Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Chen Company manufactures basketballs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly. Production and cost data

image text in transcribed
1. Chen Company manufactures basketballs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly. Production and cost data for the month of July 2010 are as follows. Basketballs Units Percent Complete Production Data Work in process units, July 1 500 60% Units started into production 1.000 Work in process units, July 31 600 30% Cost Data Work in process, July 1 Materials $750 Conversion costs 600 $1,350 Direct materials 2.400 Direct labor 1.580 Manufacturing overhead 1,060 Instructions (a) Calculate the following. (1) The equivalent units of production for materials and conversion. (2) The unit costs of production for materials and conversion costs. (3) The assignment of costs to units transferred out and in process at the end of the accounting period. (b) Prepare a production cost report for the month of July for the basketballs. 2. Colt Industries had sales in 2010 of S6,400,000 and gross profit of $1,100,000. Management is considering two alternative budget plans to increase its gross profit in 2011. Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 5% from its 2010 level. Plan B would decrease the selling price per unit by S0.50. The marketing department expects that the sales volume would increase by 150,000 units. At the end of 2010, Colt has 40,000 units of inventory on hand. If Plan A is accepted, the 2011 ending inventory should be equal to 5% of the 2011 sales. if Plan B is accepted, the ending inventory should be equal to 50,000 units. Each unit produced will cost $1.80 in direct labor, $2.00 in direct materials, and $1.20 in variable overhead. The fixed overhead for 2011 should be $1.895,000. Instructions (a) Prepare a sales budget for 2011 under each plan (b) Prepare a production budget for 2011 under each plan. (e) Compute the production cost per unit under each plan. Why is the cost per unit different for each of the two plans? (Round to two decimals.) (d) Which plan should be accepted

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Communication In The Age Of Trump

Authors: Arthur S. Hayes

1st Edition

1433150301, 9781433150302

More Books

Students also viewed these Accounting questions

Question

=+What is our leadership style like?

Answered: 1 week ago

Question

=+What are our core competencies or competitive advantages?

Answered: 1 week ago