Final Assessment

Managerial Accounting Final Assessment $-$ Cost Analysis and Decision Making

You may work on this assessment individually or with a classmate$/$classmates$!$ Each student must, however, submit their own assessment.

The objective of this managerial accounting final assessment is to validate your mastery of this course's student learning outcome "construct and analyze accounting and other information for the purpose of making business decisions" by demonstrating your ability to analyze the cost structure and profitability of the fictional Altac Manufacturing Company and to make informed business decisions based on the analysis.

Company Background:

Altac Manufacturing is a company that produces and sells a single product, the "TechThing." The TechThing is manufactured using a combination of labor and materials and is sold to wholesalers and retailers. Altac Manufacturing operates in a highly competitive market, and management is constantly seeking opportunities to improve profitability.

Data Provided:

Sales Data:

Sales Price per TechThing: $$50$

Units Sold: $10,000$ TechThings

Manufacturing Data:

Direct Materials Cost per TechThing: $$10$

Direct Labor Cost per TechThing: $$8$

Fixed Manufacturing Overhead Costs: $$40,000$

Operating Expenses:

Selling Expenses: $$10,000$

Administrative Expenses: $$15,000$

NOTES:

Do not include dollar signs $($$$)$ in your answers.

Submit your final answer ONLY in the textboxes. DO NOT INCLUDE CALCULATIONS in your responses except for question $11.$

Be sure to use commas correctly and where appropriate. For example submit $15,000$ and NOT $15000.$

$1.$ Calculate direct materials cost per TechThing

$2.$ Calculate the total manufacturing cost overhead per TechThing $($Fixed manufacturing overhead $/$ Number of TechThings produced.

$3.$ Calculate the cost of goods sold per TechThing

$4.$ Calculate the total sales revenue

$5.$ Calculate the total COGS

$6.$ Calculate the gross profit

$7.$ What are the total selling expenses?

$8.$ What are the total administrative expenses?

$9.$ Calculate the operating income

$10.$ Calculate the net income by deducting income taxes from the operating income. Assume an income tax rate of $30\%$

$11.$ Altac Manufacturing is considering two options to improve profitability: Option $1$ : Invest in new manufacturing equimpment that reduces direct labor costs by $20\%$ OR Option $2$: Increase the selling price by $10\%$ to capture a larger market share.

Analyze each option separately and recommend the option that would yield the highest increase in net income. Present calculations and reasoning to support your recommendation. You may also attach a document to support your response.