{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-06-28T03:33:31-04:00", "answer_date": "2024-06-28 03:33:31", "is_docs_available": null, "is_excel_available": null, "is_pdf_available": null, "count_file_available": 0, "main_page": "student_question_view", "question_id": "4230421", "url": "\/study-help\/questions\/question-question-classic-cabinets-has-a-factory-that-produces-custom-4230421", "question_creation_date_js": "2024-06-28T03:33:31-04:00", "question_creation_date": "Jun 28, 2024 03:33 AM", "meta_title": "[Solved] Question: Question: Classic Cabinets has | SolutionInn", "meta_description": "Answer of - Question: Question: Classic Cabinets has a factory that produces custom kitchen cabinets. It has multiple product line | SolutionInn", "meta_keywords": "question,classic,cabinets,factory,produces,custom,kitchen,multiple,product,lines,materials,labor", "question_title_h1": "Question: Question: Classic Cabinets has a factory that produces custom kitchen cabinets. It has multiple product lines. Materials and labor for the cabinets are determined", "question_title": "Question: Question: Classic Cabinets has a factory that produces custom kitchen cabinets.", "question_title_for_js_snippet": "Question Question Classic Cabinets has a factory that produces custom kitchen cabinets It has multiple product lines Materials and labor for the cabinets are determined by each job To simplify the assignment, we will assume the following average costs The materials include $1,500 for the wood and other materials on a per job basis It requires 20 hours of labor on average for a custom kitchen The hourly rate is $12 The sales price will be set at a markup of 85 The company estimates that it will have 16,000 direct labor hours in total for the kitchen cabinets It assumes 800 units are sold on average per year A breakdown of estimated yearly costs related to the kitchen cabinets follows Salaries office administrative $ 520,000 Salaries for factory personal $ 220,000 Office Rent $ 125,000 Factory Rent $20,000 Utilities and Misc office expenses(based on units sold) $20,000 Travel(based on units sold) $24,000 Insurance office $14,000 Depreciation office equipment $45,000 Depreciation for factory equipment $70,000 Advertising $20,000 Sales commissions(based on units sold) $45,000 Factory Property taxes $10,000 Maintenance for factory equipment $80,000 1) Below is my calculation for the following question (ie Question 7 ) Use a CVP Income Statement with modeled changes Assume you are selling the 800 units If the following changes were to be made, calculate a new CVP Income Statement Direct Material costs decrease by 10 fixed costs increase by 15 and sales price would increase by 5 2)Can you elaborate on this question, especially the ABC portion Explain what will happen to the MOH costs on a per unit basis if fewer units are sold If another product line that would share the MOH costs was added, how would it impact the MOH costs Should ABC be considered If so, what are the pertinent points and show calculations needed to support it Note Here is an answer from a previous tutor, but I do not understand If fewer no of units are sold, there may be ending inventories and if variable costing is followed ,(CVP) (unlike in full absorption costing) most of the MOH that are fixed will be deferred in closing stock This will impact the per unit cost which will consist of only variable mfg costs If different product lines are launched, MOH will be spread over and needs to be allocated when activity wise allocation for the products will be accurate, even though initially time consuming expensive Quenthnti Preu I three CVPIncmne Statements usin the followi'n 1r votumes 41 , Maud 1,10 mom mat evenmmmmssmm c meanmlateunnsam sanessm mp wamsapmmsmm a m mm (nation 1 Prepare the CVP Income Statement with modeled charges Assume you are sellirg the 000 units Ifthe followirg charges were to be made, calculate a new CVF, noome Statement Direct Material costs decrease by 10 xed costs increase by 1596 andsales price would increase by 5 5 LEN 00 5 Lisa 00 Decrease mi 10 inrqueion 7 MANUEAcrumNG OVERHEAD (MDHJ Factory Rent $20,000 00 Ofce Admin Overhead Salaries $520,000 00 lnu'easeof' VARIABLE cosTs per unit Direct Labor asalculated In question 4 240 00 $240 00 Utiltiiesand MiscOiIIe Expensn total estimated vearlv ram units EE Sales Commisions total estimated yearly IMO units", "question_description": "

Question:<\/strong>Question:<\/strong>Classic Cabinets has a factory that produces custom kitchen cabinets. It has multiple product lines.<\/p>

Materials and labor for the cabinets are determined by each job. To simplify the assignment, we will assume the following average costs.<\/p>

The materials include $1,500 for the wood and other materials on a per job basis. It requires 20 hours of labor on average for a custom kitchen. The hourly rate is $12.The sales price will be set at a markup of 85%.<\/p>

The companyestimates<\/strong>that it will have 16,000 direct labor hours in total for the kitchen cabinets.<\/p>

It assumes 800 units are sold on average per year. A breakdown of estimated yearly costs related to the kitchen cabinets follows:<\/p>

Salaries- office & administrative<\/strong><\/p>

$ 520,000<\/strong><\/p>

Salaries for factory personal<\/strong><\/p>

$ 220,000<\/strong><\/p>

Office Rent<\/strong><\/p>

$ 125,000<\/strong><\/p>

Factory Rent<\/strong><\/p>

$20,000<\/strong><\/p>

Utilities and Misc office expenses(based on units sold)<\/strong><\/p>

$20,000<\/strong><\/p>

Travel(based on units sold)<\/strong><\/p>

$24,000<\/strong><\/p>

Insurance - office<\/strong><\/p>

$14,000<\/strong><\/p>

Depreciation - office equipment<\/strong><\/p>

$45,000<\/strong><\/p>

Depreciation for factory equipment<\/strong><\/p>

$70,000<\/strong><\/p>

Advertising<\/strong><\/p>

$20,000<\/strong><\/p>

Sales commissions(based on units sold)<\/strong><\/p>

$45,000<\/strong><\/p>

Factory Property taxes<\/strong><\/p>

$10,000<\/strong><\/p>

Maintenance for factory equipment<\/strong><\/p>

$80,000<\/strong><\/p>

1) Below is my calculation for the following question (ie \"Question 7\").<\/strong><\/p>

Use a CVP Income Statement with modeled changes.<\/strong><\/p>