Managerial Accounting Ch 2

Managerial Accounting

1-3A

2. Wages-variable, fixed

3. Property costs-fixed, Period

4. Accounting salaries- fixed, period

5. Drum Stands variable, product

6. rent cost of equip- fixed, period

7. Upper Mgmt Salaries- fixed, product

8. Annual Flat fee- fixed, period

9. Sales commissions- variable, period

10. Machinery depreciation- fixed, product

2. Cost per drum set equals: casings(17000)+Wages(82,000) +Drum Stands(26000)=$125000. Plus Property Taxes(5000)+ Annual maintenance fee(10,000) +Machinery Depreciation (40000)=55,000+ variable=180,000 total cost for 1000 units or 180 per.

3. The total cost would simply be 17x1200=20,400. The cost of the material per unit is fixed even if the required number increases.

4. The taxes will still be $5000 as its fixed. However if the production increases, the price will fall to $4.17 per drum set.

1-5A

1. Beginning inventory -1200x8=$9,600. Plus purchases 35000x8=$280,000. Total=$289,600. Then 36200(units)-3300 soldx8=$24000.289600-24000=$265600 ending inventory.

2. "We should consider a JIT system for heels' production. This would reduce our costs by sitting on unnecessary inventory materials until needed for production. If we were to reduce our inventory by ½ we could make $12000 available on a regular basis for capital. This comes by reducing 3000 units to 1500 x $8. This