Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 8, Problem 1P
To determine
Identify the production cost and periodic cost.
Expert Solution & Answer
Explanation of Solution
Production cost are those cost that incurred during the manufacturing or purchasing of the goods. Thus, the costs storage and material handling cost for raw material, Lubricant for the machinery,
Periodic cost are those cost that are not involved in the process of manufacturing or purchasing of the goods. Thus, gains or loss from the disposable of asset, depreciation of the company value and leasehold cost are tge periodic costs.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Dime-a-Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $140. The materials cost for a
synthetic diamond is $80. The fixed costs incurred each year for factory upkeep and administrative expenses are $800,000. The
machinery costs $1.12 million and is depreciated straight-line over 10 years to a salvage value of zero.
a. What is the accounting break-even level of sales in terms of number of diamonds sold?
Accounting break-even
diamonds
b. What is the NPV break-even level of sales assuming a tax rate of 35%, a 10-year project life, and a discount rate of 12%?
Note: Do not round intermediate calculations. Round your final answer to the nearest whole number.
NPV break-even level of sales
diamonds
Cost Flow Relationships
The following information is available for the first month of operations of Bahadir Company, a manufacturer of mechanical pencils:
Sales
$792,000
Gross profit
462,000
Cost of goods manufactured
396,000
Indirect labor
171,600
Factory depreciation
26,400
Materials purchased
244,200
Total manufacturing costs for the period
455,400
Materials inventory, ending
33,000
Using the above information, determine the following missing amounts:
a. Cost of goods sold
$330,000
b. Finished goods inventory at the end of the month
66,000
c. Direct materials cost
211,200
d. Direct labor cost
e. Work in process inventory at the end of the month
Wood for frames
$ 14,500
Rent for retail store
3,900
Depreciation on office equipment
580
Assembly worker wages
2,450
CEO's salary
3,950
Glue and nails
650
Online sales commissions
1,900
Glass for frames
5,800
Depreciation on factory equipment 1,050
Factory utilities
Stain for frames
600
650
Required:
1. Determine the cost of direct material.
2. Determine the cost of direct labor.
3. Determine the cost of manufacturing overhead.
4. Determine the total manufacturing cost.
5. Determine the total period cost.
6. Determine the total variable cost.
7. Determine the total fixed cost.
8. Determine the total prime cost.
9. Determine the total conversion cost.
Chapter 8 Solutions
Contemporary Engineering Economics (6th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Plan A (Depreciation 3422 ; total anual cost 23922) Plan B (Depreciation 4277 ; total anual cost 22857) Plan C (Depreciation 7071; total anual cost 24, 891) Plan D (Depreciation 7413; total anual cost 22533) All I need is a solution for the question. Our subject is engineering economics and the lesson is economic study methodarrow_forwardackboard e x CO Remaining Time: 1 hour, 51 minutes, 17 sec = Question Completion Status: QUESTION 13 indicate whether the inputs below are variable (V) or fixed (F) in the short run. Output Input Meat hamburgers. in Fire insurance in dry cleaning. Tires in automobiles. Property tax in textile production. Gasoline in trucking services. Depreciation aircraft production. in For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial 14px "lick Save and Submit to save and submit. Click Save All Answers to save all answers. !!!arrow_forwardIdentify whether each of the following costs of Granite Construction, Inc., would be classified as direct labor, direct materials, manufacturing overhead, or as selling, general, and administrative costs. Hourly wages paid to backhoe operators. Crankcase oil used in construction machinery. PVC pipes used in a municipal sewer construction project. Depreciation of bulldozers and other construction equipment. Advertising costs. Steel beams used in the construction of an office building. Salaries paid to foremen responsible for supervising multiple construction projects. Legal costs. Gasoline used in trucks that haul construction equipment to various job sites. Hourly wages paid to masons and carpenters. Costs for accounting and tax services. The CEO’s salary. Rivets, screws, nuts, and bolts.arrow_forward
- help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all workingarrow_forwardThe CFO of Axis Manufacturing is evaluating the introduction of a new product. The costs of a recently completed marketing study for the new product and the possible increase in the sales of a related product made by Axis are best described (respectively) as follows: a. Opportunity cost b. Depreciation cost c. Sunk costarrow_forwardQuestion: The total annual fixed costs of PAKEL Incorporated Company that manufactures and sells goods X are 9000 TL, the unit sales price is 6.25 TL, and the unit exchange cost is 3.25 TL. In case the enterprise works at full capacity, 6000 products are produced annually. With this information;a) The amount of production at the point of transition to profit,b) Calculate the sales income and Capacity utilization degree at this point.c) Show the transition point to Profit in a graph. (TL=Turkish Lira) I'd be happy if you solve a,b and c sections. Have a nice day!arrow_forward
- E. A company is evaluating the profitability of a new product. The company must rent a space that will cost $50,000 a month, $25,000 a month in equipment rental, and monthly overhead cost of $20,000. It also costs $1000 in labor and $750 in materials to produce each unit. The company thinks the product will sell for $1975 each. How many units will the company need to produce and sell to break even? How many units will the company need to sell if it wants to earn profit of $10,000? Marlrot nooarrow_forwardPlease provide solution of the given questionarrow_forwardLewis contracted with the government to dredge 2 million cubic yards of silt from a ship channel. After excavating 1.5 million cubic yards, he quit the job. Should he be paid anything for partial performance? Explain.arrow_forward
- Fixed cost=20,000$ Variable cost per unit of production=500$ Number of items sold= 1000 price=800$ a) What is contribution margin and contribution margin ratio and how do you interpret it? b) What is BEP quantity and $ sold? Explain what do the numbers mean?arrow_forwardWhich of the following is an explicit cost? the depreciation of a computer the cost of hiring a manager the cost of the owner's resources the owner's forgone opportunity of running the businessarrow_forwardFind the Break Even Quantity of production for the following information. Given: Investment = $300,000 Salvage = $20,000 interest = 15% N (period) = 7 Annual Expenses = $15,000 Gross Margin per unit = $75 Variable cost per unit = $15 Depreciation is Straight Line USE MICROSOFT EXCEL FORMAT SHOW FORMULAS USEDarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning