Reference no: EM131881587

Problem 1: Given the following account balances in (000's):

                                                                         January 1, 2012                 December 31,2012

Direct Materials Inventory                                           15,000                             15,500

Work-in-process Inventory                                          18,000                             20,000

Finished Goods Inventory                                            21,000                              18,000

Executive Compensation                                                                                     15,000

Purchases of Direct Materials                                                                               80,000

Customer Service & Warranty Claims                                                                   8,000

Depreciation on Corporate Office Building                                                            12,000

Direct Manufacturing Labor                                                                                  18,000

Direct Manufacturing Labor Fringe Benefits                                                              9,000

Direct Manufacturing Labor - Overtime premium  (overtime due to breakdown of machines) 6,000

Factory Labor - Maintenance & Cleaning                                                                  5,000

Sales Commissions                                                                                                2,000

Distribution of finished goods to the customer                                                           3,000

Production Managers' Salaries                                                                                 7,000

Plant Liability Insurance                                                                                           500

Product design costs                                                                                              8,000

Property tax on Factory Building                                                                              1,000

Depreciation - Plant Equipment                                                                                  4,000

Revenue                                                                                                              500,000

a. Show the following total costs - List each cost that makes up your total below:

Total Prime Cost added during the period:

Total Manufacturing Overhead added during the period:

Total Selling and Administrative expense:

b. Based on your work in part a, prepare a Schedule of Cost of Goods Manufactured in good form. Show all work for maximum credit.

c. Create an Income Statement including Cost of Goods Sold.

Problem 2: CVP Analysis

SuperShades operates a kiosk at the local mall, selling sunglasses for $20 each. SuperShades currently pays $800 a month to rent the space and pays 2 full-time employees to work 40 hours a week at $10 per hour. The store shares a manager with a neighboring mall and pays 50% of the manager's $40,000 salary and benefits. (The manager's total benefits are 20% of her salary). The wholesale cost of the sunglasses to the company is $5 each.

a. How many sunglasses does SuperShades need to sell each month to break even?

b. If SuperShades wants to earn $4,500 per month after all expenses, how many sunglasses does the store need to sell?

c. If the store's hourly employees agreed to a 15% sales commission only pay structure, instead of their hourly pay, could the store get to its desired income of $4,500 faster?

d. Assume SuperShades pays its employees under the original hourly pay structure, but is able to pay the mall 20% of its monthly revenue instead of monthly rent. If the store would like to earn operating income of $4,500, what selling price would it need to charge customers if it wanted to maintain the level of units sold in question b above?