ACCTCY 2036 Chapter 10: Developing a Business Plan for a Manufacturing Company

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azureguinea-pig123

4 Dec 2016

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Developing a business plan for a manufacturing company: cvp planning and analysis. Raw materials are the materials, ingredients and parts that make up a. Description of the employees, facilities, and equipment necessary for the company"s products manufacture of a company"s products. The production plan influences the company"s financial plan inspection criteria it uses, and how it handles defective products. Describes where in the production process this quality inspection occurs, the. Direct materials are the raw materials that physically become part of a manufactured product. Direct labor is the labor of the employees who work with the direct materials to convert or assemble them in the finished product. Factory overhead includes all items, other than direct materials and direct labor, that are necessary for the manufacture of the product. Because they are not traceable to products, these raw materials and labor are called indirect materials and indirect labor.

Related Questions

X Company had the following inventories at the beginning of the year:
Raw Materials, $10,000
Work-in Process, $25,000
Finished Goods, $30,000
It had following transactions during the year. The company uses a predetermined manufacturing overhead rate of 60% of direct labor cost.
1. Purchased raw materials costing $200,000.
2. Put raw materials costing $195,000 into production.
3. Wages of employees that worked directly on products was $350,000
4. The wages of factory supervisors and factory maintenance employees was $150,000.
5. Advertising, insurance on sales person's car's sales salaries totaled $120,000.
6. Depreciation of factory equipment was $50,000.
7. The cost of goods completed during the year was $700,000.
8. The company sold products for $900,000 that had cost $680,000 to manufacture.

Assuming the company closes any overapplied or underapplied manufacturing overhead to cost of goods sold, what is cost of goods sold for the year?

amaranthsalmon611

Cane Company manufactures two products called Alpha and Beta that sell for $175 and $135, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 117,000 units of each product. Its average cost per unit for each product at this level of activity are given below:

	Alpha			Beta
Direct materials		$	40		$	15
Direct labor			30			30
Variable manufacturing overhead			18			16
Traceable fixed manufacturing overhead			26			29
Variable selling expenses			23			19
Common fixed expenses			26			21
Total cost per unit		$	163		$	130

The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars.

9. Assume that Cane expects to produce and sell 91,000 Alphas during the current year. A supplier has offered to manufacture and deliver 91,000 Alphas to Cane for a price of $124 per unit. What is the financial advantage (disadvantage) of buying 91,000 units from the supplier instead of making those units?

10. Assume that Cane expects to produce and sell 61,000 Alphas during the current year. A supplier has offered to manufacture and deliver 61,000 Alphas to Cane for a price of $124 per unit. What is the financial advantage (disadvantage) of buying 61,000 units from the supplier instead of making those units?

11. How many pounds of raw material are needed to make one unit of each of the two products?

12. What contribution margin per pound of raw material is earned by each of the two products?

13. Assume that Caneâs customers would buy a maximum of 91,000 units of Alpha and 71,000 units of Beta. Also assume that the companyâs raw material available for production is limited to 225,000 pounds. How many units of each product should Cane produce to maximize its profits?

14. Assume that Caneâs customers would buy a maximum of 91,000 units of Alpha and 71,000 units of Beta. Also assume that the companyâs raw material available for production is limited to 225,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?

15. Assume that Caneâs customers would buy a maximum of 91,000 units of Alpha and 71,000 units of Beta. Also assume that the companyâs raw material available for production is limited to 225,000 pounds. If Cane uses its 225,000 pounds of raw materials, up to how much should it be willing to pay per pound for additional raw materials? (Round your answer to 2 decimal places.)

tanswan150

[The following information applies to the questionsdisplayed below.]

Cane Company manufactures two products called Alpha and Betathat sell for $165 and $130, respectively. Each product uses onlyone type of raw material that costs $8 per pound. The company hasthe capacity to annually produce 113,000 units of each product. Itsunit costs for each product at this level of activity are givenbelow:

	Alpha			Beta
Direct materials		$	40		$	24
Direct labor			29			25
Variable manufacturing overhead			15			14
Traceable fixed manufacturing overhead			25			27
Variable selling expenses			21			17
Common fixed expenses			24			19

Total cost per unit		$	154		$	126

The company considers its traceable fixed manufacturing overheadto be avoidable, whereas its common fixed expenses are deemedunavoidable and have been allocated to products based on salesdollars.

Assume that Caneâs customers would buy a maximum of 89,000 unitsof Alpha and 69,000 units of Beta. Also assume that the companyâsraw material available for production is limited to 220,000 pounds.Up to how much should it be willing to pay per pound for additionalraw materials? (Round your answer to 2 decimalplaces.)

limekoala50

ACCTCY 2036 Chapter 10: Developing a Business Plan for a Manufacturing Company

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