable, mixed, or semi-fixed?

10%

Ignoring utility costs altogether, what is the contribution margin per unit, in dollars and in percentage?

10%

Ignoring utility costs altogether, what is the breakeven level of sales?

20%

Ignoring utility costs altogether, if instead of breaking even, the firm wants to make $10,000/month profit, answer the following:

10%:How many units must be sold each month?

10%:To how many sales dollars is this unit volume equivalent?

15%

In year 2, ignoring utility costs altogether, how many additional units must be sold just to pay for this added $300,000/yr. expense in added administrative salaried headcount?

15%

How many dollars of the utility bill are fixed? What is the variable cost per unit of utilities?

ACCT420-1104B-01 Cost Accounting
ACCT420-1104B-01 Cost Accounting

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…staff xxxxxxxxxxx Direct xxxxxxxxx $4,000,000/yr Other xxxxxxxx that seem xx vary xxxxx xx production xxxxxx $3,000,000/yr Other xxxxxxxx that don’t xxxx to xxxx xxxxxxxxxxxxx Selling xxxxx per unit xxxxxxxxxxx Utilities: This xxxxxxxx is xxxxxxxxx xx analyse; x part of xx is related xx the xxxxxxxxxx xxxx and xxxxxx whereas a xxxx of it xx used xx xxx manufacturing xxxxxxx itself You xxxx the following xxxx to xxxxx xxx will xxxxx the high-low xxxxxxx · When xxxxx is xx xxxxxxxxxxx utility xxxxx are $20,000/month xx When production xxxxxx reached xxxxx xxxxxxxxxxxx utility xxxxx totalled $40,000/month xxx are planning xxx the xxxxxx xxx working xx a report xxxxx on data xxxx last xxxxxx xxxxxx performance xxx are going xx use the xxxxxxxxx formula xx xxxxxxxxx the xxxxxxxxxx breakeven point xxx to answer xxxx important xxxxxxxxx xxxxxxxxx your xxxx Using only xxx data from…

230011.docx (34.8 KB)Preview: depreciation xx building xx fixed in xxxxxx Machine operators x Fixed xxxxxxxx xxxxxxx operators xxx fixed salary, xxx not variable xx production xxxxxxxxxx xxxxx – xxxxx – Management xxxxx get fixed xxxxxxx and xxx xxxxxxxx on xxxxxxxxxx Direct materials xxxxxxxx Variable – xxxxxxxx is xxxxxxxx xx per xxx number of xxxxx manufactured Other xxxxxxxx that xxxx xx vary xxxxx on production xxxxxx – Variable xxxxxxxx This xxxx xx variable xx per the xxxxxx of units xxxxxxxxxxxx Other xxxxxxxx xxxx don’t xxxx to vary xxxxxxxx Fixed – xxx expense xx xxx increase x decrease as xxx productionUtilities – xxxxx – xxx xxxxxxxxx are xxxxx upto a xxxxx and then xx is xxxxxxxx xx per xxx number of xxxxx manufactured Which xxxxx would xx xxxxxxxxxx mixed xx e , xxxxxxxxxxxxx or semi-fixed)?Fixed