The total capital investment for a conventional chemical plant is $1,500,000 and the plant
produces 3 million kg of product annually. The selling price of the product is $0.82/kg.
Working capital amounts to 15% of the total capital investment. The investment is from
company funds and no interest is charged. Delivered raw materials costs for the product
are $0.09/kg; Labor, $0.08/kg; utilities, $0.05/kg and packaging, $0.008/kg. Distribution
costs are 5% of the total product cost. Estimate a) the manufacturing cost per kg of
product; (b) total product cost per year; (c) Profit per kg of product before taxes and (d)
profit per kg of product after income taxes at 35% of gross profit.
In: Other
In: Accounting
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Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation with the owner, identified three major activities and then completed the first-stage allocations of costs to the activity cost pools. The results appear below. |
| Activity Cost Pool | Activity Measure | Total Cost | Total Activity | ||
| Serving a party of diners | Number of parties served | $ | 13,000 | 5,000 | parties |
| Serving a diner | Number of diners served | $ | 116,840 | 12,700 | diners |
| Serving a drink | Number of drinks ordered | $ | 28,280 | 10,100 | drinks |
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The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top-management salaries. |
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Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties served. Other costs, such as washing plates and glasses, depends on the number of diners served or the number of drinks served. |
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Prior to the activity-based costing study, the owner knew very little about the costs of the restaurant. She knew that the total cost for the month (including organization-sustaining costs) was $180,000 and that 12,000 diners had been served. Therefore, the average cost per diner was $15. |
| Required: | ||||||||||||||||||||||||||||||||||||||
| 1. |
According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? (Round your intermediate calculations and final answers to 2 decimal places.) |
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In: Accounting
Cost of Production Report
The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process.
| Work in process, January 1, 10,600 units, 75% completed | $100,965* | |
| *Direct materials (10,600 × $7.2) | $76,320 | |
| Conversion (10,600 × 75% × $3.1) | 24,645 | |
| $100,965 | ||
| Materials added during January from Weaving Department, 163,200 units | $1,199,520 | |
| Direct labor for January | 229,536 | |
| Factory overhead for January | 280,544 | |
| Goods finished during January (includes goods in process, January 1), 165,200 units | — | |
| Work in process, January 31, 8,600 units, 25% completed | — |
a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the cost per equivalent unit computations, round your answers to two decimal places.
| Karachi Carpet Company | |||
| Cost of Production Report-Cutting Department | |||
| For the Month Ended January 31 | |||
| Unit Information | |||
| Units charged to production: | |||
| Inventory in process, January 1 | |||
| Received from Weaving Department | |||
| Total units accounted for by the Cutting Department | |||
| Units to be assigned costs: | |||
| Equivalent Units | |||
| Whole Units | Direct Materials | Conversion | |
| Inventory in process, January 1 | |||
| Started and completed in January | |||
| Transferred to finished goods in January | |||
| Inventory in process, January 31 | |||
| Total units to be assigned cost | |||
| Cost Information | |||
| Cost per equivalent unit: | |||
| Direct Materials | Conversion | ||
| Total costs for January in Cutting Department | $ | $ | |
| Total equivalent units | |||
| Cost per equivalent unit | $ | $ | |
| Costs assigned to production: | |||
| Direct Materials | Conversion | Total | |
| Inventory in process, January 1 | $ | ||
| Costs incurred in January | |||
| Total costs accounted for by the Cutting Department | $ | ||
| Costs allocated to completed and partially completed units: | |||
| Inventory in process, January 1 balance | $ | ||
| To complete inventory in process, January 1 | $ | $ | |
| Cost of completed January 1 work in process | $ | ||
| Started and completed in January | $ | ||
| Transferred to finished goods in January | $ | ||
| Inventory in process, January 31 | |||
| Total costs assigned by the Cutting Department | $ | ||
Feedback
b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (December). If required, round your answers to two decimal places.
| Increase or Decrease | Amount | |
| Change in direct materials cost per equivalent unit | $ | |
| Change in conversion cost per equivalent unit | $ |
In: Accounting
| Make sure to read the activity notes before you attempt this activity. Detailed | ||||||
| instructions for completing the activity are included in the notes. | ||||||
| Make sure to work all the problems in this activity. The activity includes three | ||||||
| problems, each on a different worksheet (see the tabs below: Problem 1, | ||||||
| Problem 2, etc.) | ||||||
| Red Book Inc. | ||||||
| Book sales during the first four months of the year were: | ||||||
| Month | # of Books Sold | |||||
| Jan | 39 | |||||
| Feb | 88 | |||||
| Mar | 46 | |||||
| Apr | 65 | |||||
| Red management gathered the following information regarding the cost to sell | ||||||
| books: | ||||||
| Cost of Wages | Cost of Insurance | Cost of Books | Cost of Rent | |||
| Jan | $ 351 | $ 3,400 | $ 117 | $ 800 | ||
| Feb | 792 | 3,400 | 264 | 800 | ||
| Mar | 414 | 3,400 | 138 | 800 | ||
| Apr | 585 | 3,400 | 195 | 800 | ||
| Problem 1 | ||||||
| Determine the classification (variable or fixed) of each of the four types of cost. | ||||||
| Type of Cost | Classification | |||||
| Cost of Wages | Variable | |||||
| Cost of Insurance | fixed | |||||
| Cost of Materials | Variable | |||||
| Cost of Rent | fixed | |||||
| Red Book Inc. | |||||||
| Problem 2 | |||||||
| Prepare a cost equation for each type of cost (wages, insurance, books, and rent) | |||||||
| Type of Cost | Cost Equation | ||||||
| Cost of Wages | |||||||
| Cost of Insurance | |||||||
| Cost of Materials | |||||||
| Cost of Rent | |||||||
| Problem 3 | ||||||
| Red Book management would like an estimate of total cost for the following activity levels | ||||||
| (combine the cost equations for each type of cost into a total equation) | ||||||
| Activity Level | Total Cost | |||||
| 22 books | ||||||
| 53 books | ||||||
| 82 books | ||||||
In: Accounting
For a monopolist:
Price is greater than marginal revenue.
Marginal revenue equals zero.
Marginal cost equals zero.
Average total cost equals marginal cost.
In: Economics
what are the implicit and explicit cost associated with introducing a new product ? what is the total cost associated with this venture and what happens to this cost in short and long run production?
In: Economics
Assume that output is given by with price of labour L = w and price of capital K = r
1.If capital in the short run is fixed at what is the short-run total cost?
2.Write the values for the derivatives of the Total cost with respect to w and r. Does Shephard’s lemma hold in this case?
In: Economics
Direct Materials and Direct Labor Variance Analysis
Lenni Clothing Co. manufactures clothing in a small manufacturing facility. Manufacturing has 25 employees. Each employee presently provides 40 hours of productive labor per week. Information about a production week is as follows:
| Standard wage per hr. | $12.00 |
| Standard labor time per unit | 12 min. |
| Standard number of yds. of fabric per unit | 5.0 yds. |
| Standard price per yd. of fabric | $5.00 |
| Actual price per yd. of fabric | $5.10 |
| Actual yds. of fabric used during the week | 26,200 yds. |
| Number of units produced during the week | 5,220 |
| Actual wage per hr. | $11.80 |
| Actual hrs. for the week | 1,000 hrs. |
Required:
a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.
| Direct materials standard cost per unit | $ |
| Direct labor standard cost per unit | $ |
| Total standard cost per unit | $ |
b. Determine the price variance, quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
| Price variance | $ | |
| Quantity variance | $ | |
| Total direct materials cost variance | $ |
c. Determine the rate variance, time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
| Rate variance | $ | |
| Time variance | $ | |
| Total direct labor cost variance | $ |
In: Accounting
Direct Materials and Direct Labor Variance Analysis
Lenni Clothing Co. manufactures clothing in a small manufacturing facility. Manufacturing has 25 employees. Each employee presently provides 40 hours of productive labor per week. Information about a production week is as follows:
| Standard wage per hr. | $12.00 |
| Standard labor time per unit | 12 min. |
| Standard number of yds. of fabric per unit | 5.0 yds. |
| Standard price per yd. of fabric | $5.00 |
| Actual price per yd. of fabric | $5.10 |
| Actual yds. of fabric used during the week | 26,200 yds. |
| Number of units produced during the week | 5,220 |
| Actual wage per hr. | $11.80 |
| Actual hrs. for the week | 1,000 hrs. |
Required:
a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.
| Direct materials standard cost per unit | $ |
| Direct labor standard cost per unit | $ |
| Total standard cost per unit | $ |
b. Determine the price variance, quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
| Price variance | $ | |
| Quantity variance | $ | |
| Total direct materials cost variance | $ |
c. Determine the rate variance, time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
| Rate variance | $ | |
| Time variance | $ | |
| Total direct labor cost variance | $ |
In: Accounting