PROBLEM SOLVING1. ABC Mfg. Co. buy and sells its lone product on which the following data are given:Sales volume per annumUnit selling priceProduction cost per unit:Direct materialsDirect laborVariable factory overheadFixed factory overhead (P25,000/20,000 units)Variable operating expense per unitFixed operating expenses (P10,000/20,000 units)P1.000.50a. Should the order be accepted? Why?25,000 unitsP10.00P3.502.502.001.25A special order is received for P2,000 units from a remote market at P7.90, FOBdestination. Packing and shipping costs are estimated at P1,200.Decision making: (show computation)b. What is the BEP price or sales cut-off price for the special order?

Explanation of Concept:- Cost : - is the expenses which have been incurred for production,…

Sales volume per annum Unit selling price Production cost per unit: Direct materials Direct labor Variable factory overhead Fixed factory overhead (P25,000/20,000 units) Variable operating expense per unit P1.00 25,000 un P10.00 P3.50 2.50 2.00 1.25

Sales volume per annum Unit selling price Production cost per unit: Direct materials Direct labor Variable factory overhead Fixed factory overhead (P25,000/20,000 units) Variable operating expense per unit P1.00 25,000 un P10.00 P3.50 2.50 2.00 1.25

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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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

PROBLEM SOLVING
1. ABC Mfg. Co. buy and sells its lone product on which the following data are given:
Sales volume per annum
Unit selling price
Production cost per unit:
Direct materials
Direct labor
Variable factory overhead
Fixed factory overhead (P25,000/20,000 units)
Variable operating expense per unit
Fixed operating expenses (P10,000/20,000 units)
P1.00
0.50
a. Should the order be accepted? Why?
25,000 units
P10.00
P3.50
2.50
2.00
1.25
A special order is received for P2,000 units from a remote market at P7.90, FOB
destination. Packing and shipping costs are estimated at P1,200.
Decision making: (show computation)
b. What is the BEP price or sales cut-off price for the special order?

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1 of 12 Assignment: 1 Case: 1 The Cost Sheet of a product is given as under: Direct Materials Direct Wages Factory Overheads: Fixed Variable Administrative Expenses: Selling and Distribution Overheads: Fixed Variable Total OMR 6.00 3.00 0.50 0.50 0.75 0.25 0.50 11.50 The selling price per unit is OMR 13. The above figures are for an output of 85,000 units, the capacity of the firm is 100,000 units. A foreign customer is desirous of buying 15,000 units at a price of OMR 10.50 per unit. (A) Advise the manufacturer, whether the order should be accepted. (B) What will be your advice, if the orders were from a local merchant, at the same price? (C) What would be the profits, if the local selling price falls to OMR 11 from OMR 13, after acceptance of the order from a local merchant?
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6 Dake Corporation's relevant range of activity is 2.000 units to 6.000 units. When it produces and sells 4,000 unts, its average costs per un are as follows Average Cost per Unit $ 6.55 $ 3.50 $ 1.40 $ 2.60 5.0.70 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense $ 0.40 Fixed administrative expense Sales commissions $ 1.50 Variable administrative expense $ 0.45 For financial reporting purposes, the total amount of product costs incurred to make 4.000 units is closest to Multiple Choice $56.200
vaion Company manuell ve prvous me ivivning mvmvn perwina w eULT VIDE Lumpanya m www youro vi operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, It produced 40,000 units and sold 50,000 units. The selling price of the company's product is $57 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an Income statement for Year 1 and Year 2. 2. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 3. Reconcile the difference between variable costing and absorption costing net operating Income In Year 1.…