A B D E F G H I J M . N O P YOU AWN Cost of 1000 Units Total Per Unit Indirect Factory Units of Direct Direct Indirect Material Insuranc Other 1 Week Output Materials Labor Labor S. Electricity e Overhead Caroll Manufacturing 1 800 $600 $1,000 $360 $600 $230 $250 $620 2 1000 750 1250 400 600 250 250 720 Unit Total 3 1200 900 1500 440 600 270 250 820 Variable Fixed Manufacturing Cost Cost Cost Enter F, V, or M V V M F M F M Direct materials Direct labor 8 Instructions: Indirect labor 9 The purpose of this exercise is to help you to understand how costs behave relative to activity volume and Indirect material 10 how to differentiate between total and per-unit fixed, variable, and mixed costs. Electricity 11 Factory Insurance 12 1) Determine whether each of the manufacturing costs listed above are fixed, variable, or mixed Other overhead 13 and enter F, V, or M into the appropriate boxes above Total Manufacturing Costs 14 Hint: if the total cost of an item is the same for all levels of output, the cost is fixed; 15 if the unit cost of an item is the same for all levels of output, the cost is variable. Administrative and selling 16 otherwise, the cost is mixed. Admin/Selling Expenses 17 Total Costs 18 2) Once you determine the behavior of each manufacturing cost item, complete the 19 Manufacturing Costs" table to the right, following the instructions below: 20 For items categorized as 'V': Input to column L the computation for each variable cost item. 21 For items categorized as 'F': enter in column M the total fixed cost. 22 For items categorized as 'M': Follow instructions in #3, below. 23 NOTE: Some of the highlighted cells in columns L and M will remain blank. No need to enter zero. 24 25 3) Mixed costs will have to be separated into their fixed and variable components using the 26 High-Low Method. Compute each component, showing all work in the High-Low Worksheet tab 27 Once you have computed each component, use Excel cell references to feed the information 28 to the appropriate cells in the schedule to the right. 29 30 4) Once columns L and M have been completed, use the information in these two columns to compute 31 total manufacturing cost (column O), assuming 1,000 units are produced. DO NOT feed the totals from 32 the original given data. It is important that you know how to compute total costs even when the 33 total costs are not in the pr 34 35 5) Finally, compute the unit costs in column P and the 36 Administrative and Selling data at the bottom of the table. Carell Manufacturing company manufactures a single product. During the past three weeks, Carell's cost accountant observed that output costs varied considerably. The weekly production costs are as follows: Week 1 2 3 Output Units 800 1000 1200 Direct Direct Materials Labor $600 $1,000 750 1250 900 1500 Indirect Labor $360 400 440 Indirect Factory Other Materials Electricity Insurance Overhead $600 $230 $250 $620 600 250 250 720 600 270 250 820 Additional information gathered for the analysis reveals that the selling price per unit of product is $8.00 and the sales force earns a 10% commission for each unit sold. The accountant also found that other administrative and selling expenses are fixed at $1,562 per week. Carell does not carry inventory and, therefore, the number of units produced is equal to the number of units sold. Income information for three weeks is as follows: Sales Cost of Goods Sold Gross Margin Other Expenses Net Income Week 1 Week 2 Week 3 $ 6,400 $ 8,000 $ 9,600 $ 3,660 $ 4,220 $ 4,780 $ 2,740 $ 3,780 $ 4,820 $ 2,202 $ 2,362 $ 2,522 $ 538 $ 1,418 $ 2,298 Notice that cost of goods sold (COGS) per unit changes depending on output volume. At 800 units sold, COGS per unit is $4.58. At 1,000 units sold, COGS per unit is $4.22. At 1,200 units sold, COGS per unit is $3.98. The cost accountant observed that the COGS per unit declined as production volume increased. The analysis was used to support pricing decisions at Carell Manufacturing. The completed cost analysis used the average three-week production volume to determine the cost of production to be $6.58 per unit. The per-unit cost was also assumed to be the break-even cost, which was used to develop guidelines for the sales force. Instructions: 1. Complete the highlighted items in the Excel Template, following the directions provided in the worksheet. Use Excel formulas to computer your answers. Credit cannot be awarded if the formulas are not included. 2. Use the amounts you computed in the Excel Template to complete items (a) through (h): a) The variable manufacturing cost per unit for this product is b) The total variable cost per unit for this product is c) The total fixed manufacturing cost for this product is d) The total fixed cost for this product is A B D E F G H I J M . N O P YOU AWN Cost of 1000 Units Total Per Unit Indirect Factory Units of Direct Direct Indirect Material Insuranc Other 1 Week Output Materials Labor Labor S. Electricity e Overhead Caroll Manufacturing 1 800 $600 $1,000 $360 $600 $230 $250 $620 2 1000 750 1250 400 600 250 250 720 Unit Total 3 1200 900 1500 440 600 270 250 820 Variable Fixed Manufacturing Cost Cost Cost Enter F, V, or M V V M F M F M Direct materials Direct labor 8 Instructions: Indirect labor 9 The purpose of this exercise is to help you to understand how costs behave relative to activity volume and Indirect material 10 how to differentiate between total and per-unit fixed, variable, and mixed costs. Electricity 11 Factory Insurance 12 1) Determine whether each of the manufacturing costs listed above are fixed, variable, or mixed Other overhead 13 and enter F, V, or M into the appropriate boxes above Total Manufacturing Costs 14 Hint: if the total cost of an item is the same for all levels of output, the cost is fixed; 15 if the unit cost of an item is the same for all levels of output, the cost is variable. Administrative and selling 16 otherwise, the cost is mixed. Admin/Selling Expenses 17 Total Costs 18 2) Once you determine the behavior of each manufacturing cost item, complete the 19 Manufacturing Costs" table to the right, following the instructions below: 20 For items categorized as 'V': Input to column L the computation for each variable cost item. 21 For items categorized as 'F': enter in column M the total fixed cost. 22 For items categorized as 'M': Follow instructions in #3, below. 23 NOTE: Some of the highlighted cells in columns L and M will remain blank. No need to enter zero. 24 25 3) Mixed costs will have to be separated into their fixed and variable components using the 26 High-Low Method. Compute each component, showing all work in the High-Low Worksheet tab 27 Once you have computed each component, use Excel cell references to feed the information 28 to the appropriate cells in the schedule to the right. 29 30 4) Once columns L and M have been completed, use the information in these two columns to compute 31 total manufacturing cost (column O), assuming 1,000 units are produced. DO NOT feed the totals from 32 the original given data. It is important that you know how to compute total costs even when the 33 total costs are not in the pr 34 35 5) Finally, compute the unit costs in column P and the 36 Administrative and Selling data at the bottom of the table. Carell Manufacturing company manufactures a single product. During the past three weeks, Carell's cost accountant observed that output costs varied considerably. The weekly production costs are as follows: Week 1 2 3 Output Units 800 1000 1200 Direct Direct Materials Labor $600 $1,000 750 1250 900 1500 Indirect Labor $360 400 440 Indirect Factory Other Materials Electricity Insurance Overhead $600 $230 $250 $620 600 250 250 720 600 270 250 820 Additional information gathered for the analysis reveals that the selling price per unit of product is $8.00 and the sales force earns a 10% commission for each unit sold. The accountant also found that other administrative and selling expenses are fixed at $1,562 per week. Carell does not carry inventory and, therefore, the number of units produced is equal to the number of units sold. Income information for three weeks is as follows: Sales Cost of Goods Sold Gross Margin Other Expenses Net Income Week 1 Week 2 Week 3 $ 6,400 $ 8,000 $ 9,600 $ 3,660 $ 4,220 $ 4,780 $ 2,740 $ 3,780 $ 4,820 $ 2,202 $ 2,362 $ 2,522 $ 538 $ 1,418 $ 2,298 Notice that cost of goods sold (COGS) per unit changes depending on output volume. At 800 units sold, COGS per unit is $4.58. At 1,000 units sold, COGS per unit is $4.22. At 1,200 units sold, COGS per unit is $3.98. The cost accountant observed that the COGS per unit declined as production volume increased. The analysis was used to support pricing decisions at Carell Manufacturing. The completed cost analysis used the average three-week production volume to determine the cost of production to be $6.58 per unit. The per-unit cost was also assumed to be the break-even cost, which was used to develop guidelines for the sales force. Instructions: 1. Complete the highlighted items in the Excel Template, following the directions provided in the worksheet. Use Excel formulas to computer your answers. Credit cannot be awarded if the formulas are not included. 2. Use the amounts you computed in the Excel Template to complete items (a) through (h): a) The variable manufacturing cost per unit for this product is b) The total variable cost per unit for this product is c) The total fixed manufacturing cost for this product is d) The total fixed cost for this product is