Professional Documents
Culture Documents
Brain Mass+ Business+ +5014
Brain Mass+ Business+ +5014
Transactions: Raw material purchases Raw materials issued Direct labor costs incurred Overhead costs incurred Costs of goods completed and transferred Cost of sales
Raw materials issued (transaction B) moves account to the "Work in Process" account.
Cost of goods completed and transferred (tr "Work in Process" account to the "Finished
erials issued (transaction B) moves raw materials from the "Raw Materials" o the "Work in Process" account.
oods completed and transferred (transaction E) moves the cost from the Process" account to the "Finished Goods" account.
Salary of legal secretary Office rent and utilities Other costs Total costs
(A) To earn $3,300, Micha needs to be able to bill $3,300 + $5,700 = $9,000. If she can bill 150 hours then the rate should be $9,000/150 hours = $60/hour. (B) If Micha bills 100 hours she will have sales of 100 hours * $60/hour = $6,000. The total costs stay at $5,700 so her earnings will be $6,000 - $5,700 = $300.
Direct production cost Overhead cost Selling and administrative cost Total cost Units made Price/unit
Total Product J Product K $700,000 $400,000 $300,000 $280,000 $160,000 $120,000 $140,000 $80,000 $60,000 $1,120,000 $640,000 $480,000 10,000 10,000 $ 64 $ 48
(A) Since an annual profit of $280,000 is desired the profit margin = $280,000/$1,120,000 = 0.25 = 25%. Selling price for product J = $64 * 1.25 = $80. Selling price for product K = $48 * 1.25 = $60. (B) Profit per unit of J sold is $80 - $64 = $16 and profit per unit of K sold is $60 - $48 = $12 (25% of the selling price in each case). Total profit is 5,000 (units of J) * $16 + 15,000 (units of K) * $12 = $260,000. (C) Since each unit of J sold has a higher profit ($16) than each unit of K sold ($12), this leads to a reduction of profit when of K are exchanged for units of J. For example in part B of the problem 5,000 more units of K were sold while 5,000 less units of J were sold. As a result the profit decreased.