Question

In: Accounting

The company produces one type of product. Its production volumes per year are 24 thousand. pcs....

The company produces one type of product. Its production volumes per year are 24 thousand. pcs. The production department employs four workers, who are paid 6 euros for each product produced. Each worker produces 6 thousand. pcs. products per year. The annual salary of the administration staff consists of 15,000 Eur. The raw materials required for the production of one product cost 5 Eur., And additional materials for one product - 1 Eur. The company uses machines in the production process, which cost 8,000 Eur and will be used for 5 years, and other equipment, which cost 900 Eur and will be used for 5 years. The company pays EUR 2,000 per year for the maintenance and management of the premises. Communication and other services cost the company 1700 Eur per year. The company plans to receive 30 percent. profit for each unit of product sold. Depreciation of fixed assets is calculated using the straight-line method. Calculate the commercial cost, price (excluding VAT) and gross profit of one product.

Solutions

Expert Solution

Commercial Cost = €308,480

Price (excluding VAT) = €401,024

Gross profit on product = €137,024

Gross profit on one piece = €5.7093

Working note 1:

Depreciation on machinery = Cost of machinery / Useful life

= €8,000 / 5

= €1,600

Working note 2:

Depreciation on equipment = Cost of equipment / Useful life

= €900 / 5

= €180

Gross profit on product = Price of product - Direct labor - Direct materials

= 401,024 - 144,000 - 120,000

= €137,024

Gross profit on one piece = (Price of product / Number of pieces) - Direct labor cost per piece - Direct material cost per piece

= (€401,024 / 24,000) - €6 - €5

= €16.7093 - €6 - €5

= €5.7093

Note:

  • Gross profit only considers the direct costs and not operating costs.
  • Additional material consumed is assumed as the indirect material.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

The company produces one type of product. Its production volumes per year are 24 thousand. pcs....
The company produces one type of product. Its production volumes per year are 24 thousand. pcs. The production department employs four workers, who are paid 6 euros for each product produced. Each worker produces 6 thousand. pcs. products per year. The annual salary of the administration staff consists of 15,000 Eur. The raw materials required for the production of one product cost 5 Eur., And additional materials for one product - 1 Eur. The company uses machines in the production...
A company produces two types of solar panels per​ year: x thousand of type A and...
A company produces two types of solar panels per​ year: x thousand of type A and y thousand of type B. The revenue and cost​equations, in millions of​ dollars, for the year are given as follows. R(x,y)=4x+5y C(x,y)= x^2- 2xy+ 7y^2 +6x - 93y - 8 Determine how many of each type of solar panel should be produced per year to maximize profit. Part 1-The company will achieve a maximum profit by selling ____ solar panels of type A and...
A company produces two types of solar panels per​ year: x thousand of type A and...
A company produces two types of solar panels per​ year: x thousand of type A and y thousand of type B. The revenue and cost​equations, in millions of​ dollars, for the year are given as follows. R(x,y)=4x+6y C(x,y)= x^2- 2xy+ 6y^2 +8x - 38y - 6 Determine how many of each type of solar panel should be produced per year to maximize profit. Part 1-The company will achieve a maximum profit by selling ____ solar panels of type A and...
A company produces two types of solar panels per​ year: x thousand of type A and...
A company produces two types of solar panels per​ year: x thousand of type A and y thousand of type B. The revenue and cost​ equations, in millions of​ dollars, for the year are given as follows. ​R(x,y)equals=3x+5y ​C(x,y)equals=x^2-3xy+7y^2+12x-56y-2 Determine how many of each type of solar panel should be produced per year to maximize profit.
Millstone Company produces only one product. Normal capacity is 20,000 units per year, and the unit...
Millstone Company produces only one product. Normal capacity is 20,000 units per year, and the unit sales price is $5. Relevant costs are: Unit Variable Cost Total Fixed Cost Materials $1.00 Direct labor 1.20 Factory Overhead 0.50 $15000 Marketing expenses 0.30 5000 Administrative expenses 6000 Required: Compute the following: (1) The break-even point in units of product (2) The break-even point in dollars of sales (3) The number of units of product that must be produced and sold to achieve...
X Company produces 65,300 units of its regular product each year and sells each one for...
X Company produces 65,300 units of its regular product each year and sells each one for $14.00. The following cost information is available: Total Per-Unit Direct materials $114,928 $1.76 Direct labor 99,909 1.53 Variable overhead 195,900 3.00 Fixed overhead 121,458 1.86 Variable selling 86,849 1.33 Fixed selling 81,625 1.25 Total $700,669 $10.73 A company has offered to buy 4,130 units for $13.48 each. Because the special order product is slightly different than the regular product, direct material costs will increase...
X Company produces 67,700 units of its regular product each year and sells each one for...
X Company produces 67,700 units of its regular product each year and sells each one for $14.00. The following cost information is available: Total    Per-Unit     Direct materials $154,356 $2.28       Direct labor 123,891 1.83       Variable overhead 199,715 2.95       Fixed overhead 137,431 2.03       Variable selling 89,364 1.32       Fixed selling 68,377 1.01       Total $773,134 $11.42     A company has offered to buy 4,070 units for $13.71 each. Because the special order product is slightly different than the regular product, direct material costs will increase...
X Company produces 68,800 units of its regular product each year and sells each one for...
X Company produces 68,800 units of its regular product each year and sells each one for $13.00. The following cost information is available: Total    Per-Unit     Direct materials $145,168 $2.11       Direct labor 116,960 1.70       Variable overhead 221,536 3.22       Fixed overhead 149,984 2.18       Variable selling 90,816 1.32       Fixed selling 86,000 1.25       Total $810,464 $11.78     A company has offered to buy 4,160 units for $13.45 each. Because the special order product is slightly different than the regular product, direct material costs will increase...
A company produces a product which has a standard variable production cost of $8 per unit...
A company produces a product which has a standard variable production cost of $8 per unit made up as follows:                                                                $ Per Unit Direct material                                 $4.60 (2kg X $2.30 per kg) Direct labour                                     $2.10 (0.7 hours x $3.00 per hour) Variable overhead                          $1.3 Fixed manufacturing costs are treated as period costs. The following information is available for the period just ended, Variable manufacturing cost of sales (at standard cost)                                  $263,520 Opening stock of finished goods (at standard cost)                                         $120,800 Closing stock of finished...
Grainger Company produces only one product and sells that product for $110 per unit. Cost information...
Grainger Company produces only one product and sells that product for $110 per unit. Cost information for the product is as follows: Direct Material $16 per Unit Direct Labor $26 per Unit Variable Overhead $5 per Unit Fixed Overhead $33,500 Selling expenses are $4 per unit and are all variable. Administrative expenses of $20,000 are all fixed. Grainger produced 5,000 units; sold 4,000; and had no beginning inventory. A. Compute net income under i. Absorption Costing $ ii. Variable Costing...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT