The following costs were incurred in September: Direct materials $42,700 Direct labor $29,400 Manufacturing overhead $27,300 Selling expenses $23,600 Administrative expenses $33,700 Conversion costs during the month totaled: → $56,700 $70,000 $72,100 $156,700 Conversion cost = Direct labor + Manufacturing overhead = $29,400 + $27,300 In September direct labor was 25% of conversion cost. If the manufacturing overhead for the month was $108,750 and the direct materials cost was $25,800, the direct labor cost was: rev: 06_06_2013_QC_31398, 09_24_2013_QC_36205 → $36,250 $5,583 $91,250 $22,250 Givens: Direct labor = 0.25 × Conversion cost Manufacturing overhead = $108,750 Conversion cost = Direct labor + Manufacturing overhead Conversion cost = Direct labor + $108,750 Conversion cost = 0.25 × Conversion cost + $108,750 0.75 × Conversion cost = $108,750 Conversion cost = $108,750 ÷ 0.75 Conversion cost = $145,000 Direct labor = 0.25 × Conversion cost = 0.25 × $145,000 = $36,250 A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $5,040 and is paid at the beginning of the first year. Seventy percent of the premium applies to manufacturing operations and 30% applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?
McGraw-Hill Learning Solutions, 2009. p. 180). <vbk:0077589270#outline(4.9.1.4)> 4. On January 1, 2009, Turner, Inc., reports net assets of $480,000 although a building (with a 10-year life) having a book value of $260,000 is now worth $300,000. Plaster Corporation pays $540,000 on that date for a 90 percent ownership in Turner. On December 31, 2011, Turner reports a Building account of $182,000 and Plaster reports a Building account of $510,000.
We will cater to market roughly 100 miles in diameter from the xxxxxx area. CES will provide home automation and home theater solutions to the people in the market area. In order to fund the startup costs of CES the owner Blake has sold a piece of investment real estate and was able to obtain $93,000 in profit from the sale. These funds will be used to provide the necessary startup capital for CES. $60,000 will be put in a business account for startup costs and the remaining $33,000 will be put in savings and be available as a liquid asset for gaps in product purchase and customer payment.
The price premium given for Husky is $200k over a comparable competitor’s machine ($1.2m vs. $1.0m). The table in Appendix A illustrates my calculations in solving for annual operations costs. Because Husky equipment is faster, I found “Husky Equivalent” costs for the competitor; that is, how much does it cost all-in for the competitor to run the same number of cycles that Husky’s machine can do in a year. 365 days of operation for Husky is roughly 489 days of operation for the competition. I made a number of assumptions, including resin cost per gram of $0.16 (the latest figure on the chart in Exhibit 11), 365 days of operations per year, and annual cost per square foot of $60 (average of the $20-$100 range given in the case).
Assume commercial use is at the March level. Also assume that the Sales Promotion and Corporate Services expenses will be at the same levels as in March. Salem Data Services Contribution Margin Income Statement For the Quarter Ended March 31, 2004 Revenues Intracompany $ 82,000 Commercial 110,400 Total Revenues: $ 192,400 Less: Variable Expenses Power (at $4.70) $ 1,612 Operations: Hourly Personnel (at $24.00) 8,232 Total Variable Expenses: $ 9,844 Contribution Margin $ 182,556 Less: Fixed Expenses Rent $ 8,000 Custodial Services 1,240 Computer Leases 95,000 Maintenance 5,400 Depreciation 26,180 Operations: Salaried Staff 21,600 Systems Development & Maintenance 12,000 Administration 9,000 Sales 11,200 Sales Promotion 8,083 Corporate Services 15,236 Total Fixed Costs: $ 212,939 Net Income $ (30,383) 4. Assuming the intracompany demand for service will average 205 hours per month, what level of commercial revenue hours of computer use would be necessary to
Using information given in question C, the $16,200 in new machinery will be divided up over 36 months. This additional cost will add $450 per month to Molly’s fixed costs, bringing her total to $2,150 monthly. With that given information, Molly would need to clean an additional 529 items a month to break even. The answer was derived by using the following equation: $2,150 ÷ (1.1 – $0.25) – 2000 = 529.412
We will review several problems in the workout room. Problem 1 - Nancy Company has budgeted sales of $300,000 with the following budgeted costs: Direct materials $60,000 Direct manufacturing labor 40,000 Factory overheadVariable 30,000Fixed 50,000Selling and administrative expensesVariable 20,000Fixed 30,000Question 1: Compute the average markup percentage for setting prices as a percentage of the full cost of the product. (five points)60+40+30+50+20+30 = 230 300-230 = 70 70/230 = 30%Question 2: Compute the average markup percentage for setting prices as a percentage of the variable cost of the product. (five points)60+40+30+20 = 300-150 = 150 150/150 = 100%Question 3: Compute the average markup percentage for setting prices as a percentage of the variable manufacturing costs. (five points)60+40+30 = 130 300-130 = 170 170/130 = 131%Problem 2 - Better Food Company recently acquired an olive oil processing company that has an annual capacity of 2,000,000 liters and that processed and sold 1,400,000 liters last year at a market price of $4 per liter.
Net initial investment outlay is $302,040. (Cost of new system + Installation) + (Proceeds from old equipment + Tax on proceeds + Removal cost) = Total cost + NCF (old) = 303,000 +-960 2. Tax depreciation savings = (36% tax rate) x (depreciation of each year) Depreciation for each year based on MACRS 5-year (Wikipedia) 3. Incremental cash flows = (Deprn. Tax savings + A.T. cost savings) each year [pic]2.
1 - What sales volume is required to break even on Classic Knitwear's 2-year marketing investment? Licensing fee - $100,000 (Year 1) (5% of net sales after Year 1) Licensing Fee2 = (N/2)*.05* gross margin (Assuming N is spread evenly) Salary = $255,000 per year (3 salary employees) $510,000 for two years Total Marketing Investment = $3 million for two years (In part Advertising = $1.2 million total for 2 years) Total Fixed Costs = $3,610,000 + Licensing Fee2 Average Manu Cost per case = $428.88 (5% off-invoice trade promotion) Average Manu Cost per case w trade promo = $407.44 (20% orders receive 10% advertising allowance) Average Manu Cost per case w trade promo and allowance = $364.55 Average cost for display [6 cases w promo inc] = ($407.44 * 6) + $100 = $2,544.64 Average cost for display [above with adv promo] = ($364.55 * 6) + 100 = $2,287.30 N = Total displays needed Total Fixed Costs + Licensing Fee2 = 0.80($886.56 * N) + 0.20($629.22 * N) + ($100 * N) = 709.248N + 125.844N + 100N $3,610,000 + [(0.05*7.05)/2] N = 935.092N $3,610,000 = 935.092N – 0.17625N $3,610,000 = 934.91575N N = 3,861.31, so 3,861 displays needed to break even (555,984 average amount of shirts) 2 - If Classic Knitwear implements all of Miller's marketing recommendations, what is the estimated demand for the new product line over the 2-year launch period? Remember that Miller's expectations when forecasting will be influenced by his prior experience. Tip a: Breakeven Point = Fixed Costs/(Unit Selling Price - Variable Costs). Tip b: Unit Contribution Margin = Unit Selling Price - Variable Costs.
To start with, we decided to calculate SGR sustainable growth rate, which represents the growth rate that company can sustain without borrowing money. SGR = ROE x (1 - dividend-payout ratio) In case with Wilson Company SGR=ROE and equals 11.7% on average for the last 3 years. It turns that sales growth rate is twice higher than SGR. Based on our evaluation we expect 25% sales growth in 1985. Such difference indicates that company needs to borrow extra funds in 1985.