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1. Success Manufacturing




1. Success Manufacturing sold 540,000 units of its product for $72 per unit in 2011. Variable cost per unit is $54 and total fixed costs are $2,140,000.;a. Prepare the following;i. Contribution margin income statement;ii. Income statement;b. If a new piece of machinery increases the fixed costs to $6,330,000 annually, but reduces the variable costs to $48 per unit, should the new piece of equipment be purchased? Why or why not? Show your work by preparing a new contribution margin income statement and income statement;2. Consider the following selected cost data for the Herbivore Manufacturing Company for 2011;Budgeted manufacturing overhead costs $8,500,000;Budgeted machine hours 350,000;Actual manufacturing overhead costs $8,100,000;Actual machine-hours 335,000;The company uses normal costing. Its job-costing system has a single manufacturing overhead cost pool. Costs are allocated to jobs using a budgeted machine hour rate. Any amount of under- or overallocation is written off to Cost of Goods Sold.;a. Compute the budgeted manufacturing overhead rate.;b. Prepare the journal entries to record the allocation of manufacturing overhead.;c. Compute the amount of under- or overallocation of manufacturing overhead. Is this amount material?;d. Prepare the journal entry to record the disposal of the under- or overallocated manufacturing overhead.


Paper#79741 | Written in 18-Jul-2015

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