Question
Chenango Can Company manufactures metal cans used in the food-processing industry. A case of cans sells for $30. The variable costs of production for one
Chenango Can Company manufactures metal cans used in the food-processing industry. A case of cans sells for $30. The variable costs of production for one case of cans are as follows: |
Direct material | $ | 7.00 | |
Direct labor | 2.00 | ||
Variable manufacturing overhead | 6.50 | ||
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Total variable manufacturing cost per case | $ | 15.50 | |
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Variable selling and administrative costs amount to $.90 per case. Budgeted fixed manufacturing overhead is $540,000 per year, and fixed selling and administrative cost is $45,500 per year. The following data pertain to the companys first three years of operation. (A unit refers to one case of cans.) |
Year 1 | Year 2 | Year 3 | ||||
Planned production (in units) | 90,000 | 90,000 | 90,000 | |||
Finished-goods inventory (in units), January 1 | 0 | 0 | 28,000 | |||
Actual production (in units) | 90,000 | 90,000 | 90,000 | |||
Sales (in units) | 90,000 | 62,000 | 104,000 | |||
Finished-goods inventory (in units), December 31 | 0 | 28,000 | 14,000 | |||
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Actual costs were the same as the budgeted costs.
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