Problem One Cost Behaviour Required: 1. Which costs are classified as the following (no calculations required): a. Variable (per hour) Extras, Stage lighting b. Fixed Director costs/salary, equipment depreciation, royalties c. Mixed Actors, Supplies d. Step cost Food 2. The management has planned to film 800 hours and make 6 shows with an average of 3 actors and 2 extras for August 2009. Please calculate the cost of supplies, actors, and royalties for this month. (Hint: please use high-low method for mixed costs.) Supplies
Cost formula of Supplies: August 2009 supplies cost = 1,900 + 650 *6 = $ 5,800
Cost formula of Actors cost: August 2009 Actors cost = 100,000 + 800 * 3 * 250 = $ 700,000
Royalties 75,000 / 10 * 6 shows = $ 45,000
3. Calculate the total costs for July 2010 if the only difference (from July 2009) is that the number of actors and extras increases by 1 each per hour.
Actors’ fees Director compensation Stage lighting (electricity) Extras Equipment depreciation Supplies Royalties Food Total costs for July 2010
$850,000 = 100,000+ 250*1,000*3 60,000 80,000 60,000 = 40,000/2 *3 25,000 8,400 75,000 15,000 = 10,000/(2+2) * (3+3) $1,173,400
4. What cost(s) should differ in July 2010 if the weather is different from July 2009? The main cost that should differ would be the stage lighting cost since they may need to film indoors in inclement weather. If the weather is too bad and takes longer to film, then the actors, extras, and food costs would increase. Students may also comment that the type of food may differ due to the need for hotter food in the cold weather.
Problem Two Job-Order Costing Required: 1. Determine the ending balance of the following account at the end of December to help Sadaf’s prepare for the 2009 annual financial statements. (Hint: calculate the predetermined overhead rate to allocate overhead.) Please round to nearest dollar. a. Work in Process for chairs (not including lounge chairs) b....
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