Luzern Alpine Manufacturers (Luzern AG), is one of the top-rated Manufacturers in Switzerland specializing in the production of all type Ski-gear. Founded in 2005, by Victor Hugo Dietrich; Luzern AG has been working within the start-up industry for over fifteen years before becoming a Global world known company. Luzern AG Chief Executive Officer, Dr. Joan Alviano, deputed by Mr Hans and Ms Komova. Needless to say all these executives are active members within the Luzern community, working with co-op students from the YSJ-BHMS, the York St. John Business and Hotel Management School, Luzern. The Chief Operations Officer of Luzern AG is Mr. Xeth, while Production department is headed by Ms. Vivian Chow.

Decision making in Luzern AG is de-centralized and chaired by departmental Supervisors; Ms Kelix, Mr. Ludwig, Mr. Blerton, Mr. Bao among others not mentioned. Besides Luzern AG takes seriously the well being of its employees upon retirement hence it recently hired the services of a well known Pension Fund Manager Ms Veenanat to the Board.

Luzern AG also produces goods that are also used by daughter companies such as Skates Alps Ltd. Transfer of goods among mother-daughter companies involve price negotiations. Luzern is efficient in producing monthly and yearly reports. Among the reports produced by Luzern AG are; Job sheets, Costs of manufacturing flow through Ledger Accounts, Cost-Volume profit analysis, Incremental analysis, etc.

Among recent Luzern AG reports is the manufacturing costs flow. The flow of manufacturing costs through the ledger accounts of Luzern AG for the month of June 2020 Show the following prcis figures:

Direct materials used during June......................................................................... $45,000

Wages paid during June to direct Labour workers..................................... 16,000

Cost of finished goods manufactured......................................................... 92,000

Total manufacturing costs charged to production (in the Work in

Process account, record this entire amount as one entry)........................ 88,000

For the month of June and July 2019 Luzern AG Job sheets showed the following information:

Job Number Manuf. Costs as of June 30 Manuf. Costs July

101 CHF 4'200

102 3240

103 900 CHF 2000

104 2'250 4000

105 6000

106 3700

Further information show that; during July, jobs no. 103 and 104 were completed and jobs no. 101, 102 and 104 were delivered to SBB Zug AG one of their customers. Jobs no. 105 and 106 was still in process at 31 July 2019.

For its new subsidiary in Geneva (GNV Man. SA), Luzern Manufacturers AG plans to manufacture and sell 50000 units per year of a new Luxury Skate product. The Budgeted information is as follows:

Fixed Variable per unit

Manufacturing Costs:

Direct Materials CHF 47

Direct Labor 32

MOH CHF 340000 4

Period Costs:

Selling Expenses 1

Administrative Expenses 200000

Information about the manufacturing costs and inventories of Luzern AG in 2019 is shown below:

Manufacturing Costs:

Direct materials used....................................................................................... CHF 650,000

Direct labour charged to production................................................................ 325,000

Manufacturing overhead.................................................................................. 450,000

Dec. 31, Jan. 1,

2019 2019

Materials......................................................................... CHF 60,000 CHF 45,000

Work in process............................................................... 22,000 27,000

Finished goods................................................................. 72,000 78,000

Besides Skate production, Luzern Manufacturers AG has also launched new product lines among the Lawnmowers.

Luzern AG produces three different models of Lawnmowers. The company is currently considering a proposal from a supplier who wants to sell to Luzern AG blades for the Lawnmower motor line.

Luzern AG currently produces all blades it requires. In order to meet customer needs, Luzern AG produces 3 different blades for each motor model (9 different blades). The company supplier is offering to provide 5 varieties of blades for each model. A total of 15 blades would considerably expand the variety of cutting ability for the motors available to customers. The supplier would charge Luzern AG CHF 25 per blade, regardless of blade type.

For the coming year, 2021, Luzern AG has projected the costs of its own blade production as follows (based on projected volume of 10000 units:

Direct materials used............................................................................................. CHF 75,000

Direct labour charged to production..................................................................... 65,000

Variable manufacturing overhead......................................................................... 55,000

Fixed manufacturing overhead:

Depreciation .................................................................................................. 450,000

Property taxes .................................................................................................. 15000

Factory Supervision........................................................................................... 35000

Total Production Costs........................................................................................... CHF 295000

In producing the blades undertook the following measures; the equipment unitized to produce the blades has no alternative use and no market value; the space occupied by blade production will remain idle if Luzern AG purchases rather than makes the blades and finally; the factory supervision costs reflect the salary of Mr. Blerton who will be dismissed from Luzern AG if blade production ceased.