The theory of production costs is based on the idea of economic profit in which profit is defined as the difference between revenue and total costs, with total costs being the sum of implicit and explicit costs. Under these conditions, can we assume that the opportunity cost is an absolute concept, not a relative one? Justify your answer

JPJ Corp has sales of $1.29 million, accounts receivable of $46,000, total assets of $5.17million(of which $3.19 million are fixed assets), inventory of $155,000, and cost of goods sold of $596,000. What are JPJ’s accounts receivable days? Fixed asset turnover? Total asset turnover? Inventory turnover?

Job Costing – Cookie Experiment-

To celebrate your new found knowledge of Job Costing, you and a classmate (or can be completed individually) will make at least one dozen of cookies and track the cost of the cookies and the process.

Requirements: Track the Direct Materials, Direct Labor and MOH cost for making cookies. Cookies must be made from scratch. No Betty Crocker (or other brand) mixes.

1. For Direct Material, include all ingredients and calculate the cost of DM used of each ingredient.

Hint. Not all ingredients will be DM. Is a teaspoon of baking soda a DM or indirect material?

Please separate DM and Indirect Materials. Both categories must show the total cost of each ingredient and cost of ingredient used!

2. For Direct Labor, complete some research and find the hourly rate of a baker. Based on the time actually working on the cookies (not baking time) calculate the labor.

Hint: DL time would include prep, mixing, & clean-up.

3. MOH: For this assignment MOH will include indirect labor and other costs. Indirect Material will be calculated in step 1 and show separately from MOH.
   1. Possible items to include (there may be more!) when calculating Overhead: water for cleaning, utensils, cleaning supplies, electricity, rent, etc. Full points earned for listing items not included in the previous sentence.

2. For MOH costs, please determine a PDOR Rate for the total SUM OF MOH and CHOOSE ONE allocation base (cost driver) to assign a portion of the MOH costs to the cookies. Must have at least 5 MOH costs.
   1. Recommendation: Calculate the MOH costs for a month and assign to the cookie job based on a single allocation driver.

• Demonstration of calculation of MOH: Please note, this example or allocation rate (hours in a month) cannot be used for your assignment)
  • If calculated my MOH Costs for a month I would have:

$900 Monthly Rent + $45 Monthly Electricity + $10 Monthly cleaning supplies + $35 Monthly water = $990 of total MOH for one month. I could allocate these costs to my cookies based on baking time of the cookies, total Direct Labor time, etc. I chose total hours in a month, 744. if my cookies took a total of 45 minutes to make (from start to finish) I could determine a rate by the following: $990/744 hours (total hours in a month) = $1.33 per hour.

• To assign the MOH, then I use the formula Actual Activity * PDOR. Therefore $1.33 * 45/60 = $ .9975. This would be the MOH portion of my Product Costs.

Questions to answer: Work must be completed in EXCEL.

1. Provide an itemized list of all Direct Material, Indirect Material and Direct Labor Costs. Please indicate any calculations performed to determine Direct Material used or Direct Labor costs. Calculations must be completed in Excel.
   1. Example: 1 cup of sugar is required. The 5 lb bag of sugar has 10 cups. (Remember your conversion skills or look them up online). In Excel show the calculation of the cost of the 1 cup of sugar. Assume bag of sugar costs $2.29 per bag, then in Excel a calculation similar to = 2.29 * (1/10) = $.23 per cup of sugar is completed.

2. What items did you include in the MOH costs? Please list the items and the total costs for those MOH items.

FOR MOH, it is recommended to have two categories:

• MOH Allocated. Based on other MOH Costs (Rent, Water, Electricity, etc) and allocated using a PDOR. Please remember these MOH Costs should be calculated as a total. For example, I would use rent for a month or monthly water bill. The PDOR will allocate the appropriate portion of the cost to the cookies. Please refer to the example on the previous page.

3. What allocation base did you choose to assign the MOH costs to the cookies and why was this allocation base chosen?

4. What was the PDOR. Please show the PDOR calculation.

5. How much MOH was assigned to the cookie job?

6. How many cookies were made?

7. What was the total cost of the cookie job? This will include DM + DL + Indirect Materials + MOH Allocated in step 2.

8. What was the cost per cookie?

9. Based on the cost per cookie, what is your recommended selling price per cookie?

10. What mark-up percentage did you choose?

Assignment Tasks This assignment consists of three parts as follows :

Part 1:

Write a report of 300 words that covers the following:

 Fixed Cost

 Variable Cost

 Profit

Part 2 :

Solve the following questions by completing the required calculations:

 A factory has fixed cost of RO 10,000 and produces 500 units of a product at a variable cost of RO 75 per unit. Calculate Total Cost of the factory

 Calculate variable cost per unit for a factory that has a fixed cost of RO 13,200 and produces 25 units of a product at total cost of RO 32,000

 A company is producing 20 products with variable cost 47 per item. The selling price 102 O.R per item. Calculate the following assuming fixed cost is 1050

o Total Cost

o Revenue

o Profit

Part 3

Assume that you will start a new business and establish a new organization, write a report of 500 words that covers the following point about your future organization:

 Draw Organizational structure for the organization

 Identify 4 potential stakeholders for the organization and discuss their role in the organization development

 Do a PESTLE Analysis for your organization at the current time

Rules & Regulations:

 Total words count for the whole assignment should be between 800- 1000 words

 All resources should be cited using CU Harvard style.

 The final assignment must have a Title page, Table of Contents, References/ bibliography using CU Harvard Style and page numbers.

 Introduction and conclusion are not required.

 Title Page must have Assignment Name, Module name, Session, your name, ID, and the name of the faculty.

 Softcopy in word format is to be submitted through Turnitin link.

 Viva might be conducted after the assignment submission as per the dates informed earlier.

 Refer to the marking rubric for marking criteria for report and presentation.

Guidelines:

 Assignment must be computer typed.

 Font - Times New Roman

 Font – Style - Regular

 Font - Size - 12

 Heading should be with Font Size 14, Bold, Capital and Underline.

 Each student has to do the assignment individually

 You can refer books in eLibrary or use internet resource. But you should not cut and paste material from internet nor provide photocopied material from books. The assignment answers should be in your own words after understanding the matter from the above resources.

1. Consider two firms, Firm A and Firm B, who compete as duopolists. Each firm produces an identical product. The total inverse demand curve for the industry is P=250-QA+QB. Firm A has a total cost curve CAQA=100+QA2. Firm B has a total cost curve CBQB=100+2QB.
   1. Suppose for now, only Firm A exists (QB=0). What is the Monopoly equilibrium quantity and price? What is Firm A’s profit?
   2. Find the Nash Cournot equilibrium price and output level. What are the firms’ profits?
   3. Find the equilibrium price and output level in the market if firm A acts as a Stackelberg leader. What are the firms’ profits?
   4. Suppose that the two firms are able to form a cartel. Derive the output each firm will produce, the market price, and the total profit under the cartel solution.
   5. Compare the Cournot, Stackelberg, and Cartel outcomes to the monopoly outcome you calculated in part a.

MONTH UNITS TOTAL COSTS PRODUCED

January 12,500 $430,000

February 17,000 $490,000

March 19,000 $512,000

April 10,000 $400,000

May 14,000 $434,000

June 9,000 $360,000

July 20,000 $550,000

August 21,000 $525,000

September 24,000 $605,000

October 23,000 $589,000

November 28,000 $702,000

December 18,000 $496,000

1) From this information, what are my approximate fixed costs and what is my estimated variable cost per product produced? (20 POINTS) Fixed Costs = Variable Cost per Unit =

2) If I manufacture 35,000 units this month, what are my projected total costs? (10 POINTS) Total Costs =

3) If my total costs this month can not exceed $600,000, approximately how many units can I produce? (10 POINTS) Units produced =

4) Produce a figure of your choosing that presents Units Produced for each month. (20 POINTS)

​(Pro forma balance sheet construction​) Use the following​ industry-average ratios to construct a pro forma balance sheet for​ Phoebe's Cat Foods​ Inc.:

Total asset turnover   1.6 times
Average collection period (assume 365-day year)   16 days
Fixed asset turnover   6 times
Inventory turnover (based on cost of goods sold)   2 times
Current ratio   2.0 times
Sales (all on credit)   $3,000,000
Cost of goods sold   75% of sales
Debt ratio   60%

Fill in the assets section of the pro forma balance sheet. (Round all items to the nearest​ dollar.)

Cash ​$

Accounts receivable

Inventories

Net fixed assets

Total assets ​$

Fill in the liabilities and common equity section of the pro forma balance sheet. ​(Round all items to the nearest​ dollar.)

Current liabilities ​$

​Long-term debt

Total liabilities ​$

Common equity

Total liabilities and common equity ​$

​(Pro

forma balance sheet

construction​)

Use the following​ industry-average ratios to construct a pro forma balance sheet for​ Karen's Beauty​ Products, Inc.:

.

Fill in the assets section of the pro forma balance sheet.  ​(Round all items to the nearest​ dollar.)

Fill in the liabilities and common equity section of the pro forma balance sheet.  ​(Round all items to the nearest​ dollar.)

Given the following information please construct a balance sheet and an income statement for the company. It provides software via a cloud subscription. There is no inventory.

All information in $000

Total Revenues                                            5,374

Cash                                                                  908

Common Stock                                                651

Cost of Revenues Subscription                     925

Interest Expense                                               16

Additional Paid in Capital                           3,954

Retained Earnings                                       (630)

Cost of Revenues Professional Services     365

Gross Margin                                                4,084

Short term securities                                       87

Long term debt                                            2,328

Accounts Receivable                                   1,906

Accounts Payable                                        1,103

Research & Development                             793

Marketing & Sales                                       2,757

Other current liabilities                              3,287

Other current assets                                       649

Investment income                                        10

General & Administrative Expense              680

Depreciation                                                     448

Property & Equipment                               1,126

Goodwill                                                        3,783

Other long term assets                               2,234

Total Current Assets                                    3,550

Total Operating Income                             (146)

Net Loss                                                         (600)

Total assets                                                   10,693