The Cotton Bear Clothing Company has to decide whether to produce boys' trousers or girls' skirts....

 

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The Cotton Bear Clothing Company has to decide whether to produce boys' trousers or girls' skirts. Market research conducted for the company shows that the demand for boys' trousers is 200 per month at a selling price of $95 each and that the demand for girls' skirts is 100 per month at $120 each. Cost information involving either the production of boys' trousers or girls' skirts is shown on the following page. Required a Advise the management of Cotton Bear Clothing Company whether it is more profitable to produce boys' trousers or girls' skirts by calculating the following: i the break-even points in units and sales dollars for each product ii the level of profits or losses if either product was made, assuming the market research demand figures for sales volume and selling prices iii the margin of safety percentage for each product using the market research demand figures as predicted sales volumes for the month. Cost information Material per unit Labour rate per hour Labour hours per unit Overhead costs per unit Monthly rent Monthly depreciation on assets Monthly salary for Production Supervisor Monthly administration costs Boys' trousers $25.00 $18.50 2.50 hours. $0.55 $1,650.00 $250.00 $1,250.00 $500.00 b Assume that the management of Cotton Bear Clothing Company has decided that the company has the capability and capacity to produce both boys' trousers and girls' ratio of 2:1 respectively. Using the cost skirts and that the products will sell in information provided and assuming no additional costs will be incurred, calculate: i the weighted average unit contribution margin Cost information. Standard cost information: Standard labour rate per hour Standard labour hours t per unit ii the combined break-even point for the two products, showing clearly how many units of boys' trousers and girls' skirts are required. Actual cost information: Actual labour rate per hour Actual labour hours used per unit c The management of Cotton Bear Clothing Company decided to investigate the standard-setting process in the organisation. They obtained the following information: Boys' trousers Girls' skirts $26.00 $18.50 1.90 hours $0.70 $1,650.00 $250.00 $1,250.00 $500.00 $18.50 2.50 hours. $17.50 2.60 hours Girls' skirts $18.50 1.90 hours $22.50 1.70 hours i Discuss the importance of the standard-setting process for any organisation. ii Calculate the direct labour rate and efficiency variances for making the boys' trousers and girls' skirts. Discuss your findings and any corrective actions that should be taken by the manager of the company. The company had set currently attainable standards. The Cotton Bear Clothing Company has to decide whether to produce boys' trousers or girls' skirts. Market research conducted for the company shows that the demand for boys' trousers is 200 per month at a selling price of $95 each and that the demand for girls' skirts is 100 per month at $120 each. Cost information involving either the production of boys' trousers or girls' skirts is shown on the following page. Required a Advise the management of Cotton Bear Clothing Company whether it is more profitable to produce boys' trousers or girls' skirts by calculating the following: i the break-even points in units and sales dollars for each product ii the level of profits or losses if either product was made, assuming the market research demand figures for sales volume and selling prices iii the margin of safety percentage for each product using the market research demand figures as predicted sales volumes for the month. Cost information Material per unit Labour rate per hour Labour hours per unit Overhead costs per unit Monthly rent Monthly depreciation on assets Monthly salary for Production Supervisor Monthly administration costs Boys' trousers $25.00 $18.50 2.50 hours. $0.55 $1,650.00 $250.00 $1,250.00 $500.00 b Assume that the management of Cotton Bear Clothing Company has decided that the company has the capability and capacity to produce both boys' trousers and girls' ratio of 2:1 respectively. Using the cost skirts and that the products will sell in information provided and assuming no additional costs will be incurred, calculate: i the weighted average unit contribution margin Cost information. Standard cost information: Standard labour rate per hour Standard labour hours t per unit ii the combined break-even point for the two products, showing clearly how many units of boys' trousers and girls' skirts are required. Actual cost information: Actual labour rate per hour Actual labour hours used per unit c The management of Cotton Bear Clothing Company decided to investigate the standard-setting process in the organisation. They obtained the following information: Boys' trousers Girls' skirts $26.00 $18.50 1.90 hours $0.70 $1,650.00 $250.00 $1,250.00 $500.00 $18.50 2.50 hours. $17.50 2.60 hours Girls' skirts $18.50 1.90 hours $22.50 1.70 hours i Discuss the importance of the standard-setting process for any organisation. ii Calculate the direct labour rate and efficiency variances for making the boys' trousers and girls' skirts. Discuss your findings and any corrective actions that should be taken by the manager of the company. The company had set currently attainable standards.

Answer rating: 100% (QA)

a i Breakeven Points Boys Trousers Breakeven Point UnitsFixed Costs Contribution Margin per Unit Breakeven Point Units1650 952526055 Breakeven Point Units1650 955155 Breakeven Point Units1650 4345 Bre... View the full answer