Required: What are the advantages and disadvantages of the scattergram method as compared to the high-low method?
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Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business earned Operating Income of $600,000 in 2020. The following cost data has been prepared for the year ended December 31, 2020.
| Selling price per unit……………………………………… | $50.00 |
| Production Costs: | |
| Direct Materials …………………………………. | $10.00 |
| Direct Labour ……………………………………. | $8.00 |
| Variable Manufacturing Overhead ……………. | $7.00 |
| Fixed Manufacturing Overhead………….................. | $450,000 |
| Fixed Selling & Administrative Expenses……………… | $300,000 |
| Variable selling expense per unit ………………………. | $10.00 |
Required: What are the advantages and disadvantages of the scattergram method as compared to the high-low method?
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- Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects to sell 28,700 units at 32 each. Kallings controller provided the following information for the coming year: Required: 1. Calculate the cost of one unit of product under absorption costing. 2. Calculate the cost of one unit of product under variable costing. 3. Calculate operating income under absorption costing for next year. 4. Calculate operating income under variable costing for next year.A company produces two products. E and F in batches of 100 units. The production and cost data are: The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the differential profit from producing product E instead of product F for the year? A. $216,000 B. $204,000 C. $12,000 D. $54,000Starling Co. manufactures one product with a selling price of 18 and variable cost of 12. Starlings total annual fixed costs are 38,400. If operating income last year was 28,800, what was the number of units Starling sold? a. 4,800 b. 6,400 c. 5,600 d. 11,200
- Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business earned Operating Income of $600,000 in 2020. The following cost data has been prepared for the year ended December 31, 2020. Selling price per unit... $50.00 Production Costs: Direct Materials ... $10.00 ........ Direct Labour . $8.00 ........ Variable Manufacturing Overhead. $7.00 Fixed Manufacturing Overhead.... Fixed Selling & Administrative Expenses... Variable selling expense per unit ... $450,000 $300,000 ...... ..... $10.00 Required: a) Using the equation method, calculate the normal capacity of the business. b) Calculate: i) the variable production cost per unit ii) the total production cost per unit iii) The total variable cost per unit iv) Total Fixed Costs c) Calculate Greek's break-even point in units and in sales dollars. d) Assuming sales equal to the…Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business earned Operating Income of $600,000 in 2020. The following cost data has been prepared for the year ended December 31, 2020. Selling price per unit.. $50.00 Production Costs: Direct Materials $10.00 Direct Labour $8.00 Variable Manufacturing Overhead $7.00 Fixed Manufacturing Overhead.... $450,000 .. .. Fixed Selling & Administrative Expenses.... $300,000 Variable selling expense per unit $10.00 d) Assuming sales equal to the normal capacity calculated in a) above, prepare a contribution margin income statement for the year ended December 31, 2020, detailing the components of total variable costs and total fixed costs, and clearly showing contribution and net income. e) The recession in the economy in 2021 is expected to result in a reduction of the number of units sold.…Greek Manufacturing Company produces and sells a line of product that are sold usually company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business earned Operating Income of $600,000 in 2020. The following cost data has been prepared for the year year round. The ended December 31, 2020. Selling price per unit. $50.00 Production Costs: Direct Materials $10.00 Direct Labour $8.00 Variable Manufacturing Overhead $7.00 Fixed Manufacturing Overhead.. . $450,000 Fixed Selling & Administrative Expenses... $300,000 Variable selling expense per unit $10.00 g) Greek's management team is concerned about the selling expenses associated with the product and wants to reduce the variable selling expense per unit by 30%, which will see a simultaneous reduction in the total fixed selling expenses by $30,000. If they are able to accomplish this feat, it is expected that sales volume for the year will fall by 16%% below normal capacity. What must the…
- Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business earned Operating Income of $600,000 in 2020. The following cost data has been prepared for the year ended December 31, 2020. $50.00 Selling price per unit.. Production Costs: Direct Materials $10.00 Direct Labour $8.00 Variable Manufacturing Overhead Fixed Manufacturing Overhead.. $7.00 $450,000 $300,000 Fixed Selling & Administrative Expenses.. Variable selling expense per unit . $10.00 Required:Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business earned Operating Income of $600,000 in 2020. The following cost data has been prepared for the year ended December 31, 2020. Selling price per unit. Production Costs: $50.00 Direct Materials $10.00 Direct Labour $8.00 Variable Manufacturing Overhead Fixed Manufacturing Overhead. Fixed Selling & Administrative Expenses.. Variable selling expense per unit $7.00 $450,000 $300,000 $10.00 Required: a) Using the equation method, calculate the normal capacity of the business. b) Calculate: i) the variable production cost per unit ii) the total production cost per unit i) The total variable cost per unit iv) Total Fixed Costs c) Calculate Greek's break-even point in units and in sales dollars. d) Assuming sales equal to the normal capacity calculated in a) above, prepare a…Blue Incorporated manufactures a product with the following cost structure: Price per unit Selling price R12 Production costs: Material R2 Labour R2 Variable overheads R1 Fixed overheads R5 000 Over a three-year period the production and sales of the product are as follows: Y1 Y2 Y3 Production 2 000 1 000 2 000 Sales 1 000 2 000 2 000 Required: 1.1 You are required to produce the Statement of Financial Performance over the three-year period under the absorption costing. 1.2 Evaluate the application of the absorption costing method in profit reporting.
- A company produces three types of products A, B, and C, and is considering its production plan for the next month of its operations. The estimated cost and sales data are provided below. A В 10 20 25 Direct material cost per unit (Rs. 5/= per Kg) Direct labour cost per unit (Re.1/= per hour) Selling price per unit (Rs.) 4 2 20 31 40 Monthly demand in units 200 500 450 Using the above information, determine the company's product plan under each of the following situations. (a) The raw materials supply is limited to 2,500 kg in next month. (b) The availability of direct labour hours is limited to 2350 hours in next month.Gates Manufacturing operations for 2021 are as follows: $Per unit: Sales price 100 Direct material cost 36 Direct wages 8 Variable production overhead 6Per month: Fixed production overhead 198 000 Fixed selling expenses 24 000 Fixed administration expenses 52 000Variable selling expenses is 10% of sales value.Normal capacity was 11 000 units per month. January February Units UnitsSales 20 000 24 000Production 24 000 20 000 Using the two methods:A. Compute the unit production cost B. Determine the value of the closing inventoryDan Wood Ltd commenced business on 1 January 2020 making one product only, which sells for K160 per item. The production and sales data for each of the first three months of 2020 was as follows: January February March Sales in units 2,400 |2,500 3,800 Production in units 2,700 |2,400 4,000 Actual information for each month was as follows: Direct materials 3 kilograms at K5 per kilogram 4 hours at K10 per hour Variable production overheads 150% of direct labour 10% of sales value Direct labour Sales commission Fixed production overheads Fixed selling overheads K10,000 K35,000 There was no opening inventory at the start of January. Fixed production overheads are budgeted at K120,000 per annum and are absorbed into products based on a budgeted normal output of 30,000 units per annum Required: (a) Prepare a profit statement for each of the three months using absorption costing principles (b) Prepare a profit statement for each of the three months using marginal costing principles. (c)…
