Question
Please solve Problem 3-11 from your textbook (Introduction to Managerial Accounting; Fifth Canadian Edition, by Brewer, Garrison, Noreen, Kalagnanam, and Vaidyanathan) considering the following new
Please solve Problem 3-11 from your textbook (Introduction to Managerial Accounting; Fifth Canadian Edition, by Brewer, Garrison, Noreen, Kalagnanam, and Vaidyanathan) considering the following new information and requirements:
The company received a request for a 300-Kg order of potassium aspartate.
The customer offers to pay $12.50per Kg for this order.
The company usually adds a 30%markup for this type of orders.
Material requirements
Material | Required Quantity (per Kg) | Price ($) per Kg |
Aspartic Acid | 190.00 | 5.75 |
Citric Acid | 10.00 | 2.00 |
K2CO3 | 120.00 | 4.50 |
Rice | 30.00 | .50 |
The company pays its production workers an average of $20.00per hour plus $5.00per hour additional labour costs.
Expected direct labour time was 16 hours.
The company also estimated the following:
Materials related overhead | $585,000 |
Labour related overhead | $1,950,000 |
Direct material costs | $1,850,000 |
Direct labour cost | $1,250,000 |
Prepare a job cost sheet for the proposed job. Ignore the job completion status area. (9 points)
What is the gross margin expressed in %, if the customer agrees to pay a price of cost plus 25%? (1 point). Please show all your calculations. (1 point)
What is the total gross margin per total order (expressed in dollar amount) (1 point). Please clearly show all you calculations. (1 point)
What is the gross margin per unit (per Kg) (expressed in dollar amount). (1 point) Please clearly show all your calculations. (1 point)
Assume that the actual production level was only 280 Kg despite using the expected quantity of materials and labour. What is the gross margin of this order: percentage-wise (1 point), total gross margin per order (dollar amount)(1 point), gross margin per unit (per Kg)(dollar amount)(1 point). Please clearly show all you calculations. (1 point)
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