Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help with number 3. Pr28-2 eBook Show Me How Strategic Initiatives and CSR Get Hitched Inc. is a production company that is in

I need help with number 3.

image text in transcribed
Pr28-2 eBook Show Me How Strategic Initiatives and CSR Get Hitched Inc. is a production company that is in the process of testing a strategic Initiative aimed at increasing gross profit. The company's current sales revenue is $2,400,000, Currently, the company's gross profit is 35% of sales, but the con company's current monthly cost of production is $1,560,000. Of this cost, 40% Is for labor, 30% Is for materials, and 30% is for overhead. The strategic Initiative being tested at Get Hitched Is a redesign of its production process that splits the process into two sequential procedures. The make up of the costs of production for Procedure 1 is currently 50% direct labor, 45% direct mat of production for Procedure 2 is currently 55% direct labor, 25% direct materials, and 20% overhead. Company management estimates that Procedure 1 costs twice as much as Procedure 2. 1. Determine what the cost of labor, materials, and overhead for both Procedures 1 and 2 would need to be for the company to meet its target gross profit at the current level of sales. Cost makeup of Procedure 1: Direct Labor 480,000 Direct Materials 432,000 Overhead 48,000 Total 960,000 Cost makeup of Procedure 2 Direct Labor 264,000 Direct Materials 120,000 Overhead 96,000 Total 480,000 2. The company's actual direct materials cost is $446,400 for Procedure 1. Determine the actual cost of direct labor, direct materials, and overhead for each procedure, and the total cost of production for each procedure. Cost makeup of Procedure 1: Direct Labor 496,000 Direct Materials 446,400 Overhead 49,600 Total 992,000 Cost makeup of Procedure 2 Direct Labor 272,800 Direct Materials 124,000 Overhead 99,200 Total 496,000 3. The company is planning a CSR initiative to reuse some of the indirect materials used In production during Procedure 2. These indirect materials normally make up 70% of the overhead cost for Procedure 2, but the CSR initiative w the maximum new cost of these indirect materials could be for Procedure 2 if this CSR initiative is expected to enable the company to meet its target gross profit percentage (holding all other costs constant). Maximum new cost of P2 overhead materials: 1,011,200 X Check My Work Assignment Score: 94.12%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Accounting A Practical Approach

Authors: Jeffrey Slater, Mike Deschamps

14th Edition

0134729315, 978-0134729312

More Books

Students also viewed these Accounting questions

Question

Explain in detail the different methods of performance appraisal .

Answered: 1 week ago