None Richetti produces stereo speakers. The selling price per pair of speakers is $1,800. There is nobeginning inventory.Costs involved in production are:Direct materialDirect labor$161183Variable manufacturing overhead107Total variable manufacturing costs per unit$451Fixed manufacturing overhead per year$594,000In addition, the company has fixed selling and administrative costs:Fixed selling costs per year$200,500Fixed administrative costs per year$102,400During the year, Richetti produces 1,500 pairs of speakers and sells 1,200 pairs.What is the value of ending inventory using variable costing?

Step 1: Define Variable CostingIn business and finance, variable costing is an inventory valuation…

Answered: Richetti produces stereo speakers. The…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 4CMA: Bethany Company has just completed the first month of producing a new product but has not yet...

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Roper Furniture manufactures office furniture and tracks cost data across their process. The following are some of the costs that they incur. Classify these costs as fixed or variable costs, and as product costs or period costs. Wood used to produce desks ($125,00 per desk) Production labor used to produce desks ($15 per hour) Production supervisor salary ($45,000 per year) Depreciation on factory equipment ($60,000 per year) Selling and administrative expenses ($45,000 per year) Rent on corporate office ($44,000 per year) Nails, glue, and other materials required to produce desks (varies per desk) Utilities expenses for production facility Sales staff commission (5% of gross sales)
Last year, Orsen Company produced 25,000 juicers and sold 26,500 juicers for 60 each. The actual variable unit cost is as follows: Fixed overhead was 320,000. Fixed selling expenses consisted of advertising copayments totaling 110,000. Fixed administrative expenses were 236,000. There were no beginning and ending work-in-process inventories. Beginning finished goods inventory was 148,000 for 4,000 juicers. The value of ending inventory reported on the financial statements was a. 55,500 b. 92,500 c. 66,500 d. 39,900
Last year, Orsen Company produced 25,000 juicers and sold 26,500 juicers for 60 each. The actual variable unit cost is as follows: Fixed overhead was 320,000. Fixed selling expenses consisted of advertising copayments totaling 110,000. Fixed administrative expenses were 236,000. There were no beginning and ending work-in-process inventories. Beginning finished goods inventory was 148,000 for 4,000 juicers. The value of ending inventory reported on the financial statements was Refer to the information in 2.24. The gross margin percentage for last year was a. 12.57% b. 55.67% c. 28.95% d. 38.33%
The following product costs are available for Stellis Company on the production of erasers: direct materials, $22,000; direct labor, $35,000; manufacturing overhead, $17,500; selling expenses, $17,600; and administrative expenses; $13,400. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 13,750 equivalent units are produced, what is the equivalent material cost per unit? If 17,500 equivalent units are produced, what is the equivalent conversion cost per unit?
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Bethany Company has just completed the first month of producing a new product but has not yet shipped any of this product. The product incurred variable manufacturing costs of 5,000,000, fixed manufacturing costs of 2,000,000, variable marketing costs of 1,000,000, and fixed marketing costs of 3,000,000. Under the variable costing concept, the inventory value of the new product would be: a. 5,000,000. b. 6,000,000. c. 8,000,000. d. 11,000,000.
SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = 543,000 + 1.34X, where X equals number of smokers. Last year, SmokeCity produced 20,000 smokers. Actual overhead costs for the year were as expected. Required: 1. What is the driver for the overhead activity? 2. What is the total overhead cost incurred by SmokeCity last year? 3. What is the total fixed overhead cost incurred by SmokeCity last year? 4. What is the total variable overhead cost incurred by SmokeCity last year? 5. What is the overhead cost per unit produced? 6. What is the fixed overhead cost per unit? 7. What is the variable overhead cost per unit? 8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 19,500 units and (b) 21,600 units. (Round your answers to the nearest cent.) Explain this outcome.
Steering Manufacturing produces snow shovels. The selling price per snow shovel is $29.00. There is no beginning inventory. Costs involved in production are: Direct material $5.00 Direct labor 3.00 Variable manufacturing overhead 2.00 Total variable manufacturing costs per unit $10.00 Fixed manufacturing overhead per year $223,100 In addition, the company has fixed selling and administrative costs of $155,200 per year. During the year, Steering produces 48,500 snow shovels and sells 43,490 snow shovels What is the value of ending inventory using full costing?
Ovation Company has a single product called a Bit. The company normally produces and sells 64,800 Bits each year at a selling price of $47 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $10.50 7.50 3.60 4.80 ($311,040 total) 6.60 2.70 ($174,960 total) $35.70 A number of questions relating to the production and sale of Bits follow. Each question is independent. Required. 1. Assume that Ovation Company has sufficient capacity to produce 97,200 Bits each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 25% above the current 64,800 units each year if it were willing to increase the fixed selling expenses by $105,000. a. Calculate the incremental net operating income. Incremental operating income $ 199,560 b. Would the increased fixed selling…
OutsourcingTuff Tach produces pickup truck bumpers that are sold on a wholesale basis to new car retailers. The average bumper sales price is $170. Normal annual sales volume is 300,000 units, which is the company’s maximum production capacity. At this capacity, the company’s per-unit costs are as follows: Direct material $53.00 (including mounting hardware @ $15 per unit) Direct labor 17.00 Overhead (2/3 is fixed) 45.00 Total $115.00 A key component in producing bumpers is the mounting hardware used to attach the bumpers to the vehicles. Birmingham Mechanical has offered to sell Tuff Tach as many mounting units as the company needs for $20 per unit. If Tuff Tach accepts the offer, the released facilities currently used to produce mounting hardware could be used to produce an additional 4,800 bumpers. What alternative is more desirable and by what amount? (Assume that the company is currently operating at its capacity of 300,000 units.)Note: Do not use a negative…
Andretti Company has a single product called a Dak. The company normally produces and sells 88,000 Daks each year at a selling price of $56 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses $ 7.50 11.00 2.10 5.00 ($440,000 total). 3.70 3.00 ($264,000 total) Total cost per unit $ 32.30
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