Question:
calculate the predicted total cost and proposed selling price for the customer ordwr using the following
1. difect labour dollar is the cost driver
2. machcine hours is the cost driver
*assume a gross margin of 15% in order to determine the proposed selling price
Results for the year ended August 31, 2020 Revenue Discount Net Revenue Cosmetic Food Total $12,000,000 $22,000,000 34,000,000 (1,200,000) (2,200,000) (3,400,000) $10,800,000 $19,800,000 $30,600,000 Materials purchased 7,899,802 15,377,198 23,277,000 Accounting and legal 5,000 Utility Costs- Head Office 30,000 Utility Costs- Production 240,000 Administrative salaries 76,000 Inspection Costs 760,000 Factory Insurance 80,000 Sales commissions 340,000 Interest on business credit line 100,000 Management salaries (Omar, Anna, Ted $120,000 each) 360,000 Property Taxes- Head Office 6,500 Factory Building Amortization 412,000 Office supplies, Courier and Postage 7,760 Annual Business Licenses and Fees 2,500 Warranty Program Costs 500,000 Amortization Expense- Fabrication Equipment 650,000 Amortization Expense - Office Equipment 12,000 Business Liability Insurance 10,000 Telephone Costs-Factory 3,000 Telephone Costs - Head Office 6,000 Anna's House Rent $15,000 Labour- Assembly workers 2,000,000 3,500,000 5,500,000 Labour-Production supervisors 600,000 Total Expenses 32,992,760 Net Income (Loss) ($2,392,760) Current Year End Balances Cosmetic Food Total Raw Materials $1,500,000 $3,000,000 $4,500,000 Costs- Machines unfinished at year end 1,000,000 3,000,000 4,000,000 Costs- Machines complete but not sold 3,000,000 6,000,000 9,000,000 Last Year End Balances Raw Materials 1,000,000 2,000,000 3,000,000 Costs- Machines unfinished at year end 2,500,000 5,000,000 7,500,000 Costs - Machines complete but not sold $500,000 $1,500,000 $2,000,000 Food Tota! Actual Results for Fiscal 2020 Net Revenue in $ Cosmetic $10,800,000 $19,800,000 $30,600,000 Direct Labour Cost in $ $2,000,000 $3,500,000 $5,500,000 # of Assembly Labour Hours 75,000 175,000 250,000 # of Fabrication Machine Hours 200,000 375,000 575,000 # of Machines sold 40 100 140 # of Machines Produced 70 120 190 Inspection Hours 420 2,160 2,580 34,050 Factory Area used (sq metres) 11,250 22,800 Details of Proposed Customer Order Direct Materials $226,000 Direct Labour $57,000 Expected # of Fabrication Machine Hours 5,642 Results for the year ended August 31, 2020 Revenue Discount Net Revenue Cosmetic Food Total $12,000,000 $22,000,000 34,000,000 (1,200,000) (2,200,000) (3,400,000) $10,800,000 $19,800,000 $30,600,000 Materials purchased 7,899,802 15,377,198 23,277,000 Accounting and legal 5,000 Utility Costs- Head Office 30,000 Utility Costs- Production 240,000 Administrative salaries 76,000 Inspection Costs 760,000 Factory Insurance 80,000 Sales commissions 340,000 Interest on business credit line 100,000 Management salaries (Omar, Anna, Ted $120,000 each) 360,000 Property Taxes- Head Office 6,500 Factory Building Amortization 412,000 Office supplies, Courier and Postage 7,760 Annual Business Licenses and Fees 2,500 Warranty Program Costs 500,000 Amortization Expense- Fabrication Equipment 650,000 Amortization Expense - Office Equipment 12,000 Business Liability Insurance 10,000 Telephone Costs-Factory 3,000 Telephone Costs - Head Office 6,000 Anna's House Rent $15,000 Labour- Assembly workers 2,000,000 3,500,000 5,500,000 Labour-Production supervisors 600,000 Total Expenses 32,992,760 Net Income (Loss) ($2,392,760) Current Year End Balances Cosmetic Food Total Raw Materials $1,500,000 $3,000,000 $4,500,000 Costs- Machines unfinished at year end 1,000,000 3,000,000 4,000,000 Costs- Machines complete but not sold 3,000,000 6,000,000 9,000,000 Last Year End Balances Raw Materials 1,000,000 2,000,000 3,000,000 Costs- Machines unfinished at year end 2,500,000 5,000,000 7,500,000 Costs - Machines complete but not sold $500,000 $1,500,000 $2,000,000 Food Tota! Actual Results for Fiscal 2020 Net Revenue in $ Cosmetic $10,800,000 $19,800,000 $30,600,000 Direct Labour Cost in $ $2,000,000 $3,500,000 $5,500,000 # of Assembly Labour Hours 75,000 175,000 250,000 # of Fabrication Machine Hours 200,000 375,000 575,000 # of Machines sold 40 100 140 # of Machines Produced 70 120 190 Inspection Hours 420 2,160 2,580 34,050 Factory Area used (sq metres) 11,250 22,800 Details of Proposed Customer Order Direct Materials $226,000 Direct Labour $57,000 Expected # of Fabrication Machine Hours 5,642
