Homework Answers
| 1) | What is the Total Amount of Traceable Fixed Manufacturing Overhead for each of the Two Products. | |||||
| Particulars | Alpha | Beta | Total | |||
| Traceable Fixed Manufacturing Overhead | $22 | $2,376,000 | $24 | $2,592,000 | $4,968,000 | |
| [108,000 x $22] | [108,000 x $24] | |||||
| Total | $22 | $2,376,000 | $24 | $2,592,000 | $4,968,000 | |
| 2) | What is the Company's Total Amount of Common Fixed Expenses. | |||||
| Particulars | Alpha | Beta | Total | |||
| Common Fixed Expense | $21 | $2,268,000 | $16 | $1,728,000 | $3,996,000 | |
| [108,000 x $21] | [108,000 x $16] | |||||
| Total | $21 | $2,268,000 | $16 | $1,728,000 | $3,996,000 | |
| 3) | Particulars | Alpha | Total | |||
| Current | Additional | |||||
| Per Unit | 86,000 Units | Per Unit | 16,000 Units | 102,000 Units | ||
| Sales Value | $150 | $12,900,000 | $104 | $1,664,000 | $14,564,000 | |
| [86,000 x $150] | [16,000 x $102] | |||||
| Total Sales | $150 | $12,900,000 | $104 | $1,664,000 | $14,564,000 | |
| Direct Material Costs | $30 | $2,580,000 | $30 | $480,000 | $3,060,000 | |
| [86,000 x $30] | [16,000 x $30] | |||||
| Direct Labour Costs | $26 | $2,236,000 | $26 | $416,000 | $2,652,000 | |
| [86,000 x $26] | [16,000 x $26] | |||||
| Variable Manufacturing Overhead | $13 | $1,118,000 | $13 | $208,000 | $1,326,000 | |
| [86,000 x $26] | [16,000 x $26] | |||||
| Traceable Fixed Manufacturing Overhead | $22 | $1,892,000 | $22 | $352,000 | $2,244,000 | |
| [86,000 x $22] | [16,000 x $22] | |||||
| [Avoidable Fixed Cost] | ||||||
| Variable Selling Expenses | $18 | $1,548,000 | $18 | $288,000 | $1,836,000 | |
| [86,000 x $18] | [16,000 x $18] | |||||
| Common Fixed Expense | $21 | $2,268,000 | - | - | $2,268,000 | |
| [108,000 x $21] | [Unavoidable/Sunk Cost] | |||||
| Total Cost | $130 | $11,642,000 | $109 | $1,744,000 | $13,386,000 | |
| Income | $1,258,000 | ($80,000) | $1,178,000 | |||
| If accepting the new Customer's Order, income is Decreased by $80,000. Hence, It is Financial Disadvantage for Company. | ||||||
| 4) | Particulars | Beta | Total | |||
| Current | Additional | |||||
| Per Unit | 96,000 Units | Per Unit | 2,000 Units | 102,000 Units | ||
| Sales Value | $110 | $10,560,000 | $45 | $90,000 | $10,650,000 | |
| [96,000 x $110] | [2,000 x $45] | |||||
| Total Sales | $110 | $10,560,000 | $45 | $90,000 | $10,650,000 | |
| Direct Material Costs | $15 | $1,440,000 | $15 | $30,000 | $1,470,000 | |
| [96,000 x $15] | [2,000 x $15] | |||||
| Direct Labour Costs | $22 | $2,112,000 | $22 | $44,000 | $2,156,000 | |
| [96,000 x $22] | [2,000 x $22] | |||||
| Variable Manufacturing Overhead | $11 |
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