Cost and Overhead

fsdfsdsdfSuppose sales in 2001 equal 26,000 units, as budgeted in January, and that actual manufacturing expenses turn out to equal budgeted expenses. Prepare an income statement for the year (just include the manufacturing expenses) that will help senior management and the board understand the economics of cartridge production in 2001.
5. Work through the Youngstown Products numerical example (below).
Youngstown Products, a supplier to the automotive industry, had seen its operating margins shrink below 20% as its OEM customers put continued pressure on pricing.
Youngstown produced four products in its plant and decided to eliminate products that no longer contributed positive margins. Details on the four products are provided below: A B C D Total
Production Volume
(units) 10,000 8,000 6,000 4,000
Selling Price $15.00 $18.00 $20.00 $22.00
Materials/unit $4.00 $5.00 $6.00 $7.00
DLH/unit 0.24 0.18 0.12 0.08
Total DLH 2,400 1,440 720 320 4,880
Plant Overhead $122,000
DL rate/hour $30
Y oungstown has a tradition al cost sys tem. It calc ulates a p lant-wide overhead rate by dividing total overhead costs by total direct labor hours. Assume, for the calculations below, that plant overhead is a committed (fixed) cost during the year, but that direct labor is a variable cost.
• Calculate the plant-wide overhead rate. Use this rate to assign overhead costs to products and calculate the profitability of the four products. The assignment spreadsheet provides a starting point for your calculations, with some data and formulas already supplied.

Suppose sales in 2001 equal 26,000 units, as budgeted in January, and that actual manufacturing expenses turn out to equal budgeted expenses. Prepare an income statement for the year (just include the manufacturing expenses) that will help senior management and the board understand the economics of cartridge production in 2001.
5. Work through the Youngstown Products numerical example (below).