Question

Internal Operating Schedules

Chapter 4: Section 4.4 Pages 138-142

Partial Credit earned with A-D worth 25 points each

Read the section on Internal Operating Schedules and refer to the figures and tables to complete the sections below.

1. Assume you have developed and tested a prototype electronic product and are about to start your new business. You purchase pre-programmed computer chips at $70 per unit. Other component costs include: plastic casings at $15 per unit and assembly hardware at $5 per unit. Direct labor costs are $15 per hour and three units can be produced per hour. You intend to sell each unit at a 50 percent mark-up over the total costs of producing each unit. The plan is to produce 500 product units per month in January, February, and March. Sales are expected to be: 200 units in January, 400 units in February, and 800 units in March.

1. Calculate the dollar amount of sales revenue expected in each month (i.e., January, February, and March) and for the first quarter of the year.

Computer chips          

Plastic casings            

Assembly hardware   

Direct labor ($15/3)       

Total costs                

Mark-up = $ () =

Dollar Sales:

January:          

February:        

March:            

            First Quarter                                       

2. Prepare a cost of production schedule for January, February, and March.

            Cost of Production Schedule:

                                                Cost

                                                Per Unit          January          February       March

            Production (units)                                     500                    500                 500

            Production costs

            Computer chips        

            Plastic casings          

            Assembly hardware

            Direct labor              

            Total costs                  

Prepare a cost of goods sold schedule for each of the three months and for the first quarter of the year. Using your cost of goods sold estimates and the sales revenues

Internal Operating Schedules

Chapter 4: Section 4.4 Pages 138-142

Partial Credit earned with A-D worth 25 points each

Read the section on Internal Operating Schedules and refer to the figures and tables to complete the sections below.

1. Assume you have developed and tested a prototype electronic product and are about to start your new business. You purchase pre-programmed computer chips at $70 per unit. Other component costs include: plastic casings at $15 per unit and assembly hardware at $5 per unit. Direct labor costs are $15 per hour and three units can be produced per hour. You intend to sell each unit at a 50 percent mark-up over the total costs of producing each unit. The plan is to produce 500 product units per month in January, February, and March. Sales are expected to be: 200 units in January, 400 units in February, and 800 units in March.

1. Calculate the dollar amount of sales revenue expected in each month (i.e., January, February, and March) and for the first quarter of the year.

Computer chips          

Plastic casings            

Assembly hardware   

Direct labor ($15/3)       

Total costs                

Mark-up = $ () =

Dollar Sales:

January:          

February:        

March:            

            First Quarter                                       

2. Prepare a cost of production schedule for January, February, and March.

            Cost of Production Schedule:

                                                Cost

                                                Per Unit          January          February       March

            Production (units)                                     500                    500                 500

            Production costs

            Computer chips        

            Plastic casings          

            Assembly hardware

            Direct labor              

            Total costs   

Answer 1

Part A
Calculation of Sales revenue for each month and first quarter

Particulars	Amount in $
Cost of 1 unit:
Computer Chip	70
Plastic Casings	15
Assembly Hardware	05
Direct Labour ($15/3)	05
Total Cost of 1 unit	95
Markup ($95* 50%)	47.50
Selling price	142.50
Dollar Sales:
January (200 units * $142.50)	28500
February (400 units * $142.50)	57000
March (800 units * $142.50)	114000
First Quarter (28500+57000+114000)	199500

Part B

Cost of Production schedule

Particulars	Cost per unit	January	February	March	First Quarter
Production (units)	1	500	500	500	1500
Production Costs
Computer Chip	70	35000	35000	35000	105000
Plastic Casings	15	7500	7500	7500	22500
Assembly Hardware	5	2500	2500	2500	7500
Direct Labour ($15/3)	5	2500	2500	2500	7500
Total Costs	95	47500	47500	47500	142500