Question

In: Accounting

Cost Formulas Colonial Manufacturing produces a single product requiring the following direct material and direct labor:...

Cost Formulas

Colonial Manufacturing produces a single product requiring the following direct material and direct labor:

Cost per Unit of Input

Required Amount per Unit of Product

Material A

$9 / pound

24 ounces

Material B

$6 / pound

12 ounces

Material C

$12 / gallon

0.5 gallon

Cutting labor

$10 / hour

45 minutes

Shaping labor

$12 / hour

15 minutes

Finishing labor

$11 / hour

30 minutes

Manufacturing overhead consists of indirect materials, $0.80 per unit of product; indirect labor, $10,000 per year plus $1.20 per unit of product; factory maintenance, $1,000 per month plus $0.60 per unit of product; factory depreciation, $22,000 per year; and annual factory property taxes, $20,000. Selling and administrative expenses include the salaries of a sales manager, $30,000 per year, an office manager, $18,000 per year, and two salespersons, each of whom is paid a base salary of $12,000 per year and a commission of $4 per unit sold. Advertising and promotion of the product are done through a year-round media package program costing $600 per week.

a. Analyze all cost and expense factors to determine a general formula (based on units of production) for total cost.

Round variable cost per unit answers to two decimal places, if applicable.

Total Fixed Costs

Variable Cost per Unit

Material A

$Answer

$Answer

Material B

Answer

Answer

Material C

Answer

Answer

Cutting labor

Answer

Answer

Shaping labor

Answer

Answer

Finishing labor

Answer

Answer

Manufacturing overhead:

Indirect material

Answer

Answer

Indirect labor

Answer

Answer

Factory maintenance

Answer

Answer

Factory depreciation

Answer

Answer

Factory property taxes

Answer

Answer

Selling and administration expenses

Sales administration salaries

Answer

Answer

Office administration salaries

Answer

Answer

Sales salaries and commissions

Answer

Answer

Advertising and promotion

Answer

Answer

Total component cost

$Answer

$Answer

b. Assuming a relevant range of 20,000 to 40,000 units, what is the estimated unit cost for producing and selling 20,000 units? 40,000 units?

Round answers to two decimal places.

Estimated per unit cost for 20,000 units $Answer

Estimated per unit cost for 40,000 units $Answer

c. If 35,000 units are produced and sold in a year, what selling price results in a net income before taxes of $56,800?

Round answers to two decimal places, if needed ?Answer?

Solutions

Expert Solution

In part B the per unit costs for 20000 units would be =1168200/20000=$58.41 per unit

AND for 40,000Units=2180200/40000=$54.51 per unit


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