A Company started its business in 2010 producing luxury handbags for young ladies.The normal production of handbags at an average of 3,300 units annually. The actual productionsales for the year 2019, 2020 and 2021 are as followsYear201920202021Actual production(units)2,4003.3004,200Sales(units)2,0003,5004,000The selling price, cost and expenses for the handbags are:RMSelling price per handbagDirect raw materials costs per handbagDirect labour costs per handbagVariable manufacturing overhead per handbagFixed manufacturing overhead per monthSales commissionSelling and administrative expenses per month10,0005,0002,0001,000330,00010% on sales198,000Requireda) Calculate the product cost per unit of handbag by using absorption costing and variable costingb) Prepare the income statement for year 2019, 2020 and 2021 by using absorption costing

Absorption costing refers to the process of computing the expenses regarding a product using its…

Answered: handbags at an average of 3,30 120 and…

Business

Accounting

handbags at an average of 3,30 120 and 2021 are as follows Actual production (units) 2,400 100 T00

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 16E

See similar textbooks

Similar questions

ABC Co. is selling its products to customers A, B and C. The following information is given for the year 2018-19. Customer A Customer B Customer C Sales in Lakhs (?) 15.90 20.0 15.0 Number of deliveries (including rush deliveries) 100 40 50 Number of orders 120 50 60 1.2 Average number of hours per delivery (for verification of goods | before loading for delivery) 1 1.30 Number of rush deliveries 2 1 2 Sales commission (% to sales) 4 5 Normal delivery cost is ? 1,250 per delivery. Order processing cost is ? 1,84,000. Verification cost of goods before loading is ? 5,32,500. Rush delivery cost is 180% of normal delivery cost. Variable cost is 75 percent of sales. (i) Present a customer wise profitability statement.
Case 2:Muscat Tubes Manufacturing LLC are the manufacturer of picture tubes for T.V. The following are the details of their operation during 2019. Rate of consumption per week is 200 units for Muscat Tubes Manufacturing LLC. Company estimated inventory carrying cost at 20% per annum. The ordering cost per order is RO 100. The cost incurred for purchasing a tube is RO 500. The rate of consumption per week is 100 to 300 units and lead time to supply is 6 to 8 weeks. During emergency purchase the lead time is 2 weeks.Calculate the following: a. Reorder levelb. Maximum level of stockc. Minimum level of stockd. Average level of stocke. Danger Level
Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. Thecompany has a maximum production capacity of 100,000 units per year. Operating at normal capacity, thebusiness earned Operating Income of $600,000 in 2020. The following cost data has been prepared for theyear ended December 31, 2020. Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00 Show ALL supporting workings where necessary and state any assumption(s) made. Required: f) The President of Greek Manufacturing is under pressure from shareholders to increase operating income by 30% in 2021. Management expects per unit data and total fixed costs to remain the same in 2021. Using the…
Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. Thecompany has a maximum production capacity of 100,000 units per year. Operating at normal capacity, thebusiness earned Operating Income of $600,000 in 2020. The following cost data has been prepared for theyear ended December 31, 2020.Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00 1. Greek’s management team is concerned about the selling expenses associated with the product and wants to reduce the variable selling expense per unit by 30%, which will see a simultaneous reduction in the total fixed selling expenses by $30,000. If they are able to accomplish this feat, it is expected…
Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. Thecompany has a maximum production capacity of 100,000 units per year. Operating at normal capacity, thebusiness earned Operating Income of $600,000 in 2020. The following cost data has been prepared for theyear ended December 31, 2020. Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00 Show ALL supporting workings where necessary and state any assumption(s) made. Required: a) Using the equation method, calculate the normal capacity of the business. b) Calculate: i) the variable production cost per unit ii) the total production cost per unit iii) The total variable cost per unit iv) Total…
Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. Thecompany has a maximum production capacity of 100,000 units per year. Operating at normal capacity, thebusiness earned Operating Income of $600,000 in 2020. The following cost data has been prepared for theyear ended December 31, 2020.Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00 d) Assuming sales equal to the normal capacity calculated in a) above, prepare a contribution marginincome statement for the year ended December 31, 2020, detailing the components of total variablecosts and total fixed costs, and clearly showing contribution and net income. e) The recession in the economy…
Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. Thecompany has a maximum production capacity of 100,000 units per year. Operating at normal capacity, thebusiness earned Operating Income of $600,000 in 2020. The following cost data has been prepared for theyear ended December 31, 2020.Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00Required:a) Using the equation method, calculate the normal capacity of the business. d) Assuming sales equal to the normal capacity calculated in a) above, prepare a contribution marginincome statement for the year ended December 31, 2020, detailing the components of total variablecosts and total fixed…
Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. Thecompany has a maximum production capacity of 100,000 units per year. Operating at normal capacity, thebusiness earned Operating Income of $600,000 in 2020. The following cost data has been prepared for theyear ended December 31, 2020. Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00
A merchandising company sells a particular product that is estimated to have approximately 1,500 sales this year. The purchasing department estimates that it will cost approximately $200 to place an order for this product: $180 fixed and $20 variable. The total annual carrying cost for this product is $1,500. What is the product’s EOQ? A. 775 B. 19 C. 735 D. 20
Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. Thecompany has a maximum production capacity of 100,000 units per year. Operating at normal capacity, thebusiness earned Operating Income of $600,000 in 2020. The following cost data has been prepared for theyear ended December 31, 2020 Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00 Required: d) Assuming sales equal to the normal capacity calculated in a) above, prepare a contribution marginincome statement for the year ended December 31, 2020, detailing the components of total variablecosts and total fixed costs, and clearly showing contribution and net income. e) The recession…
Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. Thecompany has a maximum production capacity of 100,000 units per year. Operating at normal capacity, thebusiness earned Operating Income of $600,000 in 2020. The following cost data has been prepared for theyear ended December 31, 2020 Selling price per unit……………………………………… $50.00Production Costs:Direct Materials …………………………………. $10.00Direct Labour ……………………………………. $8.00Variable Manufacturing Overhead ……………. $7.00Fixed Manufacturing Overhead…………....................... $450,000Fixed Selling & Administrative Expenses……………… $300,000Variable selling expense per unit ………………………. $10.00 Required: a) Using the equation method, calculate the normal capacity of the business. b) Calculate:i) the variable production cost per unitii) the total production cost per unitiii) The total variable cost per unitiv) Total Fixed costs c) Calculate Greek’s break-even point in units and in sales…
Breakeven Analysis Andreea Ltd. manufactures t-shirts, which sell at £15 each. Table 5 shows the sales and total costs for the period July 2020 to December 2020. Monthly fixed costs have been the same each month and it is expected they will remain constant for the remainder of the financial year (up to and including March 2021). Table 5 – Sales Volume and Total Costs Month Sales (Units) Total Costs July 14,502 195,020 August 15,000 200,400 September 13,320 183,200 October 19,100 241,000 November 24,806 308,060 December 36,000 400,000 How many t-shirts does the company need to produce and sell to achieve a profit target of £200,000 in January 2021? Show your calculations. What is the margin of safety for January 2021, assuming the profit target for that month has beenachieved? Show your calculations. Write a 400-word report, addressed to the sales…