Cost accounting: relevant costs & revenues Please solve example two (2) Jeremyco
ID: 2554845 • Letter: C
Question
Cost accounting: relevant costs & revenues Please solve example two (2) Jeremyco obs, the 150-hour requiremsent, studems groups, ec Example One Jiaqico has the following information Current Volume (boxes) Capacity Sales Price Variable Costs Monthly Fixed Costs Cookies 640 800 56 $2 $1,100 500 750 57 $2.50 200 Cookies Fixed Costs include an allocation of $200 per month of depreciation on ovens and Beowsies Fixed Costs include an allocation of $50 per month of deprociation on ovens Al other fixed costs are division-specific and would be eliminated iastantly if the division were discontimued Treat each of the following situations separately 1 Efrenco has offered to bay 400 boxes of cookies each month for $5 per box If Jiaqico accepts this offer, it will eliminate $300 per month in advertising costs Should Fiaqico accept Efremoo's offer? 2 Melvaco has offered to buy 100 boxes of brownies from Jiagico each morth Melvaco's parchase will not affect Jiaqioo's other sales or fixed conts, but it will increase its variable costs $0.50 per box. This increase arises because Melvaco wants the brownies made with a special kind of fise-quality chocolate What is the minimum price Jiaqico should charge Melvaco for this special order? . Marianneco has offered to peovide beownies to Jiagjico so Jiagico would oaly make oookies Mariannecwill charge Jagico $3 60 per bex Should Jiaqico accept the offer? Jiagico is considering frosting 200 boxes of brownies each month. Total sales of brownies would not increase, it would sell 300 boxes of unfrosted beownies and 200 boxes of frosted browaies each month. The frosted brownies would sell for $3.50 per box. The frosting would cost so 60 per box of brownies, and direct labor costs would increase by $0.40 per box Jiaqico plans a peomotional campaign for the new frosted browsies that will cost $220 per month. Should Jiagico frost the beowaies? 5 Create oontribution-format income statements for each situation described above Esample Two information, what should Jeremsyce produce? Jeremyco can only obeain 91 ounces of gold each moeth Given the following monthly i Market Demand 100 rings per month 50 pecklaces per moeth 2.000 per moeth Vc Sales Price $500 Gold per rem Rings Necklaces Bracelets ? ounceExplanation / Answer
Solution: Jeremyco should produce Rings 100 Necklaces 50 Bracelets 8 Working Notes: Since, there is limited resources , so for decision making we need to find out contribution margin per unit of resources to have optimum result. Per month available gold = 91 ounces Now Rings Necklaces Bracelets Selling price per unit $500 $800 $1,000 Less: Variable cost per unit $200 $450 $600 Contribution margin per unit (a) $300 $350 $400 Gold required per item (ounce) (b) 0.25 1 2 Contribution margin per ounce of gold (a/b) 1200 350 200 Ranking 1 2 3 Since, Contribution margin per ounce of gold which is limited , will be used to produce maximum unit of Rings as it have highest contribution margin per ounce of gold , then balance will be used for Necklace as it have second next highest Contribution margin per ounce of gold and balance if any to Bracelets Statement of allocation of gold for optimum product mix & maximum gain. a b c = a x b d = c / b Gold required per item (ounce) (b) Units can be produce Ranking Market demand Gold allocation Rings 1 100 0.25 =100 x 0.25 =25 100 Necklaces 2 50 1 =50 x 1 = 50 50 Bracelets 3 2000 2 16 ounce balance 8 91 Ounce Hence, Per month units to be produce Rings 100 Necklaces 50 Bracelets 8 Please feel free to ask if anything about above solution in comment section of the question.