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Harmon and Co. manufacture maple syrup and uses process costing system. The company has two departments Mixing Department and Packaging Department. The maple syrups are

  1. Harmon and Co. manufacture maple syrup and uses process costing system. The company has two departments Mixing Department and Packaging Department. The maple syrups are sold for $20 each.

Information regarding the Mixing Departments April months operation is as follows :

The department had beginning inventory of 4,300 units (80% completed with respect to material at a cost of $38,700 and 65% complete with respect to conversion at a cost of $48,000). 23,000 units of sent into production in the month of April. During the month a total of 26,000 units of maple syrup were completed a finished good.

The ending work in process inventories were completed at 65% and 70% , in relation to material and conversion, respectively. The total cost of production added during the month were $507,800 in relation to material cost and $490,000, in relation to conversion cost.

Question:

Calculate the cost of the units completed to transfer into the Packaging Department of Harmon and Co. and the cost of the ending work in process inventory in the first department.

2. ABC Company manufactures the product XE-17. The product is sold at a unit price of $70. Variable expenses are $13.50 per unit and fixed expenses are $220,000 per year.

Question :

  1. What should be the products CM ratio?
  2. Calculate the BEP is sales dollars and in units for ABC Company.
  3. The manager of ABC company estimates that in the coming year, the companys sales will increase by $80,000 (from the current sales). How much should the net profit/loss increase/ decrease if the fixed costs remain constant?
  4. The manager of ABC company predicts that by spending an additional $80,000 per year on advertising and using higher quality raw material (which will, in turn, increase the raw material cost per unit by $3), and increasing selling price per unit by 2% (to compensate for the increased costs), unit sales will increase by two- thirds of the current sales units. Should the company go with the managers proposed plan? Explain your answer. (Assume that in the current year, the company sold 5,600 units of XE-17)
  5. (Refer to question no. d). Assume that the company went with the managers plan, however, the predictions were not correct and the demand for XE-17 decreased by 4,000 units from the estimated units (from question no. d) as selling price per unit was raised by 2%. Now the manager is estimating that by changing the selling price per unit, the current net profit amount can be conveniently maintained. Calculate what should be the new selling price per unit (calculate the approximated value) in order to maintain the net profit that the company is making now after going with the managers plan from information number. d

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