Armstrong helmet organization essay

Category: Financing,
Published: 12.12.2019 | Words: 793 | Views: 311
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Armstrong Helmet Business manufactures a distinctive model of bicycle helmet. The corporation began functions December one particular, 2013. It is accountant quit the second week of procedures, and the firm is trying to find a replacement. The corporation has chosen to test the ability and ability of all prospects interviewing intended for the position. Every candidate will probably be provided with the data below and after that asked to arrange a series of studies, schedules, finances, and advice based on that information. The information provided with each candidate can be as follows.

Cost Things and Accounts Balances money

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Management salaries 12-15, 500

Advertising for helmets 10, 000

Cash, December 1 0

Downgrading ” Stock Building one particular, 500

Depreciation ” Office Tools 800

Insurance ” Factory Building 1, five-hundred

Assorted expenses ” Factory one particular, 000

Office supplies expense three hundred

Specialist Fees 500

Real estate Taxes ” Factory Building 400

Raw materials 70, 500

Rent on creation equipment 6, 000

Research & development 15, 000

Sales commission payment 40, 500

Power Costs ” Factory nine hundred

Pay ” Manufacturing plant 70, 1000

Operate process ” Dec 1 0

Work in process ” Dec 31 zero

Unprocessed trash inventory, December 1 zero

Unprocessed trash inventory, December 31 0

Recycleables purchases seventy, 000

Finished items inventory, December 1 0

Production and Product sales Data

Number of helmets produced 12, 000

Expected revenue in models for January

($40 unit sales price)

8, 1000

Expected sales in units for January 12, 000

Desired finishing inventory 20% of next month’s revenue

Immediate materials per finished device 1 kilogram

Immediate materials cost $7 every kilogram

Direct time hours per unit.


Direct labor hourly rate $20Cash Flow Info

Funds collections via customers: 74% in month of sales and 25% the following month. Cash payments to suppliers: 75% in month of purchase and 25% the subsequent month. Income tax rate: 45%

Expense of proposed creation equipment: $720, 000

Manufacturing cost to do business and selling and administrative costs happen to be paid because incurred. Ideal ending money balance: $30, 000


Using the data presented, the actual following inside your respective teams. 1) Sort out the costs while either merchandise costs or perhaps period costs using a five-column table as shown listed below. Enter the dollar amount of each price in the appropriate column and total every single classification.

Merchandise Costs

Item Immediate





Over head

Period Costs

2) Sort the costs because either variable or fixed costs. Presume there are simply no mixed costs. Enter the dollar amount of each cost in the ideal column and total every classification. Utilize the format demonstrated below. Utilize the format demonstrated below. Assume that ‘Utility Costs ” Factory’ are a fixed cost.

Item Variable Costs Fixed Costs Total Costs

3) Prepare a timetable of expense of goods manufactured for the month of

Dec, 2013. 4) Determine the expense of producing a head protection.

5) Identify the type of cost accounting system that Armstrong Motorcycle helmet Company is probably using this time. Explain.

6) Beneath what circumstances might Armstrong use a distinct cost accounting system? 7) Compute the device variable expense for a motorcycle helmet.

8) Compute the system contribution perimeter and the contribution margin ratio. 9) Compute the break-even point in units and in sales dollars. 10) Prepare the next budgets intended for the month of Dec, 2013. a. Sales

m. Production

c. Immediate materials

d. Immediate labour

e. Selling and administrative expenses

f. Cashg. Budgeted income statement

11) Prepare a flexible plan for manufacturing costs for activity levels between 8, 1000 and 12, 000 models, in 1, 000-unit increments. QUESTION a couple of INCREMENTAL EVALUATION (20 MARKS) Navula Firm is thinking about the purchase of fresh equipment to replace the existing tools it presently has. Details of the new tools are tabulated below: Account Price $140, 000

Shipment Charges bucks 4, 1000

Installation Costs $6, 000

Expected useful life a few years

Salvage worth 0

The new equipment is faster compared to the old products, and it is more efficient in its usage of materials.

Existing tools could be stored and intended for an additional five years if the new machines are not bought and by that point the salvage value with the equipment can be zero. Nevertheless , if the new equipment is purchased now, the current machine would have to be scrapped. The current publication value from the existing equipment is $36, 000 and the company uses the straight-line depreciation approach.

Navula Provider’s accountant features accumulated this data below regarding total annual sales and expenses with and without the newest equipment.


Production & Sale End result 12 000 units Boost by 10%

Selling Price $100 $22.99

Major Profit Level 25% of sales 30% of revenue

Gross annual Selling Expenses $180, 1000 Increase by 10%

Annual Administrative Expenses hundred buck, 00