Acct break-even sales under present and proposed conditions?
Good Earth Garden Tools Inc. operating at full capacity, sold 292,000 units at a price of $45 per unit during 2003. Its income statement for 2003 is as follows:
Sales
$13,140,0...
Cost of goods sold
8,000,000
Gross profit
.. $5,140,000
Operating expenses:
Selling expenses
.. $1,500,000
Administrative expenses
... 2,000,000
Total operating expenses
... 3,500,000
Income from operations $1,640,000
The division of costs between fixed and variable is as follows:
Fixed Variable
Cost of Sales 25% 75%
Selling expenses 40% 60%
Administrative expenses 80% 20%
Management is considering a plant expansion program that will permit an increase of $2,250,000 in yearly sales. The expansion will increase fixed costs by $600,000 but will not affect the relationship between sales and variable costs.
Instruction:
1. Determine for 2003 the total fixed cost and the total variable cost.
2. Determine for 2003 (a) the unit variable cost and (b) the unit contribution margin.
3. Compute the break-even sales (units) for 2003
4. Compute the break-even sales (units) under the proposed program
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $1,640,000 of income from operations that was earned in 2003.
6. Determine the maximum income from operations possible with the expanded plant.
7. If the proposal is accepted and sales remain at the 2003 level, what will the income or loss from operations be for 2004?
8. Based on the data given, would you recommend accepting the proposal? Explain.
Acct. Cost of production and journal entries- process cost systems?
Ventura metal works companys casts blades for turbine engines. Within the casting dept. alloy is first t melted in a crucible, then poured into molds to producee the castings. On march 1, there were 400lbs of alloy in process, which were 65% complete as to vonversion, the work in process balance for these 400 lbs was $20,000. During marchm the casting dept was charged $420,000 for 12,000 lbs of alloy n $140,000 for direct labor. Factory overhead is applied to the dept at a rate of 90% of direct labor. The dept transferred out 11,500lbs of finished castings to the machining dept. the march 31 inventory in process was 36% complete as to conversion.prepare march journal entries for casting dept:
a.) materials charged to production
b.) conversion costs charged to production
c.) completed production transferred to the machine dept.
Acct. Equivalent units of production- process cost systems?
the kellogg company manufactures cold cereal products, such as frosted flakes and special k. assume that the invenroty in process for feb. 1 for the packing dept. include 1200 pounds of cereal in the packing machine hopper. In addition, there were 800 empty 24-oz boxes held in the package carousel of the packing machine. During feb, 15000 boxes of 24-oz cereals were packed. Conversion costs are incurred when a box is filled with cereal. On feb. 28 the packing machine hopper held 300 pounds of cereal, and the package carousel held 200 empty 24-oz boxes. Assume that once a box is filled with cereal, it is immediately transferred to the finished goods warehouse.
determine the equivalent units of production for cereal, boxes, and vonversion costs for February. An equivalent unit is defines as "pounds" for cereal and "24-oz. boxes" for boxes and conversion costs.
.
.
equivalent units of production= the number of units that could have been completed within a given acct period.
