A manufacturing company HES Inc. has two product lines. Traditional product has unit price of $340 and Classic has a unit price of $480. Firms manufacturing overhead costs are applied as $420 per direct labor hour.

6. Discuss the two clients COGS in terms of fixed cost and variable cost according to special specifications.

HES Inc Budgeted statement of gross margin 2020 Sales in units Beginning finished goods Direct material Direct labor Ending finished goods Traditional 10000 $480,000.00 $2,000,000.00 $370,370.00 $480,000.00 Classic 8000 $500,000.00 $3,400,000.00 $185,186.00 $520,000.00 Total 18000 $980,000.00 $5,400,000.00 $555,556.00 $1,000,000.00 Overhead breakdown in percentage Machining Assembly Material Handling Inspection Total 49.00% 29.60% 6.95% 14.45% 100.00% Cost pool info for 2020 Products Direct labor hours Machine hours Assembly hours Material handling parts Inspection hours Traditional 2000 30000 12000 10 1000 Classic 1000 60000 11000 20 1500 Projections 2021 Products Ending inventory in dollars Sales in units Traditional $460,000.00 10200 Classic $510,000.00 7800 Material, labor and overhead costs are expected to increase by 10% each in 2021. Unit sale prices for both products are expected to increase by $20 each in 2021. Percentage of overhead remains the same in 2021. The cost driver units are staying the same in 2021. There are two clients A and B with special orders for Traditional. The two clients ordered the same number of units You tracked its COGS by its extra number of specifications per units by month in 2020 # of specifications 85 65 110 160 65 Client A in 2020 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 37 29 37 COGS $45,000.00 $32,000.00 $55,000.00 $78,000.00 $36,000.00 $34,000.00 $19,000.00 $21,000.00 $39,000.00 $51,000.00 $36,000.00 $74,000.00 $520,000.00 68 81 48 124 909 # of specifications 75 55 120 150 55 34 Client B in 2020 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total COGS $25,000.00 $15,000.00 $45,000.00 $60,000.00 $30,000.00 $25,000.00 $ 15,000.00 $20,000.00 $35,000.00 $45,000.00 $25,000.00 $60,000.00 $400,000.00 27 33 61 77 42 116 845 HES Inc Budgeted statement of gross margin 2020 Sales in units Beginning finished goods Direct material Direct labor Ending finished goods Traditional 10000 $480,000.00 $2,000,000.00 $370,370.00 $480,000.00 Classic 8000 $500,000.00 $3,400,000.00 $185,186.00 $520,000.00 Total 18000 $980,000.00 $5,400,000.00 $555,556.00 $1,000,000.00 Overhead breakdown in percentage Machining Assembly Material Handling Inspection Total 49.00% 29.60% 6.95% 14.45% 100.00% Cost pool info for 2020 Products Direct labor hours Machine hours Assembly hours Material handling parts Inspection hours Traditional 2000 30000 12000 10 1000 Classic 1000 60000 11000 20 1500 Projections 2021 Products Ending inventory in dollars Sales in units Traditional $460,000.00 10200 Classic $510,000.00 7800 Material, labor and overhead costs are expected to increase by 10% each in 2021. Unit sale prices for both products are expected to increase by $20 each in 2021. Percentage of overhead remains the same in 2021. The cost driver units are staying the same in 2021. There are two clients A and B with special orders for Traditional. The two clients ordered the same number of units You tracked its COGS by its extra number of specifications per units by month in 2020 # of specifications 85 65 110 160 65 Client A in 2020 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 37 29 37 COGS $45,000.00 $32,000.00 $55,000.00 $78,000.00 $36,000.00 $34,000.00 $19,000.00 $21,000.00 $39,000.00 $51,000.00 $36,000.00 $74,000.00 $520,000.00 68 81 48 124 909 # of specifications 75 55 120 150 55 34 Client B in 2020 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total COGS $25,000.00 $15,000.00 $45,000.00 $60,000.00 $30,000.00 $25,000.00 $ 15,000.00 $20,000.00 $35,000.00 $45,000.00 $25,000.00 $60,000.00 $400,000.00 27 33 61 77 42 116 845