1. Bellfont Company produces door stoppers. August production costs are below: D
ID: 2767106 • Letter: 1
Question
1. Bellfont Company produces door stoppers. August production costs are below: Door Stoppers produced 74,000 Direct material (variable) $20,000 Direct labor (variable) 40,000 Supplies (variable) 20,000 Supervision (fixed) 25,000 Depreciation (fixed) 21,500 Other (fixed) 4,400 In September, Bellfont expects to produce 100,000 door stoppers. Assuming no structural changes, what is Bellfont'ss production cost per door stopper for September.
2. aron's chairs is in the process of preparing a production cost budget for August. Actual costs in July for 120 chairs were:
3,200
Materials and labor are the only variable costs. If production and sales are budgeted to increase to 100 chairs in August, how much is the expected total variable cost on the August budget?
3. Carry-ALL plans to sell 1,300 carriers next year and has budgeted sales of $46,000 and profits of $22,000. Variable costs are projected to be $20 per unit. Michael Co. offers to pay $21,600 to buy 690 units from Carry-ALL. Total fixed costs are $7,000 per year. This offer does not affect Carry-ALL's other planned operations. The incremental revenues for this situation are
Materials cost $4,720 Labor cost 2,590 Rent 1,500 Depreciation 2,500 Other fixed costs3,200
Explanation / Answer
Answer 1 Total production of Door stoppers for August = 74000 Production cost data for August Total Per Unit Variable cost Direct material $20,000.00 $0.27 Direct Labour $40,000.00 $0.54 Supplies $20,000.00 $0.27 Fixed cost Supervision $25,000.00 Depreciation $21,500.00 Other $4,400.00 Total Cost $1,30,900.00 Production cost per door stopper for September Expected production = 100000 door stoppers Per Unit Total Variable cost Direct material $0.27 $27,027.03 Direct Labour $0.54 $54,054.05 Supplies $0.27 $27,027.03 Fixed cost Supervision $25,000.00 Depreciation $21,500.00 Other $4,400.00 Total Cost $1,59,008.11 Expected production 1,00,000 Production cost per door stopper $1.59 Answer 2 Actual variable cost in July for 120 chairs Total Per unit Material cost $4,720.00 $39.33 Labor cost $2,590.00 $21.58 Expected total variable cost in August Budget for 220 chairs Per unit Total Material cost $39.33 $8,653.33 Labor cost $21.58 $4,748.33 Total Variable cost in August $13,401.67 Answer 3 Calculation of Incremental revenues Situation 1 Situation 2 Incremental Total Units Per unit Total Total Units Per unit Total sale to Michael co. 0 $0.00 $0.00 690 $31.30 $21,600.00 sale to others 1300 $35.38 $46,000.00 1300 $35.38 $46,000.00 Total Sale 1300 $46,000.00 1990 $67,600.00 $21,600.00 Less : Variable cost 20 $26,000.00 20 $39,800.00 $13,800.00 Total Net revenue $20,000.00 $27,800.00 $7,800.00 Fixed cost doesn't affect as it remains constant in both situation Incremental revenue = $7800
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