# Mendel Paper Company

Good Essays
1378 Words
Grammar
Plagiarism
Writing
Score
Mendel Paper Company
Mendel Paper Company Mendel Paper Company has been doing relatively well with the sales of computer paper, napkins, place mats, and poster board. With more people eating out, the demand for napkins and place mats have increased. Computer paper and poster boards have slowly increased in demand as well. However, there is concern at the company with the fixed cost of operations. Marlene Herbert, the plant superintendent, said, “As we have automated our operation, we have experienced increases in fixed overhead and even variable overhead. And, we will have to add more equipment since it appears that we need even more plant capacity. We are operating over our normal capacity as it is.” (Case 2B). With the new production costs added in, will the Mendel Paper Company have what it takes to succeed? For computer paper for the next fiscal quarter, according to the information given by the superintendent, Mendel Paper Company will receive a profit of \$240,000.00. If 30,000 units are produced and sold at \$14.00 then the total sales will be \$420,000.00. However it costs the company \$6.00 to produce each unit. So, 30,000 units at \$6.00 a unit costs the company \$180,000.00. The total sales cost of \$420,000.00 minus the cost of labor of \$180,000.00 equals the profit of \$240,000.00. News came in however from the vice-president of purchasing that the company has firm orders for 35,000 cartons of computer paper. So, if the company continues to sell each unit of computer paper at \$14.00 then the total cost of sales is \$490,000.00. It still costs Mendel Paper Company \$7.00 to produce each unit, therefore costing the company \$245,000.00. Making the total profit of computer paper \$245,000.00. The same formula can be applied to the napkins that Mendel Paper Company produces. The company is expected to sell 120,000 units of napkins for the next fiscal quarter. They sell the napkins at \$7.00. If they sell 120,000 napkins at \$7.00 then they will make \$840,000.00. However, you have to

References: Case 2B – Mendel Paper Company. (N.D.). Retrived from website http://vizedhtmlcontent.next.ecollege.com/pub/content/bc097e4c-08f0-4bd3-990d-b3a4f206ea47/Week_1_Assignment_CASE_2B.pdf Schneider, A. (2012). Managerial accounting: Decision making for the service and manufacturing sectors. San Diego, CA: Bridgepoint Education.

## You May Also Find These Documents Helpful

• Satisfactory Essays

Paper cost ( 1,300 copies x .007) 9.10 Other supplies & electricity (1,300 copies x 0.004) 5.20 Total variable cost 14.30 2.) Calculate the total labor cost of these jobs Labor cost ( \$ 8 x 4 hrs ) 32.00 3.) Suggest a way to assign labor and indirect costs to the cost of a copy made on that Sunday Direct Labor hours used because it is fixed and can be easily measured. 4.) Determine the full cost of one copy on the last Sunday in June, using the cost method in preceeding question. Paper cost 0.007 Other supplies & electricity Other supplies & electricity 0.004 0.004 Labor Cost (8/ hrx 4 hrs)/1300 copies 0.0246 Monthly operating cost (total cost ((\$5,000/30 days)/8hrs ) hourly rate ( 20.83/ hr x 4hrs )/1,300 copies 0.064 Total Full Cost per copy 0.0996 5. ) Determine the average annual full cost of one copy No. Of copies made / No. Of copies made 1,300 copies / 4hrs = 325 copies per hour Total no. Of copies made = total direct labor-hours x copies made per hour 7,280 hrs x 325 copies per hour = 2,366,000 copies Variable Cost ( 0.011 x 2,366,000 copies ) Labor cost (.0246 x 2,366,000 copies ) Other monthly cost total cost 5,000 x 12 months Total annual cost 26,026.00 58,203.60 144,000.00…

• 657 Words
• 3 Pages
Satisfactory Essays
• Satisfactory Essays

Donna can make a chair for about \$100, she charges customers \$150 to buy the chair, and customers perceive that the chair is worth \$225. Donna's profit margin is…

• 463 Words
• 2 Pages
Satisfactory Essays
• Satisfactory Essays

The five year prediction of XYZ Company’s sales displays an upsurge of 15%, 10%, 25%, and 50% in each of the years. The gross profit also improved from \$697,428 to \$3,494,500 over the five year period. Revenue will increase twice in year 2013, after that revenue will increase 10% in the coming year. Cost of revenue will be based on sales percentage…

• 452 Words
• 2 Pages
Satisfactory Essays
• Best Essays

The fictitious business in this assignment is named TopShop, which is an American multinational retailer with its main headquarters in New York. It is a high end fashion brand that specializes in fashion clothing, shoes, make-up and accessories. Currently, TopShop has 150 workers for its factory in New Jersey, and has hired a consultant to offer some advice that could help it make a decision as to whether it should shut down completely or continue operations. In addition, TopShop has 100 workers that produce 6,000 units of output per month (working 20 days / month). The daily wage (per worker) is \$70, and the price of the firm’s output is \$32. The cost of other variable inputs is \$2,000 per day. The firm’s fixed cost is “high enough” so that the firm’s total costs exceed its total revenue. The marginal cost of…

• 1358 Words
• 6 Pages
Best Essays
• Good Essays

1. Compute the company’s total production cost per unit if 25,000 units had been produced.…

• 526 Words
• 4 Pages
Good Essays
• Good Essays

A pencil manufacturer is in a perfectly competitive market. The firm can sell as much as it wants at a price of \$1.50 per pencil. At some production levels, its average variable costs are less than \$1.50, but there is not production level where its average total cost is equal or less than \$1.50. What would be your recommendation to the pencil manufacturer?…

• 1701 Words
• 7 Pages
Good Essays
• Powerful Essays

1. A manufacturer produces 1,000 basketballs each day, which it sells to customers for \$30 each. All costs associated with production and sales total \$10,000; however, if the manufacturer were to produce one additional basketball per day, total costs would increase to \$10,100. From these amounts, we can tell that…

• 1487 Words
• 9 Pages
Powerful Essays
• Good Essays

David Green is considering his operating statement for 2010, which is displayed in the table below. David is the manager of store number 88, where he began as one of the staff 6 years ago, and through hard work has risen to become manager of the store. The operating report shows his budgeted performance for the year and the actual results, showing a net improvement of 9% over budget--\$405. While his results are positive, the small improvement over the budget does not qualify David for the bonus program which awards a \$3,000 bonus for store managers who improve their performance over that of the budget by 20% or more. David manages one store in a 110 store chain of pet grooming stores owned by Pet Groom & Clean Company (PG&C). As for other PG&C stores, his store is open Monday through Saturday each week; the only service provided at the store is a service in which a pet, dog or cat, is groomed and cleaned, typically while the customer waits. The budgeted price for the service at the beginning of 2010 was \$25. Budgeted variable costs were \$2 for materials and \$9 labor cost per service, as well as other variable costs of \$1.50 per service. Materials are purchased by local store managers, and all staff are hired and supervised by the local store managers. Other budgeted and actual information for 2010 are shown in the table below. David is an ambitious and hard working manager, who has applied himself to the job and has looked for different ways to attract customers and to reduce costs. For example, he noticed that most of the company’s customers brought their pets in on Friday, Saturday, and Monday, and the number of customers was significantly lower on Tuesday through Thursday. In fact, David budgeted that 80% of total demand for 2010 would be in the Friday-Monday period, and only 20% would be in the…

• 925 Words
• 4 Pages
Good Essays
• Satisfactory Essays

Q: You are a newspaper publisher. You are in the middle of a one- year rental contract for your factory that requires you to pay \$ 500,000 per month, and you have contractual labor obligations of \$ 1 million per month that you can’t get out of. You also have a marginal printing cost of \$ 0.35 per paper as well as a marginal delivery cost of \$ 0.10 per paper. If sales fall by 20 percent from 1 million papers per month to 800,000 papers per month, what happens to the AFC per paper, the MC per paper, and the minimum amount that you must charge to break even on these costs?…

• 849 Words
• 4 Pages
Satisfactory Essays
• Powerful Essays

2) GH Inc. has two divisions. The paper division produces cardboard, which it can sell externally or internally to the box division. Both the paper and the box divisions are evaluated as profit centres. The firm has a policy of transferring all internal products at market price. The market price for the cardboard is \$70 per unit, and the market price for the box is \$100 per unit. Variable costs for the cardboard are \$30 per unit. Per unit cost of manufacturing the boxes is \$40 plus the cost of the cardboard. One unit of cardboard is needed to produce one unit of boxes.…

• 1664 Words
• 7 Pages
Powerful Essays
• Satisfactory Essays

International Marketing - An SME Perspective by Sean De Burca, Linden Brown and Richard Fletcher, Published by Person Education…

• 272 Words
• 3 Pages
Satisfactory Essays