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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
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.
35
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
Required:
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
Materials
Immediate
Work
Developing
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.
DETAILS OUTDATED EQUIPMENT NEW 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
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