Synder Corp., a lamp manufacturer, provides the following information for the year ended December 2008: Inventories Beginning Ending Materials $50,000 $25,000 Work in process 100,000 65,000 Finished goods 40,000 43,000 Other information: Depreciation: Plant Building Repairs & maintenance-plant $5,000 & Equipment $15,000 Indirect labor 30,000 Materials purchases 155,000 Direct labor 120,000 Insurance on plant 20,000 Administrative expenses 52,000 Sales salaries expense 48,000 sales revenue 550,700 Requirements: a) Prepare a schedule of cost of goods manufactured for the year ended December 31, 2008 b) Prepare an income statement for Synder Corp. for the year ended December 31, 2008 c) What is the unit product cost if Synder manufactured 3,000 lamps for the year?
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.
- Synder Corp., a lamp manufacturer, provides the following information for the year ended December 2008:
Inventories Beginning Ending
Materials $50,000 $25,000
Work in process 100,000 65,000
Finished goods 40,000 43,000
Other information:
& Equipment $15,000 Indirect labor 30,000
Materials purchases 155,000 Direct labor 120,000
Insurance on plant 20,000 Administrative expenses 52,000
Sales salaries expense 48,000 sales revenue 550,700
Requirements:
a) Prepare a schedule of cost of goods manufactured for the year ended December 31, 2008
b) Prepare an income statement for Synder Corp. for the year ended December 31, 2008
c) What is the unit product cost if Synder manufactured 3,000 lamps for the year?
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