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Cost Formula Princeton Manufacturing Company summarizes the following total cost data for the month of March. Princeton has a normal capacity per month of 25,000 units of product that sell for $80 each. For the foreseeable future, sales volume should equal normal capacity of production. Direct material $590,000 Direct labor 330,000 Variable overhead 170,000 Fixed overhead (Note 1 280,000 Selling expense (Note 2 160,000 Administrative expense (fixed) 112,000 $1,642,000 Notes: 1. Beyond normal capacity, fixed overhead cost increases $12,700 for each 1,000 units or fraction thereof until a maximum capacity of 30,000 units is reached. 2. Selling expenses are a 5% sales commission plus shipping costs of $2.40 per unit. a. Using the information available, prepare a formula to estimate Princeton's total cost at various production volumes up to normal capacity. Total cost = $ X + $ X X # of units. b. Prove your answer in requirement (a) relative to the total cost figure for 25,000 units. Total cost Fixed cost + Variable cost 2$ X = $ $ c. Calculate the planned total cost at 20,000 units. $ 0 ホ1c

Cost Formula Princeton Manufacturing Company summarizes the following total cost data for the month of March. Princeton has a normal capacity per month of 25,000 units of product that sell for $80 each. For the foreseeable future, sales volume should equal normal capacity of production. Direct material $590,000 Direct labor 330,000 Variable overhead 170,000 Fixed overhead (Note 1 280,000 Selling expense (Note 2 160,000 Administrative expense (fixed) 112,000 $1,642,000 Notes: 1. Beyond normal capacity, fixed overhead cost increases $12,700 for each 1,000 units or fraction thereof until a maximum capacity of 30,000 units is reached. 2. Selling expenses are a 5% sales commission plus shipping costs of $2.40 per unit. a. Using the information available, prepare a formula to estimate Princeton's total cost at various production volumes up to normal capacity. Total cost = $ X + $ X X # of units. b. Prove your answer in requirement (a) relative to the total cost figure for 25,000 units. Total cost Fixed cost + Variable cost 2$ X = $ $ c. Calculate the planned total cost at 20,000 units. $ 0 ホ1c

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cost Formula Princeton Manufacturing Company summarizes the following total cost data for the month of March. Princeton has a normal capacity per month of 25,000 units of product that sell for $80 each. For the foreseeable future, sales volume should equal normal capacity of production. Direct material $590,000 Direct labor 330,000 Variable overhead 170,000 Fixed overhead (Note 1 280,000 Selling expense (Note 2 160,000 Administrative expense (fixed) 112,000 $1,642,000 Notes: 1. Beyond normal capacity, fixed overhead cost increases $12,700 for each 1,000 units or fraction thereof until a maximum capacity of 30,000 units is reached. 2. Selling expenses are a 5% sales commission plus shipping costs of $2.40 per unit. a. Using the information available, prepare a formula to estimate Princeton's total cost at various production volumes up to normal capacity. Total cost = $ X + $ X X # of units. b. Prove your answer in requirement (a) relative to the total cost figure for 25,000 units. Total cost Fixed cost + Variable cost 2$ X = $ $ c. Calculate the planned total cost at 20,000 units. $ 0 ホ1c
Transcribed Image Text:Cost Formula Princeton Manufacturing Company summarizes the following total cost data for the month of March. Princeton has a normal capacity per month of 25,000 units of product that sell for $80 each. For the foreseeable future, sales volume should equal normal capacity of production. Direct material $590,000 Direct labor 330,000 Variable overhead 170,000 Fixed overhead (Note 1 280,000 Selling expense (Note 2 160,000 Administrative expense (fixed) 112,000 $1,642,000 Notes: 1. Beyond normal capacity, fixed overhead cost increases $12,700 for each 1,000 units or fraction thereof until a maximum capacity of 30,000 units is reached. 2. Selling expenses are a 5% sales commission plus shipping costs of $2.40 per unit. a. Using the information available, prepare a formula to estimate Princeton's total cost at various production volumes up to normal capacity. Total cost = $ X + $ X X # of units. b. Prove your answer in requirement (a) relative to the total cost figure for 25,000 units. Total cost Fixed cost + Variable cost 2$ X = $ $ c. Calculate the planned total cost at 20,000 units. $ 0 ホ1c
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