Question

Managerial Accounting-

Questions below the table

Cost Behavior Variable Fixed Period Costs Selling & Administrative Costs Product Costs Direct Indirect Cost Item $120,000 $120,000 $30,000 $20,000 Example: Direct materials used: $120,000 (aluminum, glass, etc.) Example: Administrative office salaries: $30,000 1. Sales commission: $20,000 2. Depreciation factory building: $10,000 3. Depreciation, administrative office equipment: $4,000 4. Indirect materials, factory: $7,000 5. Factory labor (cutting and assembly): $140,000 $30,000 $20,000 $10,000 $4,000 $10,000 $4,000 $7.000 $7,000 $140,000 $140,000 $10,000 $10,000 $2000 $2,000 $3,000 $3,000 $12.000 $30.000 6. Advertising $10,000 7. Insurance, factory: $2,000 8. Administrative office supplies (billing): $3,000 9. Property taxes, factory: $12,000 10. Utilities, factory: $30,000 11. Factory supervision: $45,000 12. Lease cost, factory equipment: $10,000 13. Property taxes, administrative building: $3,000 14. Executive salaries: $160,000 15. Factory maintenance salaries: $60,000 $12.000 $30.000 $45.000 $10.000 $45.000 $10,000 $3,000 $160,000 $60,000 $3,000 $160,000 $60,000

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Answer 1

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Part 2
		Variable	Fixed	Total
Direct Material		$                      120,000		$ 120,000
Depreciation Factory Building			$    10,000	$    10,000
Indirec Material Factory		$                           7,000		$      7,000
Factory Labor		$                      140,000		$ 140,000
Insurance Factory			$      2,000	$      2,000
Property Tax Factory			$    12,000	$    12,000
Utilities Factory		$                        30,000		$    30,000
Factory Supervision			$    45,000	$    45,000
Lease Cost Factory			$    10,000	$    10,000
Factory Maintenance			$    60,000	$    60,000
Total		$                      297,000	$ 139,000	$ 436,000
No of Units		2,500	2,500	2,500
Average product cost per patio		$                        118.80	$      55.60	$    174.40
Part 3
Average Product cost per patio will decrease.
Since Fixed cost of $139,000 will remain same and with increase in units
Fixed cost per unit will be down.
		Part 1/2,500*3,000
		Variable	Fixed	Total
Direct Material		$                      144,000		$ 144,000
Depreciation Factory Building			$    10,000	$    10,000
Indirec Material Factory		$                           8,400		$      8,400
Factory Labor		$                      168,000		$ 168,000
Insurance Factory			$      2,000	$      2,000
Property Tax Factory			$    12,000	$    12,000
Utilities Factory		$                        36,000		$    36,000
Factory Supervision			$    45,000	$    45,000
Lease Cost Factory			$    10,000	$    10,000
Factory Maintenance			$    60,000	$    60,000
Total		$                      356,400	$ 139,000	$ 495,400
No of Units		3,000	3,000	3,000
Average product cost per patio		$                        118.80	$      46.33	$    165.13