Cost Accounting-ACCT 321 Homework Week 7 Question #1 Sales (9,000 x $4) Cost of

| January 30, 2017

Question
ACCT 321

Homework Week 7

Question #1 Traditional Income Statement

Sales (9,000 x $4)

$36,000

Cost of Goods Sold:

Direct Materials

9,000

Direct Labor

9,000

Manuf. Overhead:

Variable

1,800

Fixed

8,000

9,800

Cost of Goods Sold

27,800

Gross Margin

8,200

Operating Costs

Variable:

Commissions

1,800

Packaging and Postage

360

2,160

Fixed:

Advertising

2,000

Salaries

2,000

4,000

6,160

Administrative Costs:

Variable

450

Fixed

2,040

2,490

Total Operating Costs

8,650

Operating Income (Loss)

(450)

a. Reformat the above Traditional Income Statement into a Contribution Margin method Income Statement.

b. What is the difference, and the purpose a manager would choose to prepare a Contribution Margin Income Statement?

Question #2. Make or Buy

Camping Company estimates that it would incur the following costs to produce 6,000 tent lanterns:

Per Unit

Direct Material

$10.00

Direct Labor

8.50

Variable Factory Overhead

9.00

Fixed Factory Overhead

15.00

Outdoor Accessories has offered to sell Camping Company tent lanterns for $59 per unit. If the lanterns are purchased from Outdoor Accessories, Camping Company can reduce its fixed factory overhead by 28%.

a. What is the total cost Camping Company will incur if it makes the lanterns?

b. What is the total cost Camping Company will incur if it buys the lanterns?

c. Should Camping Company purchase the lanterns or buy the lanterns?

Get a 30 % discount on an order above $ 50
Use the following coupon code:
COCONUT
Order your essay today and save 30% with the discount code: COCONUTOrder Now
Positive SSL