cost accounting 2

Topics: Variable cost, Costs, Fixed cost Pages: 3 (1819 words) Published: May 11, 2015
1/ Variable Costs:The variable cost will be 40% higher [ an increase of 21,000 - 15,000=6,000 units] Direct Material used1,060,000Variable Costs: Direct Labor1,904,000Direct material used [ 1,060,000 *1.4]1,484,000Unit costs [ 6,335,600 / 21,000] =$ 301.7 Indirect Materials and supplies247,000Direct Labor [ 1,904,000 * 1.4]2,665,600 Variable Cost/ Unit = 228.27 at both 15k & 21k units Power to run plant eqip213,000 Indirect Materials and supplies [247,000 * 1.4]345,800 Total Variable Cost @ 15k units = Fixed Cost:Power to run plant eqip [ 213,000 *1.4]298,200 1,060,000+1,904,000 + 247,000+ 213,000 = 3,424,000 Supervisory salaries926,000Total Variable Cost4,793,600 Unit Variable Cost = 3,424,000/15k units or Plant Utilities 281,000Fixed Costs:4,793,600/21k units = $228.27/unit Depreciation on P&P(S-L, time basic)141,000Supervisory salaries926,000 Property tax on building194,000Plant Utilities281,000 Required: Unit Variable Cost and total fixed costsDepreciation on P&P(S-L, time basic)141,000 are expected to remain unchanged next month. Property tax on building194,000 Calculate unit cost and total cost if 21,000 units Total Fixed Costs1,542,000 are produced next month.Total Cost for 21,000 units 6,335,600

2/ The Dollar Store’s cost structure is dominated by variable costs with a contribution margin ratio of 0.45 and fixed costs of $119,700. Every cost structure of a competitor, One-Mart, is dominated by fixed costs .  with a higher contribution margin ratio of 0.80 and fixed costs of $319,200. . Both companies have sales of $570,000 for the month.

Compare the two companies’ cost structures...
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