Your information:

1. Your company produces boxed cereal. There are three main processes used to make the cereal.The first process preps and shapes the corn into flakes.The second process bakes and seasons the corn flakes.The third process packages the cereal.The cereal sold in 16 oz boxes (1 box is a unit)

2. Information on the direct materials is listed in table 1. Consider this information the standard.Direct labor information given in Table 2.Consider this information the standard.

3. Annual overhead information is given in Table 3. Overhead is allocated based direct labor hours.Estimated annual direct labor hours are 20,000.Calculate a predetermined OH rate (round to two decimal places if needed).Use this rate when you need to apply OH.

4. Table 4 gives you the information for the last two months on the overhead cost.Use this information to determine the fixed and variable portions of the cost.(You will need this information to complet Table 5). Machine hours have been determined as the best cost driv er for separating mixed cost into their fixed and variable portions. It takes approximately 10 minutes of total machine time for each cereal box (or 1/6 a machine hour per box of cereal).

5. Table 5 is where you will list all your production cost, separated into their fixed and variable components.

6 .Cost-Volume-Profit (CVP) Relationships

a.Selling Price:You sell a box of cereal for $5.70

b.Breakeven point: Calculate the breakeven point. Be sure to include the fixed component of mixed cost in your fixed costs and the variable component in thevariable cost.Show your breakeven in Sales units and in Sales Dollars

c.Profit Planning:Determine the number of units you must sell to make an annual pre-tax profit using 3 assumptions concerning your net income (profit), both in sales units and sales dollars.

i.Aggressive Profit ($225,000)

ii.Conservative Profit ($75,000)

iii.Average Profit ($186,460)

7.Budgeting:

a.Createa sales budget using the information for earning an average profit for the year.You will break the budget down into the four quarters for the year. (Sales tend to be consistent each quarter, you can only sale a whole unit so round-up if necessary) Use table 6 to comple the sales budget.

b.Creat a production budget for each quarter of the year (keep it in quarters; you do not need to break it down by month).You desire to keep 10% of next quarter's sales in ending inventory.Sales for Qtr 1 the following year (year 2) are expected to be 30,000 boxes of cereal. There is not any beginning finished goods inventory for quarter one this year. Use table 7 to comple the production budget.

8.Running quarter one -- Weighted-average process costing.Table 8 presents the information for the packaging department.Comple the questions under table 8.

9.Actuals are in for quarter one.You sold 10% less units than you budgeted for (round to a whole unit), but price per unit was $5.80.

a.Calculate revenue

b.Compute the cost of goods sold (total and per unit) before adjusting for actual OH cost

10.Actual corn usage for quarter one was 146,232 pounds at a price of $0.49 per pound. Actual equivalent units of production (boxes of cereal) compleed through the first process (where the corn is added) was 46,214.Calculate the direct materials variances for the corn (price, usage, and total) and indicate if these variances are favorable or unfavorable.

11.Actual direct labor hours for the quarter were 7,660 at an average rate of $11.00 per hour.For actual production, you expected to use 7,300 direct labor hours.Calculate the direct labor variances (rate, efficiency and total) and indicate if these variances are favorable or unfavorable.

12.For next quarter, you have been asked to supply a special order of your cereal.The non-profit organization requesting this order would like a custom box (packaging) that will cost $0.50 instead of the normal $0.20 per box.The request is for 800 boxes of cereal.Based on your projections you have the capacity for this order.What is the minimum price per unit and total price you would be willing to accept on this order?(You cannot afford to take this offer at a loss, but you are fine with accepting it at cost).

13.Determine over- or under-applied overhead and close to cost of goods sold.Actual OH cost are given in table 13 (look at #11 for actual DL hours used to apply OH).Determine the new cost of goods sold amount.

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table 1 direct material

material(corn), quantity per unit (3lbs), cost (0.50) total per unit (1.50)

material(seasoning), quantity per unit (1 ounce), cost (0.05) total per unit (.05)

material(package), quantity per unit (1 box), cost (0.20) total per unit (.20)

Total $1.75

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table 2 direct labor

Processor (hour/unit) 0.1,Rate 10.50 Total cost 1.05

baker (h/u) .04 Rate 10.50 totalcost .42

packager (h/u) 0.02 rate 10.50 total cost .21

total cost 1.68

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Table 3 yearly overhead cost

Indirect material$9060

Indirect labor$ 60000

Machine Maintenance $5275

Electricity 7985

Depreciation7200

Quality testing 6480

total 96000

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Predetermined OH rate:

table 4 actual overhead cost for the last two months

Indirect Materialmonth1=755 month2=755

Indirect Labormonth1=5000 month2=5000

Machine Maintenancemonth1=338 month2 410

Electricitymonth1=504 mont2630

Depreciationmonth1=600 month2=600

Quality testingmonth1=420 month2 =500

machine hrsmonth1=1200 month2=1500

*10 minutes of machine time per box of cereal (1/6 hour = 1 unit)

Complet any calculations here:

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Table 5:Variable and Fixed Costs

COSTS DescriptionVARIABLE Cost per unitFIXED Cost per Year

If a cost is mixed, put the fixed amount in the fixed column and the variable amount in the variable column.

CVP Calculations

Table 6 - Sales Budget (Q1, Q2, Q3, Q4)

Table 7 - Production Budget (q1,q2,q3,q4)

Process Costing - Packaging Department

Direct materials are added 90% at the beginning of the process and the remaining 10% are added when the cereal is 50% complet with the packaging process.Direct labor and overhead are added evenly throughout the process.

Table 8 unit and cost info

Beg WIP = physical unite 4,000 (40% complet), transferred $15000, D.M $720 ,D.L $466.09

Transferred in = phy/un 42013, tran 153867.71

End WIP = 4200(30% COMPLETD)

Added during Qtr 1:

Direct Materials -- $10,678.25

Direct Labor - 860 hrs @ $11.00 per hour

Overhead - OH is applied based on predetermined OH rate and actual DL hours

1. Determine the number of units completed during quarter 1.

2. Compute the equivalent units using the weighted average method

3. Compute the cost per equivalent unit using the weighted average method

4. Compute the cost of goods transferred to finished goods inventory

5. Compute the ending balance in WIP, Packaging

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Table 9 - Actual Results (calculate revenue and COGS

Units sold? sales price ?Revenue ?

unites sold ?cost per unit ?Cogs?

Table 10 - DM Variances (corn only)

price v ?

usage v ?

total v ?

Calculations:

Table 11 - Direct Labor Variances

rate V ?

efficiency v ?

total v ?

Calculations:

#12 Calculations (Minimum price on special order)

Table 13 - Actual OH cost for Quarter 1

Indirect Materials $2300

ind-Labor $15000

machine maintenance $2000

electricity $3200

deprecation $1800

quality $2200

Amount of applied OH:

Amount of actual OH:

Under or Over- Applied Amount:

New COGS amount: