Jayson Company has the following projected costs for manufacturing and selling and administrative expenses: Prepare a schedule of cash payments for Jayson for January, February, and March. Determine the balances in Prepaid Property Taxes, Accounts Payable, and Utilities Payable as of March 31. (If an input field is not used in the table leave the input field empty; do not enter a zero.) March January February Direct materials purchases $3,200 $3,700 $4,200 Direct labor costs 3,400 3,500 3,600 Depreciation on plant 700 700 700 Utilities for plant 450 450 450 Property taxes on plant 250 250 250 Depreciation on office 200 200 200 Utilities for office 550 550 550 Property taxes on office 180 180 180 Office salaries 6,500 6,500 6,500 All costs are paid in month incurred except: direct materials, which are paid in the month following the purchase; utilities, which are paid in the month after incurred; and property taxes, which are prepaid for the year on January 2. The Accounts Payable and Utilities Payable accounts have a zero balance on January 1. January February
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
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January
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February
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Direct materials purchases
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$3,200
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$3,700
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$4,200
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Direct labor costs
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3,400
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3,500
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3,600
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700
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700
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700
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Utilities for plant
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450
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450
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450
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Property taxes on plant
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250
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250
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250
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Depreciation on office
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200
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200
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200
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Utilities for office
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550
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550
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550
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Property taxes on office
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180
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180
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180
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Office salaries
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6,500
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6,500
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6,500
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| All costs are paid in month incurred except: direct materials, which are paid in the month following the purchase; utilities, which are paid in the month after incurred; and property taxes, which are prepaid for the year on January 2. The Accounts Payable and Utilities Payable accounts have a zero balance on January 1. |
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January
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February
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March
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Total
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Cash Payments
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Direct Materials:
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Accounts Payable balance, January 1
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January—Direct material purchases paid in February
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February—Direct material purchases paid in March
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Total payments for direct materials
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Direct Labor:
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Total payments for direct labor
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3400
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3500
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3600
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10,500
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Manufacturing
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Utilities for plant
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Property taxes on plant
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Total payments for manufacturing overhead
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Selling and Administrative Expenses:
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Utilities for office
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Property taxes on office
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Office salaries
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Total payments for Selling and Admin. expenses
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Total cash payments
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Acccount balances, March 31:
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Prepaid Property Taxes
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Accounts Payable
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Utilities Payable
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