Coombes is examining the activities for the past year. Voguish Couches rents a small administrative office...

  

 

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Coombes is examining the activities for the past year. Voguish Couches rents a small administrative office in Melbourne's central business district (CBD) for $30,000 per year and a large warehouse in Tullamarine for $40,000 per year. The cost with salary for staff in the administrative office in the CBD is $90,000 per year. Voguish Couches has hired a firm for managing the sales and this firm charges a commission of $50 for each completed sale. The invoicing system used by Voguish Couches is outsourced and for each sale completed the firm charges $5. The administrative office had in the past year other miscellaneous costs of $5,000, mostly costs with the lease of material and stationery, and this yearly cost is expected to remain the same amount for years to come. A full-time employee gets paid $80,000 per year for supervising the casual staff working in the warehouse in Tullamarine. Like the administrative office, the warehouse had other miscellaneous costs of $5,000 in the past year and is expected to remain the same amount for years to come. Voguish Couches has a contract with a delivery firm for delivering the copies of the sofas to their clients, but Coombes is not able to find the contract and is not sure how much the firm charges per transaction. The only information he can gather is regarding the past years: Table 1- Annual unit delivery and costs Delivery Cost Units Delivered $1,500 $1,420 $1,480 Year Two years ago 600 Three years ago 575 Four years ago 580 Five years ago $1,400 550 Below is a table listing all the material used during the past year to manufacture 500 sofas and the costs incurred. There was no stock or work in process in the beginning or end of the year. Table 2 - Material costs Material Total Cost Quantity 1,500 m? 6,000 Units Fabric $3,000 $36,000 $250 $500 Timber Foam 500 Kilograms Button stud 5,000 Units $10,000 $500 Varnish 500 Litres Bolt 5,000 Units The manufacturing activity is made by casual staff. The first stage is the woodworking, where a carpenter is hired by $30 per hour for working with the timber. This task is very labour intensive and for preparing the material a carpenter takes 5 hours per sofa. Once the timber is ready for being assembled a casual staff is paid $25 per hour for assembling the sofa with the bolts and adding the paddings (fabric, foam, and button studs). The assembling takes only 1 hour per sofa. The final stage of manufacturing is varnishing the sofa. A casual staff is paid $27 per hour for varnishing the sofa and this task takes 2 hours. Required a) Coombes is having some trouble crunching the numbers and has asked for your help identifying and classifying all the costs between (a) fixed, mixed, or variable, (b) direct or indirect, and (c) product cost or period cost. Use a table for presenting the answer to this question, as format suggested below. (Chapter 2, 10 marks) Cost item Fixed, mixed, or variable cost Direct or indirect cost Product or period cost [cost item #1] [cost item #2] [cost item #3] [...] b) Use the high-low method for estimating the cost function for annual delivery costs. (Chapter 9, 10 marks) c) Coombes is also having trouble and asked for your help in calculating the total product cost and unit product cost for the past year for Voguish Couches. (Chapter 2, 10 marks) Coombes is examining the activities for the past year. Voguish Couches rents a small administrative office in Melbourne's central business district (CBD) for $30,000 per year and a large warehouse in Tullamarine for $40,000 per year. The cost with salary for staff in the administrative office in the CBD is $90,000 per year. Voguish Couches has hired a firm for managing the sales and this firm charges a commission of $50 for each completed sale. The invoicing system used by Voguish Couches is outsourced and for each sale completed the firm charges $5. The administrative office had in the past year other miscellaneous costs of $5,000, mostly costs with the lease of material and stationery, and this yearly cost is expected to remain the same amount for years to come. A full-time employee gets paid $80,000 per year for supervising the casual staff working in the warehouse in Tullamarine. Like the administrative office, the warehouse had other miscellaneous costs of $5,000 in the past year and is expected to remain the same amount for years to come. Voguish Couches has a contract with a delivery firm for delivering the copies of the sofas to their clients, but Coombes is not able to find the contract and is not sure how much the firm charges per transaction. The only information he can gather is regarding the past years: Table 1- Annual unit delivery and costs Delivery Cost Units Delivered $1,500 $1,420 $1,480 Year Two years ago 600 Three years ago 575 Four years ago 580 Five years ago $1,400 550 Below is a table listing all the material used during the past year to manufacture 500 sofas and the costs incurred. There was no stock or work in process in the beginning or end of the year. Table 2 - Material costs Material Total Cost Quantity 1,500 m? 6,000 Units Fabric $3,000 $36,000 $250 $500 Timber Foam 500 Kilograms Button stud 5,000 Units $10,000 $500 Varnish 500 Litres Bolt 5,000 Units The manufacturing activity is made by casual staff. The first stage is the woodworking, where a carpenter is hired by $30 per hour for working with the timber. This task is very labour intensive and for preparing the material a carpenter takes 5 hours per sofa. Once the timber is ready for being assembled a casual staff is paid $25 per hour for assembling the sofa with the bolts and adding the paddings (fabric, foam, and button studs). The assembling takes only 1 hour per sofa. The final stage of manufacturing is varnishing the sofa. A casual staff is paid $27 per hour for varnishing the sofa and this task takes 2 hours. Required a) Coombes is having some trouble crunching the numbers and has asked for your help identifying and classifying all the costs between (a) fixed, mixed, or variable, (b) direct or indirect, and (c) product cost or period cost. Use a table for presenting the answer to this question, as format suggested below. (Chapter 2, 10 marks) Cost item Fixed, mixed, or variable cost Direct or indirect cost Product or period cost [cost item #1] [cost item #2] [cost item #3] [...] b) Use the high-low method for estimating the cost function for annual delivery costs. (Chapter 9, 10 marks) c) Coombes is also having trouble and asked for your help in calculating the total product cost and unit product cost for the past year for Voguish Couches. (Chapter 2, 10 marks)

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