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kykrilka [37]
3 years ago
8

Orion company sells several products. information of average revenue and costs is as follows: selling price per unit $23 variabl

e costs per unit: direct material $4 direct manufacturing labor $1.70 manufacturing overhead $0.40 selling costs $2 annual fixed costs $100,000 the company sells 12,000 units at the end of the year. if direct labor and direct material costs increase by $1 each, contribution margin ________. select one:
a. increases by $24,000

b. increases by $12,000

c. decreases by $24,000

d. decreases by $12,000
Business
1 answer:
Ilia_Sergeevich [38]3 years ago
6 0
C. Decrease by $24,000. Start by multiplying the selling price by the number of units sold, or $23/unit by 12,000 units, to get $276,000, or revenue. Then find the total variable expense costs by summing each variable cost per unit, for $8.10/unit. Multiply this by 12,000 units then subtract the variable cost and the fixed cost of $100,000 from the revenue, to get $78,800, or gross income.

Next, find the new gross income by adding $2.00 to the variable cost per unit, to get $10.10/unit and multiplying by 12,000 units and subtracting this variable cost and the fixed cost from the revenue to get $54,800.

To find the contribution margin, subtract the original gross income from the new gross income to get a decrease of $24,000. 
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Answer:

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1) Calculation of the Allocated Cost of Sold Items:

a) Production Units:

Lobster tails = 3,200/100 * 58 = 1,856 units

Lobster flakes = 3,200/100 * 26 = 832 units

Total units = 2,688 units, costing $12,800

b) Material costs:

Lobster tails = 1,856/2,688 * $12,800 = $8,838

Lobster flakes = 832/2,688 * $12,800 = $3,962

c) Labor costs:

Lobster tails = 1,856/2,688 * $7,400 = $5,110

Lobster flakes = 832/2,688 * $7,400 = $2,290

d) Total Production costs (Materials & Labor):

i) Lobster tails = $8,838 + $5,110 = $13,948

per unit cost = $13,948/1,856 = $7.52

ii) Lobster flakes = $3,962 + $2,290 = $$6,252

per unit cost = $6,252/832 = $7.51

e) Cost of Sales:

Lobster tails = $7.52 x 1,722 = $12,949.44

Lobster flakes = $7.51 x 752 = $5,647.52

2) Calculation of the Allocated Cost of Ending Inventory:

a) Ending Inventory units:

Lobster tails = Production unit Minus Sales unit = 1,856 - 1,722 = 134

Lobster flakes = Production unit Minus Sales unit = 832 - 752 = 80

b) Ending Inventory costs:

Lobster tails = 134 x $7.52 = $ 1,007.68

Lobster flakes = 80 x $7.51 = $600.80

Explanation:

To calculate the costs of sales and the costs of ending inventory, the first step is to calculate the units produced.  The material and labour costs are then apportioned based on the units produced since no costs are allocated to the waste.

Then, the unit costs of tails and flakes are calculated.  These form the bases for computing the cost of items sold and the ending inventory.

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Answer:

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Under the perpetual inventory system, in addition to making the entry to record a sale, a company would
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Under the perpetual inventory system, in addition to making the entry to record a sale, a company would: a. debit Inventory and credit Cost of Goods Sold.

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There are four types of inventory: raw materials/components, work in progress (WIP), finished goods, and maintenance and repair (MRO).

Inventory valuation methods include FIFO (First In, First Out), LIFO (Last In, First Out), and WAC (Weighted Average Cost).

Inventory refers to all of the items, goods, merchandise, and materials held by a company for the purpose of reselling in the market for a profit. For instance, if a newspaper vendor uses a vehicle to deliver newspapers to customers, only the newspaper is considered inventory. The vehicle will be considered an asset.

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Answer:

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Explanation:

Material Handling = $7,700 for 10,430 parts

Assembling = $10,600 for 10,430 parts

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We need to calculate material handling and assembling cost per book shelf.

Material handling cost per part = $7,700/10,430 = 0.738

Cost for 77 parts = 0.738 X 77 =$56.826

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Cost for 77 parts = $1.0163 X 77 = $78.2551

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