Wyandotte Company provided the following information for the last calendar year: Beginning inventory: Direct materials $31,600 Work in process 44,000 Ending inventory: Direct materials $20,000 Work in process 24,000 During the year, direct materials purchases amounted to $255,200, direct labor cost was $171,600, and overhead cost was $316,800. There were 40,000 units produced. Required: 1. Calculate the total cost of direct materials used in production. 2. Calculate the cost of goods manufactured. Calculate the unit manufacturing cost. If required, round your answer to the nearest cent. per unit 3. Of the unit manufacturing cost calculated in Requirement 2, $6.67 is direct materials and $7.92 is overhead. If required, round intermediate calculations and your final answers to the nearest cent. What is the prime cost per unit? What is the conversion cost per unit
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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