Question
Background: Play and Stay Manufacturing(P&S) has a factory that produces cabinetry for the RV and marine market. The company has other product lines. Materials and
Background: Play and Stay Manufacturing(P&S) has a factory that produces cabinetry for the RV and marine market. The company has other product lines. Materials and labor for the cabinets are determined by each job. To simplify the assignment, we will assume the following average costs The following information highlights P&S Manufacturings cost structure for 2020.
- The materials include $2,800 for the wood and other materials on a per job basis.
- It requires 24 hours of labor on average for the cabinetry. The hourly rate is $11.
- The sales price will be set at a markup of 80%.
- The company estimates that it will have 43,200 direct labor hours in total for the cabinets.
- It assumes 1800 units are sold on average per year. A breakdown of estimated yearly costs related to the cabinetry follows: Salaries- office & administrative $ 500,000 Salaries for factory personal $ 350,000 Office Rent $ 150,000 Factory Rent $ 30,000 Office utilities and Misc office expenses(based on units sold) $ 15,000 Sales travel(based on units sold) $ 24,000 Insurance - office $ 12,000 Depreciation - office equipment $ 40,000 Depreciation for factory equipment $ 70,000 Advertising $ 20,000 Sales commissions(based on units sold) $ 50,000 Factory Property taxes $ 25,000 Maintenance for factory equipment $ 80,000 Question1 : Prepare a Job Order Cost sheet for the following custom project: Materials $6,000 and 30 hours of labor. Calculate the sales price based on your cost calculations. Do not use these numbers for any other calculation. Please show any excel formulas needed as well. Question 2: Assuming P&S Manufacturing is considering adding another product line molded doors (keeping the cabinet production constant at 1,800 units). How many units should the company sell to make adding the additional line economically feasible/attractive? Adding this line will require hiring a different type of worker which costs the company $15/hour. P&S Manufacturing estimated each unit takes 10 hours of labor, and $850 direct materials. This line is estimated to incur additional fixed MOH $425,000 for the year, and variable costs/expenses per unit are the same as the cabinet product line. This product line does not add additional fixed period costs, but shares the fixed period costs with the cabinetry line. The company estimated sales price of a set of doors would be $1,850. If you can only answer one question that's fine!
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