Q2

Problem 1-39 (Algo) Cost Data for Managerial Purposes (LO 1-3) Impenal Devices (ID) has offered to supply the state government with one model of its security screening device at "cost plus 20 percent." ID operates a manufacturing plant that can produce 22.000 devices per year, but it normally produces 20,000. The costs to produce 20,000 devices follow, Total Cost cost per Device Droduction costs: Materials Labor Supplies and other costs that will vary with production Indirect cost that will not vary with production Variable marketing costs Administrative costs (will not vary with production) Totals $ 1,360,000 1,760,000 720,000 680.000 1,780,000 1,240.000 $ 7.540, eee $ 68.00 88.00 36.00 34.00 89.00 62.00 $ 377.ee Based on these data, company management expects to receive $45240 (- $377.00 * 120 percent) per monitor for those sold on this contract. After completing 2,000 monitors, the company sent a bill invoice) to the government for $904,800 (-2,000 monitors $452.40 per monitor) The president of the company received a call from a state auditor, who stated that the per monitor cost should be Materials Labor Supplies and other costs that will vary with production $ 68.00 88.00 36.80 $ 192.00 Therefore, the price per monitor should be $230,40 = $192,00 * 120 percent). The state government ignored marketing costs because the contract bypassed the usual selling channels Required: For each of the four situations, calculate the cost basis per device based on the information shown above (Round intermediate calculations and final answers to 2 decimal places.) Options A Only the differential production costs could be considered as the cost basis th Based on these data, company management expects to receive $452 40 = $37700 x 120 percent) per monitor for those sold on this contract After completing 2,000 monitors, the company sent a bill invoice) to the government for $904,800 (-2.000 monitors $452 40 per monitor) The president of the company received a call from a state auditor, who stated that the per monitor cost should be Materials Labor Supplies and other costs that will vary with production $ 68.00 88.00 36.00 5. 192.00 Therefore, the price per monitor should be $230.40 = $192.00 * 120 percent). The state government ignored marketing costs because the contract bypassed the usual selling channels Required: For each of the four situations, calculate the cost basis per device based on the information shown above (Round intermediate calculations and final answers to 2 decimal places.) Options A Only the differential production costs could be considered as the cost basis. B. The total cost per device for normal production of 20,000 devices could be used as the cost basis. C. The total cost per device for production of 22.000 devices, excluding marketing costs, could be used as the cost basis D. The total cost per device for production of 22,000 devices, including marketing costs, could be used as the cost basis. Per device Recommended cost basis price per device $ 192.00 5 230.40 $ 377.00 $ 452 40 Option A Option B Optionc Option D Exercise 2.49 (Algo) Cost Behavior and Forecasting (LO 2-5) Sophia's Restaurant served 5,900 meals last quarter. Sophia recorded the following costs with those meals. Variable costs: Ingredients used $14,900 Direct labor 12,300 Indirect materials and supplies 7,100 Utilities 3,460 Fixed costs: Managers' salaries 26,500 Rent 22,500 Depreciation on equipment (straight-line, time basis) 6,500 other costs 4,800 Required: Suppose that Sophia expects to serve 20 percent more meals in the next quarter Unit variable costs are expected to remain unchanged. However, Sophia knows that if the restaurant serves over 6.490 meals in a quarter, she must hire an additional manage (part-time) at a cost of $7.950 for the quarter. Other fixed costs are expected to increase by 10 percent. Calculate the unit cost and the total cost if 7080 meals are served next quarter. (Round "Unit costs" answer to 2 decimal places.) Total variable costs Total fixed costs Total costs Unit COSIS