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Cost Accounting Homework Solution Essay

3051 words - 13 pages


Income statement and schedule of cost of goods manufactured. Calendar Corporation Income Statement for the Year Ended December 31, 2011 (in millions)

Revenues Cost of goods sold Beginning finished goods, Jan. 1, 2011 Cost of goods manufactured (below) Cost of goods available for sale Ending finished goods, Dec. 31, 2011 Gross margin Marketing, distribution, and customer-service costs Operating income (loss)

$355 $ 47 228 275 11

264 91 94 $ (3)

Calendar Corporation Schedule of Cost of Goods Manufactured for the Year Ended December 31, 2011 (in millions) Direct material costs Beginning inventory, Jan. 1, 2011 Direct materials purchased Cost of direct materials available for ...view middle of the document...

Design costs and R&D costs may be regarded as product costs in case of contracting with a governmental agency. For example, if the Air Force negotiated to contract with Lockheed to build a new type of supersonic fighter plane, design costs and R&D costs may be included in the contract as product costs. 4. Direct materials used = $108,000,000 ÷ 2,000,000 units = $54 per unit Depreciation on plant and equipment = $6,000,000 ÷ 2,000,000 units = $3 per unit

5. Direct materials unit cost would be unchanged at $108. Depreciation unit cost would be $6,000,000 ÷ 3,000,000 = $2 per unit. Total direct materials costs would rise by 50% to $162,000,000 ($54 per unit × 3,000,000 units). Total depreciation cost of $6,000,000 would remain unchanged. 6. In this case, equipment depreciation is a variable cost in relation to the unit output. The amount of equipment depreciation will change in direct proportion to the number of units produced. (a) Depreciation will be $2 million (2 million × $1) when 2 million units are produced. (b) Depreciation will be $3 million (3 million × $1) when 3 million units are produced.


Sales mix, three products.

1. Sales of A, B, and C are in ratio 20,000 : 100,000 : 80,000. So for every 1 unit of A, 5 (100,000 ÷ 20,000) units of B are sold, and 4 (80,000 ÷ 20,000) units of C are sold. Contribution margin of the bundle = 1  $3 + 5  $2 + 4  $1 = $3 + $10 + $4 = $17 $255,000 Breakeven point in bundles = = 15,000 bundles $17 Breakeven point in units is: Product A: 15,000 bundles × 1 unit per bundle 15,000 units Product B: 15,000 bundles × 5 units per bundle 75,000 units Product C: 15,000 bundles × 4 units per bundle 60,000 units Total number of units to breakeven 150,000 units Alternatively, Let Q = Number of units of A to break even 5Q = Number of units of B to break even 4Q = Number of units of C to break even Contribution margin – Fixed costs = Zero operating income $3Q + $2(5Q) + $1(4Q) – $255,000 $17Q Q 5Q 4Q Total 2. Contribution margin: A: 20,000  $3 B: 100,000  $2 C: 80,000  $1 Contribution margin Fixed costs Operating income Contribution margin A: 20,000  $3 B: 80,000  $2 C: 100,000  $1 Contribution margin Fixed costs Operating income = 0 = $255,000 = 15,000 ($255,000 ÷ $17) units of A = 75,000 units of B = 60,000 units of C = 150,000 units $ 60,000 200,000 80,000 $340,000 255,000 $ 85,000


$ 60,000 160,000 100,000 $320,000 255,000 $ 65,000

Sales of A, B, and C are in ratio 20,000 : 80,000 : 100,000. So for every 1 unit of A, 4 (80,000 ÷ 20,000) units of B and 5 (100,000 ÷ 20,000) units of C are sold.

Contribution margin of the bundle = 1  $3 + 4  $2 + 5  $1 = $3 + $8 + $5 = $16 $255,000 Breakeven point in bundles = = 15,938 bundles (rounded up) $16 Breakeven point in units is: Product A: 15,938 bundles × 1 unit per bundle 15,938 units Product B: 15,938 bundles × 4 units per bundle 63,752 units Product C: 15,938 bundles × 5 units per bundle 79,690 units Total number of units to...

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