Scooby Enterprises produces and sells only one product. The following data refer to the year just completed:

Beginning Inventory 0 units

Units produced........................... 13,000

Units sold...................................... 10,000

Sales price per unit.................... $325

Variable selling and administrative expenses per unit $ 15

Fixed Selling and administrative expenses (Total) $270,000

Manufacturing Costs:

Direct materials cost per unit..................................................$ 75

Direct labor cost per unit..........................................................$ 65

Variable manufacturing overhead cost per unit..............$ 25

Fixed manufacturing overhead (Total).................................$260,000

Required:
a. What is the unit product cost for the month under variable costing?

b. What is the unit product cost for the month under absorption costing?
c. Prepare a contribution format income statement for the year using variable costing.

d. Prepare an income statement for the year using absorption costing.

Patty and Ben operate a small company that produces bicycles. Their fixed cost is $ 4000
per month. They can hire workers for $ 4000 per month. Their monthly production function for
bicycles is as given in the following table:
Quantity of Labour Quantity of Bicycles
0 0
1 10
2 30
3 60
4 120
5 170
6 200
7 220
8 230
a.) For each quantity of labour calculate the following: total product (TP), marginal product (MP),
average productivity (AP), average variable cost (AVC), average fixed cost (AFC), average total
cost (ATC), and marginal cost (MC).
b.) On one diagram draw the MP and AP
c.) On one diagram draw the AVC, ATC, and MC
d.) At what point does Patty and Ben experience decreasing marginal productivity? At what level of are ATC minimized?

Assume the market for watermelons is perfectly competitive. AAA Watermelon Company has fixed costs of $30, and total variable costs at $10 for one truckload of watermelons, $25 for two truckloads of watermelons, $45 for the three truckloads of watermelons, $70 for four truckloads of watermelons, $100 for five truckloads of watermelons, and $135 for six truckloads of watermelons.

Set out in a table, total cost, average cost, marginal cost for each output level (one to six units) for AAA Watermelon Company.

If the market price for a truck load of watermelons is $25, in one diagram sketch the demand curve for AAA Watermelon Company, its average cost curve, its marginal revenue curve, and its marginal cost curve.

What is the profit-maximizing quantity of output for AAA Watermelon Company? Is the market in long-run equilibrium? Why or why not?

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for this firm's product is $35, it will produce

Multiple Choice

• 6 units at a loss of $150.

• 6 units at a loss of $90.

• 9 units at an economic profit of $281.97.

• 8 units at an economic profit of $130.72.

Taveras Corporation is currently operating at 50% of its available manufacturing capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:

Required:

1. Compute the plantwide predetermined overhead rate.

2. During the year, Job P90 was started, completed, and sold to the customer for $2,500. The following information was available with respect to this job:

Compute the total manufacturing cost assigned to Job P90.

1. what is the predetermined overhead rate?

2. what are the direct materials, direct labor, operational overhead, and total manufacturing cost

Joe Smith, a young Engineer has planned to buy a house that they could afford. He and his

spouse have been saving even before getting married and have put away about $65,000.

The average price of a start up house or condo is about $550,000 here in Los Angeles, California.

They have the following options to take a Jumbo loan;

1.     ) 30-years fixed (% 20 down)

·       Note rate: 3.75 %

·       Cost: 0.0 Points

2.     ) 15-years fixed (% 20 down)

·       Note rate: 3.75%

·       Cost: 0.0 Points

·      

3.     ) 5-years ARM Interest only (zero down)

·       Note rate: 3.5% (first 5-years), then variable

·       Cost: 1.25 Points

·    a.) Total cost of loan

· b.) Total interest to be paid

· c.) The APR (including the cost of loan).

·    d.) The monthly payments.

MAKE OR BUY DECISION

Component T6 is used in one of the company's products. The unit product cost of the component according to the company's cost accounting system is determined as follows:

Direct Materials . . . . . . . . . . . . . . . . . . . . . . . $45.00

Direct Labor . . . . . . . . . . . . . . . . . . . . . . . . . . 32.00

Manufacturing Overhead Variable . . . . . . . . .    8.00

Manufacturing Overhead Fixed . . . . . . . . . . .   32.00  *

       Total Unit Product Cost . . . . . . . . . . . . . $117.00
  
* Manufacturing Overhead Fixed will remain, even if they buy the product from an outside supplier

An outside supplier has offered to supply component T6 for $101 each. The outside supplier is known for quality and reliability. Bulan chronically has idle excess capacity and no opportunity costs exist.




Required:
Is the offer from the outside supplier financially attractive? YES or NO and Why?   RECALCULATE THE UNIT PRODUCT COST WITH THE IMPORTANT (RELAVENT) NUMBERS

SHOW CALCULATIONS:

CALCULATE CORRECTED TOTAL RELAVENT COST OF PRODUCT WE MAKE

martinez company's relevant range of production is 7500 unit to 12500 units. when it products and sells 10000 units, its average cost unit are as follow:

Ave cost per unit

direct materials $5.40

direct labor 2.90

variable manufacturing overhead 1.60

fixed manufacturing overhead 4.00

fixed selling expenses 2.40

fixed administrative expense 2.10

sales commissions 1.10

variable administrative expense 0.55

If 12500 unit are produced, what is the average fixed manufacturing cost per unit produced? (round your answer to 2 decimal places.)

If 12500 units are produced and sold what is the total amount of variable cost related to the units produced and sold. (do not round intermediate calculations)

If 8000 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level production?

1.- Wazy Corporation's relevant range of activity is 5,000 units to 15,000 units. When it produces and sells 1,000 units, its average costs per unit are as follows:

If 1,000 units are sold, the variable cost per unit sold is closest to:

2. Describe Fixed Cost behavior (per unit and in total) and give your own example.

3. Describe Variable Cost behavior (per unit and in total) and give your own example.

4. Define Period Cost, describe how/when they are expensed AND give your own example.

Sanders Limited is considering whether to lease its equipment as an alternative to borrowing to purchase it. The equipment will cost $230,000. This amount can be borrowed from a local bank at 8.5% interest with annual payments amortized over 6 years. Payments would be at the end of the year. The CCA rate on this equipment would be 25%, and the expected salvage at the end of 6 years is $33,000. Alternatively, lease payments of $47,000 could be made each year for 6 years, with the first payment due immediately. Sanders’ cost of capital is 13%, and its tax rate is 32%.

Required: What is the total cost of the Financing Option?

What is the total cost of the Leasing Option?

What is the difference in cost between the Financing Option and Leasing Option (from the perspective of the LEASING option)?

Which option should the company proceed with?

a. Financing Option

b. Leasing Option