Que. No. 2. ABC a product has just organized a new division to manufacture and sell...

 

 

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Que. No. 2. ABC a product has just organized a new division to manufacture and sell specially designed tables using select hardwoods for PCs. The company's new plant is highly automated and thus requires high monthly fixed costs, as shown in the schedule below: Manufacturing cost: Required: Variable cost per unit: DM - DL VMOH FMOH cost (total) S&Ad cost: Variable Fixed (total) (2+2+2+1.5+2+1.5)=11 Unit Produced Unit Sold Selling price per unit The company regards all of its workers as full time employees and has a long-standing no - layoff policy. Furthermore, production is highly automated. During a particular month of operations, the following activity was recorded: 2,000 $80 6 1,400 $450 4 $240,000 15% of sales $160,000 1. Compute the unit product cost under AC and VC methods. 2. Prepare an Income Statement for the month using AC method. 3. Calculate the amount of VC net income using a reconciliation report. 4. Assume that in order to continue operations, the company must obtain additional financing. As a member of top management which of the statements that you have prepared would you prefer to take with you as you negotiate with the bank? Why? 5. Show the break-up of COGS under AC. 6. Show the break-up of El under VC method. Que. No. 2. ABC a product has just organized a new division to manufacture and sell specially designed tables using select hardwoods for PCs. The company's new plant is highly automated and thus requires high monthly fixed costs, as shown in the schedule below: Manufacturing cost: Required: Variable cost per unit: DM - DL VMOH FMOH cost (total) S&Ad cost: Variable Fixed (total) (2+2+2+1.5+2+1.5)=11 Unit Produced Unit Sold Selling price per unit The company regards all of its workers as full time employees and has a long-standing no - layoff policy. Furthermore, production is highly automated. During a particular month of operations, the following activity was recorded: 2,000 $80 6 1,400 $450 4 $240,000 15% of sales $160,000 1. Compute the unit product cost under AC and VC methods. 2. Prepare an Income Statement for the month using AC method. 3. Calculate the amount of VC net income using a reconciliation report. 4. Assume that in order to continue operations, the company must obtain additional financing. As a member of top management which of the statements that you have prepared would you prefer to take with you as you negotiate with the bank? Why? 5. Show the break-up of COGS under AC. 6. Show the break-up of El under VC method.

Answer rating: 100% (QA)

1 Compute the unit product cost under AC and VC methods Under absorption costing AC method Variable cost per unit 80 DM 6 DL 4 VMOH 90 Total fixed manufacturing overhead cost per unit 240000 2000 unit... View the full answer