PART 1

Fixed and Variable Cost Determinations

Unit Cost Calculations

The projected cost of a lamp is calculated based upon the projected increases or decreases to

current costs. The present costs to manufacture one lamp are:

Lamp Kit:

$16.0000000

per lamp

Direct Labor:

2.0000000

per lamp (4 lamps/hr.)

Variable Overhead:

2.0000000

per lamp

Fixed Overhead:

10.0000000

per lamp (based on normal capacity of 25,000 lamps)

Cost per lamp:

$30.0000000

per lamp

Expected increases for 20x2

When calculating projected increases round to TWO ($0.00) decimal places.

1. Material Costs are expected to increase by 5.00% .

2. Labor Costs are expected to increase by 6.00%.

3. Variable Overhead is expected to increase by 6.00%.

4. Fixed Overhead is expected to increase to $290,000.

5. Fixed Administrative expenses are expected to increase to $60,000.

6. Variable selling expenses (measured on a per lamp basis) are expected to increase

by 5.00%.

7. Fixed selling expenses are expected to be $33,000 in 20x2.

8. Variable administrative expenses (measured a per lamp basis) are expected to

increase by 5.50%.

On the following schedule develop the following figures:

1- 20x2 Projected Variable Manufacturing Unit Cost of a lamp.

2- 20x2 Projected Variable Unit Cost per lamp.

3- 20x2 Projected Fixed Costs.

To keep records of the actual cost of a special order job, a Job Order Cost System has been developed.
Overhead is applied at the rate of 50% of the direct labor cost.
Job Order Costing Section
On January 1, 20x2, Division S began Job 2407 for the Client, THE BIG CHILDREN STORE. The
job called for 4,000 customized lamps. The following set of transactions occurred from
January 5 until the job was completed:
	5-Jan	Purchased 4,125 Lamp Kits @ $16.65 per kit.
	9-Jan	4,175 sets of Lamp Kits were requisitioned.
	17-Jan	Payroll of 630 Direct Labor Hours @ $9.80 per hour.
	30-Jan	Payroll of 680 Direct Labor Hours @ $10.05 per hour.
	30-Jan	3,990 lamps were completed and shipped. All materials requisitioned were
		used or scrapped, and are a cost of normal processing.
	Month End Overhead Information
	Actual Variable Manufacturing Overhead				$ 1,493.40
	Actual Fixed Manufacturing Overhead				$ 41,123.45
							Round to two places, $##.##
	Cost of Direct Material Incurred in Manufacturing Job 2407
							$ 832.50	{13.01}
	Cost of Direct Labor Incurred in Manufacturing Job 2407
							$ 13,008.00	{13.02}
	Cost of Manufacturing Overhead Applied to Job 2407
								{13.03}
	Cost of manufacturing one lamp
							$ 29,095.00	{13.04}