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PROBLEM Product A Product B Estimated sales (units) 5,000 2,000 Selling price per unit $ 8.00 $ 15.00 Purchase price per unit $ 2.00 $

PROBLEM

Product A

Product B

Estimated sales (units)

5,000

2,000

Selling price per unit

$ 8.00

$ 15.00

Purchase price per unit

$ 2.00

$ 6.00

Freight in per unit

$ 1.00

$ 1.00

The total production overhead is $ 200,000 and 7% is allocated against products A and B. The allocation of this overhead is further divided on the basis of number of units sold.

Administrative overhead amounts to $ 70,000 and 10% of this overhead is allocated against products A and B. The allocation of this overhead is further divided on the basis of revenue.

  1. Revenue for product A is .
  2. Total revenue is .
  3. Cost of sales per unit for product B .
  4. Total cost of sales for product B .
  5. Total profit margin before overhead allocation is .
  6. Total production overhead allocated to products A and B is
  7. Administrative overhead allocated to product A is .
  8. Profit after allocation of both overhead amounts for product A is .
  9. Profit after allocation of both overhead amounts for product B is .
  10. A business sells $ 60,000 and $ 80,000 worth of goods in January and February respectively. The controller indicates that 50% of the customers pay their bills on a cash basis, 40% in 30 days and 10% in 60 days. During the month of January and February, the company purchased 30,000 and $50,000 worth of goods from suppliers respectively. The companys policy is to pay 50% on a cash basis and the other 50% during the following 30 days. The monthly administrative expenses are broken down as follows:

    Salaries

    $ 12,000

    Depreciation

    2,000

    Rent

    3,000

    Office supplies

    500

    Communication services

    500

    The companys opening cash balance for the month of January is $ 1,000.

  11. Monthly cash receipts from sales are as follows:
  12. January February

    March

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