Overview
NOTE: I AM ALSO ATTACHING THE DOCUMENT FOR YOUR CONVENIENCE. IT INCLUDES THE EXACT SAME INFORMATION THAT I AM COPYING AND PASTING BELOW FOR YOU:
ACTIVITY-
ACC 601 Managerial Accounting
Residency Activity: Part 2 (60 Points)
Residency Activity
Instructions:
1.As a group, complete the following activities in good form. Use excel or word only. Provide all supporting calculations to show how you arrived at your numbers
2.Add only the names of group members present at the residency.
3.Submit only one copy of your completed work. DO NOT send your work to me via email.
- Due: No later than Residency Day-2 at 9:00 PM EST. Please note that your professor has the right to change the due date of this assignment.
#E: Cost-Volume-Profit Analysis
1.Using the internet, each group member should read at least one article on Cost-Volume-Profit Analysis. Summarize the article in 200 words or more. Provide the source/reference using APA. Add your summary here with your name on your summary.
- As a group, discuss why Cost-Volume-profit analysis is an important decision-making tool. Provide the sources of your information.
#F: Activity-Based Costing
JBC Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor cost. The company has two products, X20 and X25, about which it has provided the following data:
X20 | X25 | ||
Direct materials per unit................ | $12.00 | $60.00 | |
Direct labor per unit...................... | $10.00 | $26.00 | |
Direct labor-hours per unit............ | 0.50 | 1.50 | |
Annual production......................... | 45,000 | 9,500 |
The company’s estimated total manufacturing overhead for the year is $1,500,000 and the company’s estimated total direct labor-hours for the year is 30,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
Activities and Activity Measures | Estimated Overhead Cost | |
Supporting direct labor (DLHs)................ | $ 600,000 | |
Setting up machines (setups)..................... | 150,000 | |
Parts administration (part types)............... | 800,000 | |
Total........................................................... | $1,550,000 |
X20 | X25 | Total | ||
Supporting direct labor...... | 15,000 | 13,000 | 28,000 | |
Setting up machines.......... | 900 | 300 | 1,200 | |
Parts administration........... | 700 | 1,000 | 1,700 |
Required: To earn full or partial marks, show all calculations and tables in good form.
a.Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system.
b.Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system.
- As a manager, discuss why ABC may be better that Job-order and Process costing. Support your response with appropriate reference. Use APA.
a.Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system.
X20 | X25 | |
Direct Labor Hours | ||
Direct Labor per Unit | ||
POHR |
b.Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system.
Estimated cost overhead | Total Expected | Activity Rate | |
DIRECT LABOR HOURS | |||
Manufacturing Cost | |||
Parts Admin | |||
X20 | Activity Rate | Activity | ABC Cost |
DIRECT LABOR HOURS | |||
Manufacturing Cost | |||
Parts Admin | |||
Total | |||
Manufacturing OH cost per unit | |||
X25 | |||
DIRECT LABOR HOURS | |||
Manufacturing Cost | |||
Parts Admin | |||
Total | |||
Manufacturing OH cost per unit |
Part G: Breakeven Analysis
Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit and the breakeven point depend on the proportions in which the products are sold. Sales mix is the relative contribution of sales among various products sold by a firm. Assume that the sales of Jordan Incorporated for a typical year are as follows:
Product | Units Sold | Sales Mix |
A | 18,544 | 80% |
B | 4,636 | 20 |
Total | 23,180 | 100% |
Assume the following unit selling prices and unit variable costs:
Product | Selling Price | Variable Cost | Contribution Margin |
A | $ 97 | $ 82 | $ 15 |
B | 157 | 117 | 40 |
Fixed costs are $434,000 per year. Assume that the sales mix, expressed in terms of relative physical units sold, is constant as sales volume changes.
Required: To earn full or partial marks, you need to show all calculations in good form.
1. Determine the breakeven point in total units and, for this breakeven point, calculate the number of units of A and B that must be sold. Use the weighted-average contribution margin approach. 2. Determine the overall breakeven point in terms of sales dollars based on the weighted-average contribution margin ratio (CMR). (Hint: The weights for calculating the weighted-average CMR are based on relative sales dollars, not units, of the two products.) Break down the total sales dollars breakeven point into sales dollars for product A and sales dollars for product B. 3. Assume the original facts except that now fixed costs are expected to be $43,400 higher than originally planned. How does this expected increase in fixed costs affect the breakeven point in units? How does the percentage change in the breakeven point compare to the percentage increase in fixed costs?
4. Discuss how breakeven analysis can be used in management decisions. Support your comments with appropriate references.