Essay of my life

Topics: Variable cost, Costs, Management accounting Pages: 3 (609 words) Published: November 10, 2013
Brian Alvarez
Pat Turner
Cost Accounting
10/10/2013

Case Study 1
3-49)
1.
1. Normal Production:
Peoria Contribution Margin per unit: $64 ($150 - $72 - $14)
Moline Contribution Margin per unit: $48 ($150 - $88 - $14)
Overtime Production:
Peoria Contribution Margin per unit: $61 ($150 - $72 - $3 - $14) Moline Contribution Margin per unit: $40 ($150 - $88 - $8 - $14) 2. Peoria Fixed Cost: $4,704,000 ($30 + $19 x 96,000 (400 x 240)) Moline Fixed Cost: $2,265,600 ($15 + $14.50 x 76,800 (320 x 240)) 3. Peoria Breakeven Point: 73,500 units ($4,704,000 (FC) / $64 (CM)) Moline Breakeven Point: 47,200 units ($2,265,600 (FC) / $48 (CM)) 2.

1. Peoria Normal Production: 96,000 units (400 x 240)
Moline Normal Production: 76,800 units (320 x 240)
Total Normal Production: 172,800 units (96,000 + 76,800)
Manager’s plan is short by 19,200 units (192,000 - 172,800) if both plants operate at their normal production maximum. Moline would be required to work overtime production of 300 days a year to arrive at the desired units. 2. Normal Production:

Peoria Contribution Margin: $6,144,000 ($150 - $72 - $14 x 96,000) Moline Contribution Margin: $3,686,400 ($150 - $88 - $14 x 76,800) Overtime Production:
Moline Additional Contribution Margin: $768,000 ($150 - $88 -$8 - $14 x 19,200) 3. Peoria Operating Income: $1,440,000 ($6,144,000 (CM) - $4,704,000 (FC)) Moline Operating Income: $1,622,400 ($4,454,400 (CM) - $2,832,000 (FC)) 3.

1. Alternative 1: Moline Overtime Production
Total Operating Income $3,062,400 ($1,440,000 + $1,622,400)
Alternative 2: Peoria Overtime Production
Peoria Overtime Units: 120,000 units (400 x 300)
Moline Units: 72,000 units (320 x 225)
Peoria Contribution Margin: $6,144,000 ($150 - $72 - $14 x 96,000) Moline Contribution Margin: $3,456,000 ($150 - $88 - $14 x 72,000) Overtime Production:
Peoria Additional Contribution Margin: $1,464,000 ($150 - $72 - $3 - $14 x 24,000) Peoria Operating Income: $2,904,000 ($7,608,000 (CM) - $4,704,000...
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