Question

The following data is available for Crater Corporation's North American division for the years 2014 and 2015. During these years there were no inventories in the system. 2015 55,000 13,400 $ 24,700,000 2014 59.000 12,500 $ 26,140,000 Production quantity Number of customers Revenues Expenses Direct materials & components Direct production wages (1) Production supervisory salaries Salaries paid to sales representatives (2) Advertising Insurance (3) Building rent (4) Other salaries (5) Honorarium to the members of the board Production quality control (6) Market research Depreciation (7) Facilities management (8) Legal Personnel department Utilities production (9) Utilities other (10) Customer service (11) $ $ $ $ $ $ $ $ $ $ $ $ 3,222,500 1,466,000 268,900 610,500 687,300 121,670 266,140 1,175,000 437,700 132,900 348,000 1,329,700 885,730 690,100 198,000 860,100 367,840 920,400 $ 3,555,700 $ 1,608,600 $ 245,600 $ 632,100 $ 580,400 $ 116,600 $ 264,300 $ 1,247,000 $ 437,700 $ 138,120 $ 304,960 $ 1,171,900 $ 747,700 $ 622,700 $ 195,700 $ 770,200 $ 309,000 $ 927,600 $ $ $ $ $ $ 13,988,480 $ 13,875,880

Answer 1

Part 1

	Behavior	Function
	Variable	Fixed	MFG	Sales/MKT	Admin
Direct materials & components	3222500		3222500
Direct production wages	1466000		1466000
Production supervisory salaries		268900	268900
Salaries paid to sales representatives	370500	240000		610500
Advertising		687300		687300
Insurance		121670	85169		36501
Building rent		266140	172991	53228	39921
Other salaries		1175000	587500	235000	352500
Honorarium to the members of the Board		437700			437700
Production quality control	53160	79740	132900
Market research		348000		348000
Depreciation		1329700	864305	132970	332425
Facilities management		885730	354292		531438
Legal		690100			690100
Personnel department		198000			198000
Utilities – production	344040	516060	860100
Utilities - other	165528	202312		183920	183920
Customer service	184080	736320		920400
Total	5805808	8182672	8014657	3171318	2802505
	13988480	13988480

24000*10 = 240000

121670*70% = 85169

121670*30% =36501

266140*65%=172991

266140*20% = 53228

266140*15% = 39921

1175000*50% = 587500

1175000*20% = 235000

1175000*30%= 352500

132900*40% = 53160

132900*60% = 79740

1329700*65% = 864305

1329700*10% =132970

1329700*25% = 332425

885730*40% =354292

885730*60% = 531438

860100*40% = 344040

860100*60% = 516060

367840*50% = 183920

367840*45% =165528

367840*55% = 202312

920400*20% = 184080

920400*80% = 736320

Part 2-a

Product cost	$8014657
Period cost	$5973823

Product cost = manufacturing cost

Period cost = marketing costs + administrative costs = 3171318+2802505

Part 2-b

Product costs	Direct	Indirect
Direct materials & components	√
Direct production wages	√
Production supervisory salaries		√
Insurance		√
Building rent		√
Other salaries		√
Production quality control		√
Depreciation		√
Facilities management		√
Utilities – production		√

Part 3

CRATER CORPORATION - NORTH AMERICAN DIVISION INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2015
Sales revenues	$24700000
Less: cost of goods sold
Direct materials & components	3222500
Direct production wages	1466000
Production supervisory salaries	268900
Insurance	85169
Building rent	172991
Other salaries	587500
Production quality control	132900
Depreciation	864305
Facilities management	354292
Utilities – production	860100
Gross margin	$16685343
Less: selling and administrative expenses
Salaries paid to sales representatives	610500
Advertising	687300
Insurance	36501
Building rent	93149
Other salaries	587500
Honorarium to the members of the Board	437700
Market research	348000
Depreciation	465395
Facilities management	531438
Legal	690100
Personnel department	198000
Utilities - other	367840
Customer service	920400
Net income	$10711520