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Question;Question 1;Low company;produces four types of products using the same production process. Each product;can be process further. The common costs of these four product, up to the split;of point are, $200,000, and these costs are allocated based on the quantity;produced. Following its information regarding production, prices, and costs for;each product;products;number of units produced;selling price at split off point;Selling price after further processing;Additional costs for further processing;A;500,000;$1.99;$2.95;$350,000;B;250,000;3.99;5.25;300,000;C;125,000;3.50;4.99;200,000;D;50,000;2.99;4.50;100,000;Required;1. if only one product can be processed further, which product should;Low process?;2. If common costs up to the split off point were allocated on the basis;of the market would your decision in part (1) be different? briefly explain why;or why not.;Question 2: You work as an analyst for a bulletproof glass manufacturer. one of your duty is to study the;quality costs of the company. The following is the information for the year;ended December 31, 2012;2012;Disposal;of defective products;$110,000;Warranty;replacement;256,000;Warranty;repairs;825,000;Training;521,000;Cost;incurred to test production equipment;590,000;Amortization;of testing equipment;89,000;Inspection;485,000;Statistical;process control;59,000;Supplies;used in testing;87,000;Product;testing;283,000;Systems;development;68,000;Quality;engineering;145,000;Rework;labour;522,000;Total;$;4,090,000;Sales;$25,300,000;1. Repair the quality cost report with the information collected by the;accounting.;Question 3;GR is the manufacturer of umbrellas.;After three years of research and development. The company recently;developed a new umbrella for golfers. The unit production costs of that;umbrella are as follow;Raw;material $8.50;Direct labour 6.00;Overhead costs---variable 2.00;Overhead costs---fixed 1.00;Selling and administrative expenses---variable 0.50;Selling and administrative expenses---fixed 1.00;All costs are based on an expected level of;production and sales of 1,000,000 umbrellas.;Required;Answer the following independent questions;1. Calculate the break even price of the new;umbrella. Show all your calculations.;2. If GR requires a minimum contribution margin;of 25% for all its products, calculate the minimum selling price for the new;umbrella. Show all your calculations.;3. If the selling price of the new umbrella is;set at $30, calculate the number of umbrellas that must be sold to generate an;income of $8,000,000. Show all your calculation, rounding to the nearest whole;unit.;4. If;the selling price of the new umbrella is set at $25, calculate the number of;umbrellas that must be sold to generate an income of 20% on sales. Show all;your calculation, rounding to the nearest whole unit.;Question;4;A;company plans to market a new product. It has received a order of 5,000 units;from a client. The client is willing to pay $75 per unit. The estimated costs;of producing each unit of the new product are;Direct;materials $24;Direct;labour 14;Variable;overhead 12;Fixed overhead 10;Total $60;The company usually has rate of return on sales of 15%.;Required;1. In this situation, calculate the target cost for this product.;2. Calculate the target profit.;3. Based on the current cost structure, calculate the total profit.

 

Paper#52384 | Written in 18-Jul-2015

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