Question

Your CEO has also asked you to prepare a production cost budget for the MiniY for May 20X8. The actual costs in April 20X8 were as follows:

MiniY: Production Cost Budget
April 20X8
Production–Units of MiniY	3,000
Components cost (variable)	24,000,000
Labor cost (variable)	13,500,000
Rent (fixed)	6,000,000
Depreciation (fixed)	6,000,000
Other (fixed)	2,000,000
Total	$51,500,000

For the month of May, the number of MiniY produced will increase to 3,200, reflecting an anticipated sales increase related to a new marketing campaign.

Question 5: Using the above information, prepare a budget for May 20X8, stating the total cost. Use a spreadsheet to display your data and calculations.

IPS operates a factory, which produces the MiniY and the MiniX. During September 20X8, the factory produced 3200 units of MiniY and 3000 units of MiniX. The joint cost related to the operation was $3,000,000. MiniX sells for $27,100 per unit and MiniY sells for $25,000 per unit. Allocate the joint costs using the relative sales values of MiniY and MiniX.

Question 6: With the costs that you calculate, what is the profit or loss associated with MiniY?NOTE: Assume that the variable and fixed costs mentioned in Step 5 are also applicable to Step 6 when calculating the profit or loss for MiniY

Answer 1

5) Production cost budget for MiniY for the month o May can be made from the budget of April. The per unit costs of variable cost is calculated as follows:

	Variable cost	Per unit
Components cost	$2,40,00,000	$8,000
Labor cost	$1,35,00,000	$4,500

Per unit cost = variable cost / number of units

MiniY Production Cost Budget
May 20X8
Production units	3,200
Components cost	$2,56,00,000
Labor cost	$1,44,00,000
Rent	$60,00,000
Depreciation	$60,00,000
Other	$20,00,000
Total	$5,40,00,000

Allocation of joint cost based on relative sales value

	MiniY	MiniX	Total
Sales units	3200	3000
Sales price	$25,000	$27,100
Sales value	$8,00,00,000	$8,13,00,000	$16,13,00,000
Allocation rate	49.6%	50.4%	100%
Joint costs	$14,87,910.7	$15,12,089.3	$30,00,000.0

6)

Profit for MiniY
Sep 20X8
Production units	3,200
Sales price	$25,000
Sales value	$8,00,00,000
Components cost	$2,56,00,000
Labor cost	$1,44,00,000
Rent	$60,00,000
Depreciation	$60,00,000
Other	$20,00,000
Joint cost	$14,87,911
Profit for MiniY	$2,45,12,089