Dansk Minox Case

Variable and fixed costs per unit (or per 100 brochures) at the current monthly production level of 150,000 brochures can be determined from the data in case Exhibit 1, as follows:

In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.

Break-even Dollar Volume = Total Fixed Costs / Contribution Margin = $525,000 / 0.7111 = $738,282.40

If Marlene Herbert were to discontinue place mats, he would miss $270,000 that will go toward Mendel paper company fixed cost. The company currently has a plant overhead that is estimated at $420,000 for the quarter. In addition to the fixed plant overhead, the plant incurs fixed selling and administrative expenses per quarter of $118,000. This draws the company to a total fixed cost of $538,000. If Marlene Herbert were to discontinue the second highest contributor to the fixed cost, he would need to increase the volume of computer paper and lower material cost to help pull the contribution margin of the lowest product up to help support the lost of a whole product line.

This case study will look at Jokkmok Industries and one of its managers, Mr. Rosen, who is bucking for a promotion to CEO. His division uses absorption costing and has the ability to produce 50,000 units a quarter with a fixed overhead amount of $600,000. While the sales forecast shows that the company will only sell 25,000 units during each of the next two quarters, Mr. Rosen wants to double his budgeted production for the second quarter from 25,000 to 50,000 units. We will look at Mr. Rosen’s decision and see how it affects his company’s bottom line by putting the figures from last quarter and the next quarter into an absorption income statement and a contribution margin statement. From this we will be able to see the differences in

(a) The firm will produce 4 units of output. At that level, marginal revenue ($25) is greater than marginal cost ($15), but as close to equality as possible. Total profit will be $90 ($160 – $70).

1. Assume that a company is budgeting to sell 2,500 units of a product at a selling price per unit of $32. The variable cost per unit is $26 and total fixed costs are $5,000.

There were not any units sold in the worst-case scenario. From this reason, the revenue and variable costs were zero. Therefore, there was not only no profit, but also there was $29,250 loss which is the total fixed costs. However, in the best case with $8,775 units sold which means they get revenue of $350,561. Moreover, the variable costs were $292,811 but the fix costs remained was nothing change. As the result, there was a significant profit of $58,500.

The Martinez Company has decided to introduce a new product and would like to evaluate the costs of manufacturing through capital intensive and labor intensive manufacturing methods to determine which of the two methods to employ. The values to be used in the evaluation for capital intensive manufacturing are direct materials at $5 per unit, direct labor at $6 per unit, a variable overhead of $3 per unit, and fixed manufacturing costs of $2,508,000. The values for material, labor, and overhead are summed to find the total variable cost of $14. The labor intensive values are direct materials at $5.50 per unit, direct labor at $8 per

The Bakery produces cupcakes. It uses a process costing system. In March, its beginning inventory was 450 units, which were 100% complete for direct materials costs and 10% complete for conversion costs. The cost of beginning inventory was $655. Units started and completed during the month totaled 14,200. Ending inventory was 410 units, which were 100% complete for direct materials costs and 70% complete for conversion costs. Costs per equivalent unit for March were $1.40 for direct materials costs and $1.00 for conversion costs. Using the FIFO costing method, compute the cost of goods transferred to the Finished Goods Inventory account, the cost remaining in the Work in Process

a.) Discretionary fixed costs may be altered in the short-term by current managerial decisions; an example can be advertising, training or even development in which a company can always alter these decisions and bring it back later. Committed fixed costs differ due to it being long term and it cannot be reduced in the short-term; such examples are depreciation on buildings

sold are one-half of the units that were sold previously then Lucy’s Variable Costs and

Question 1: Compute the full production cost (per gallon) of the Polynesian Fantasy and Vanilla products using: -

Analyze this whole process and change and evaluate the manager’s proposal of reduction of price.

Costing Cost Benchmarking Prof. Dr. P. Weber-Dreßler Stategic Costing.ppt (p. 11) 1.600 units x 12 € 2.000 units x 7 € = 1.600 x 4 € = 2.000 units x 4 € = - fixed costs Total profit 19.200 € 14.000 € 6.400 € 8.000 € 18.000 € 800 € Explanations: Elimination of product A might be a wrong