Question

In: Accounting

a)    Complete the table below by classifying the cost items. You need to repeat an amount...

a)    Complete the table below by classifying the cost items. You need to repeat an amount if it belongs to more than one category. You must provide a total for each column.

b)    Coffee-Culture Ltd manufactures barista quality coffee machines. The unit selling price is $900 and the variable cost per unit is $630. The monthly fixed cost for August 2020 is $27,000. Answer the questions below in the spaces provided. (Show the formula and workings for each)

Required: Answer the following questions in the spaces provided:

a)    Complete the following table by classifying the cost items. You need to repeat an amount if it belongs to more than one category. You must provide a total for each column.

Cost Items

Amount

Prime Costs

Conversion Costs

Product Costs

Period Costs

Raw materials

86,800

Factory supervisor’s salary

147,000

Factory workers’ wages

350,000

Depreciation on office building

7,280

Insurance on factory building

78,400

Advertising expenses

168,000

Totals

b)    Coffee-Culture Ltd manufactures barista quality coffee machines. The unit selling price is $900 and the variable cost per unit is $630. The monthly fixed cost for August 2020 is $27,000. (Show the formula and workings for each)

1. Calculate the contribution margin per unit.

2. Calculate the contribution margin as a ratio.

3. Calculate the break-even point in units. Calculate the break-even point in sales dollars.

4. Assume that the company sold 120 units of televisions in January 2019. Calculate the margin of safety in dollars.

  

5. If the target profit for February 2019 is$15,000, calculate the required sales in dollars for February 2019.

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