IPorter Corporation manufactures and sells luggage with integrated technologies for long distance travel. Last month, the...
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IPorter Corporation manufactures and sells luggage with integrated technologies for long distance travel. Last month, the company produced and sold 10,000 units at a price of $75 each. Related information appears below: Total Cost $18,000 Item Wages for administrative staff Utilities for factory Rent on factory and equipment 28,000 86,000 46,000 Circuits and wires Product delivery costs Salary for factory manager Advertising (fixed) Salaries for office staff Metal, plastic and rubber Wages for factory assembly staff 28,000 8,200 14,000 96,000 106,000 183,000 Required. a, Identify all costs above as either a product cost (specifically DM, DL or OH) or a period cost (PC). b. The company uses the cost-plus approach to pricing and wants to achieve an approximate profit of 30 percent. Did it meet its profit objective last month? Briefly explain. Regardless, what two specific actions would you recommend to improve its profitability? c. If the company had only sold 7,000 units last month, what dollar amount would it report for cost of goods sold as well as ending inventory in its financial statements? Round your final answer to the nearest dollar. d. Identify all costs as either a variable cost (VC) or a fixed cost (FC) then calculate the variable cost per unit (rounded to the nearest penny) assuming 10,000 units were produced and sold as well as the total fixed costs. What is the break-even point (rounded to the nearest whole unit)? Prepare a CVP income statement to answer each scenario below. The scenarios are independent of each other and unless specified otherwise, use the volume, rounded VC per unit and FC data from part d as well as a price of $75 per unit. e. For next month, the company is considering using recycled materials for its product, If so, its most recent costs for materials would increase by $10 per unit. As a result, the company would increase the price by $5 per unit to help offset that cost increase. In addition, management would increase advertising by $15,000, If those changes are made, the company anticipates that unit sales (and production) volume would increase by 2,000 units. What is the projected net income under this scenario? t. For next month, the company is considering whether it should make upgrades to the factory and equipment; if so, the rent on factory and equipment would increase by $10,000. Management projects that its sales (and production) volume would increase by 4,000 units, if the price were lowered by $10 per unit for all units. What is the projected net income under this scenario? g. Would you recommend either course of action in part e or part ? Briefly explain. IPorter Corporation manufactures and sells luggage with integrated technologies for long distance travel. Last month, the company produced and sold 10,000 units at a price of $75 each. Related information appears below: Total Cost $18,000 Item Wages for administrative staff Utilities for factory Rent on factory and equipment 28,000 86,000 46,000 Circuits and wires Product delivery costs Salary for factory manager Advertising (fixed) Salaries for office staff Metal, plastic and rubber Wages for factory assembly staff 28,000 8,200 14,000 96,000 106,000 183,000 Required. a, Identify all costs above as either a product cost (specifically DM, DL or OH) or a period cost (PC). b. The company uses the cost-plus approach to pricing and wants to achieve an approximate profit of 30 percent. Did it meet its profit objective last month? Briefly explain. Regardless, what two specific actions would you recommend to improve its profitability? c. If the company had only sold 7,000 units last month, what dollar amount would it report for cost of goods sold as well as ending inventory in its financial statements? Round your final answer to the nearest dollar. d. Identify all costs as either a variable cost (VC) or a fixed cost (FC) then calculate the variable cost per unit (rounded to the nearest penny) assuming 10,000 units were produced and sold as well as the total fixed costs. What is the break-even point (rounded to the nearest whole unit)? Prepare a CVP income statement to answer each scenario below. The scenarios are independent of each other and unless specified otherwise, use the volume, rounded VC per unit and FC data from part d as well as a price of $75 per unit. e. For next month, the company is considering using recycled materials for its product, If so, its most recent costs for materials would increase by $10 per unit. As a result, the company would increase the price by $5 per unit to help offset that cost increase. In addition, management would increase advertising by $15,000, If those changes are made, the company anticipates that unit sales (and production) volume would increase by 2,000 units. What is the projected net income under this scenario? t. For next month, the company is considering whether it should make upgrades to the factory and equipment; if so, the rent on factory and equipment would increase by $10,000. Management projects that its sales (and production) volume would increase by 4,000 units, if the price were lowered by $10 per unit for all units. What is the projected net income under this scenario? g. Would you recommend either course of action in part e or part ? Briefly explain.
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aPeriod cost Is the cost which is a fixed cost irrespective of no of units produced The following are the period cost in the given sum 1 wages for adm... View the full answer
Related Book For
Cost Management Measuring Monitoring and Motivating Performance
ISBN: 978-0470769423
2nd Canadian edition
Authors: Leslie G. Eldenburg, Susan Wolcott, Liang-Hsuan Chen, Gail Cook
Posted Date:
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