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Problem 1 (35 points) Random Inc. Cost data for the last 3 years Overhead Costs Units Produced January-17 $78,000 5,679 Use regression and show the
Problem 1 (35 points) Random Inc. Cost data for the last 3 years Overhead Costs Units Produced January-17 $78,000 5,679 Use regression and show the equation used forRandom to separate overhead into fixed and variable components. February-17 $91,000 6,751 How much of the change in costs will this equation predict? March-17 $100,000 7,539 April-17 $78,000 5,335 What is the variable cost per unit for overhead? Round to the nearest cent May-17 $89,000 6,480 June-17 $93,000 7,630 What is the fixed overhead cost per month? Round to the nearest dollar July-17 $87,000 6,331 August-17 $94,000 7,998 Random analyzes their other costs and finds the following (in addition to the overhead costs above): September-17 $81,000 5,943 Direct Mat Each unit of inventory uses 2 gallons of materials and each gallon costs $3 October-17 $85,000 7,081 Direct Labor On average a worker can produce 16 units of product in an 8 hour shift and gets paid $180 for that shift November-17 $104,500 7,694 Each month Random spends $26,500 on selling and administration costs December-17 $104,000 8,903 Sales price for 2021 is estimated at $36 per unit January-18 $92,000 7,485 February-18 $104,000 9,062 March-18 $96,000 8,189 What is the contribution margin per unit? Round to the nearest cent April-18 $77,000 5,410 May-18 $83,000 6,556 How many units does Random need to sell in a month to break even in 2021? June-18 $95,000 7,850 July-18 $65,000 4,836 How many units does Random need to sell in a month to make $25,000 of profit before taxes? August-18 $92,000 6,828 September-18 $77,000 6,221 How much in dollars must Random sell in a month to make $100,000 in profit before taxes? October-18 $105,000 8,238 November-18 $103,000 7,842 December-18 $96,000 8,086 Show the predicted contribution margin format income statement for January if production and sales are 7,100 units for January 2021 January-19 $84,500 6,887 February-19 $100,000 8,438 Show the predicted contribution margin format income statement for February 2021 if sales increase from January by 200 units. March-19 $83,000 5,829 Also in February, selling costs are increased by $2,000/month, a new machine increases fixed overhead by $6,000 April-19 $79,000 5,639 and makes it so that workers can make 24 in a shift (changes the direct labor per unit) May-19 $74,000 5,703 Other costs should be consistent with January. June-19 $81,000 6,455 July-19 $82,000 6,370 August-19 $74,000 5,684 September-19 $72,000 4,906 October-19 $73,000 5,026 November-19 $92,000 7,630 December-19 $82,000 4,014
| Problem 1 (35 points) | ||||||||||||||
| Random Inc. | Cost data for the last 3 years | |||||||||||||
| Overhead Costs | Units Produced | |||||||||||||
| January-17 | $78,000 | 5,679 | Use regression and show the equation used forRandom to separate overhead into fixed and variable components. | |||||||||||
| February-17 | $91,000 | 6,751 | How much of the change in costs will this equation predict? | |||||||||||
| March-17 | $100,000 | 7,539 | ||||||||||||
| April-17 | $78,000 | 5,335 | What is the variable cost per unit for overhead? Round to the nearest cent | |||||||||||
| May-17 | $89,000 | 6,480 | ||||||||||||
| June-17 | $93,000 | 7,630 | What is the fixed overhead cost per month? Round to the nearest dollar | |||||||||||
| July-17 | $87,000 | 6,331 | ||||||||||||
| August-17 | $94,000 | 7,998 | Random analyzes their other costs and finds the following (in addition to the overhead costs above): | |||||||||||
| September-17 | $81,000 | 5,943 | Direct Mat | Each unit of inventory uses 2 gallons of materials and each gallon costs $3 | ||||||||||
| October-17 | $85,000 | 7,081 | Direct Labor | On average a worker can produce 16 units of product in an 8 hour shift and gets paid $180 for that shift | ||||||||||
| November-17 | $104,500 | 7,694 | Each month Random spends $26,500 on selling and administration costs | |||||||||||
| December-17 | $104,000 | 8,903 | Sales price for 2021 is estimated at $36 per unit | |||||||||||
| January-18 | $92,000 | 7,485 | ||||||||||||
| February-18 | $104,000 | 9,062 | ||||||||||||
| March-18 | $96,000 | 8,189 | What is the contribution margin per unit? Round to the nearest cent | |||||||||||
| April-18 | $77,000 | 5,410 | ||||||||||||
| May-18 | $83,000 | 6,556 | How many units does Random need to sell in a month to break even in 2021? | |||||||||||
| June-18 | $95,000 | 7,850 | ||||||||||||
| July-18 | $65,000 | 4,836 | How many units does Random need to sell in a month to make $25,000 of profit before taxes? | |||||||||||
| August-18 | $92,000 | 6,828 | ||||||||||||
| September-18 | $77,000 | 6,221 | How much in dollars must Random sell in a month to make $100,000 in profit before taxes? | |||||||||||
| October-18 | $105,000 | 8,238 | ||||||||||||
| November-18 | $103,000 | 7,842 | ||||||||||||
| December-18 | $96,000 | 8,086 | Show the predicted contribution margin format income statement for January if production and sales are 7,100 units for January 2021 | |||||||||||
| January-19 | $84,500 | 6,887 | ||||||||||||
| February-19 | $100,000 | 8,438 | Show the predicted contribution margin format income statement for February 2021 if sales increase from January by 200 units. | |||||||||||
| March-19 | $83,000 | 5,829 | Also in February, selling costs are increased by $2,000/month, a new machine increases fixed overhead by $6,000 | |||||||||||
| April-19 | $79,000 | 5,639 | and makes it so that workers can make 24 in a shift (changes the direct labor per unit) | |||||||||||
| May-19 | $74,000 | 5,703 | Other costs should be consistent with January. | |||||||||||
| June-19 | $81,000 | 6,455 | ||||||||||||
| July-19 | $82,000 | 6,370 | ||||||||||||
| August-19 | $74,000 | 5,684 | ||||||||||||
| September-19 | $72,000 | 4,906 | ||||||||||||
| October-19 | $73,000 | 5,026 | ||||||||||||
| November-19 | $92,000 | 7,630 | ||||||||||||
| December-19 | $82,000 | 4,014 |
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Management Accounting Information for Decision-Making and Strategy Execution
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
6th Edition
137024975, 978-0137024971
