Reference no: EM13582083
Mina's Tricks'N Treats sells premium dog treats and cute dog accessories for the most fashion forward dogs around. Your mission, should you choose to accept it, is to provide the owner of Mina' Tricks 'N Treats with some helpful cost analysis. See, Mina's Tricks 'N Treats isn't doing so hot in comparison to its competitors and the owner wants to know why All the information to produce Mina's famous dog biscuits has been gathered and is presented for your analysis below.
Mina's Tricks 'N Treats requires two types of direct labor to make dog biscuits: Production and Inspection. Production employees are paid $10.00 per hour. Inspection employees are paid $20.00 per hour and inspections are performed in batches of 300 biscuits. Standards have been established for one biscuit.
- Production. 1 min per biscuit
- Inspection 2 hours per batch
During the current month Minas Tricks N Treats produced 300,000 biscuits and incurred the following direct labor costs:
- Production - 4,900 hours $52,150
- Inspection - 2,200 hours $43,000
Mina%u2019s Tricks N Treats requires two types of direct materials to make dog biscuits: Peanut Butter and Bacon. Standards have been established based on one biscuit.
- Peanut Butter.6 unit at $0.30 per unit
- Bacon.4 unit at $0.60 per unit
- Also during the current month, Minas Tricks N Treats noted direct material costs to be as follows:
- Materials purchased:
- Peanut - Butter 200,000 units at $0.28 per unit
- Bacon - 120,000 units at $0.65 per unit
- Of the materials purchased, the following were used:
- Peanut Butter - 198,000 units
- Bacon - 113,000 units
- Minas Tricks N Treats has the following standard overhead rates:
- Standard variable overhead rate - $6.00 per direct-labor hour
- Standard quantity of direct labor - .02 hours per unit of output
- Budgeted fixed overhead - $70,000
- Budgeted output - 310,000 biscuits
- During the current month the actual overhead results were as follows:
- Actual variable overhead - $50,000
- Actual fixed overhead - $63,000
- Actual direct labor - 7,100 hours
Prior to the start of the month, the owner estimated sales volume in order to prepare a budget for the upcoming month. Below are the pre-period estimates:
- Budgeted sales volume - 290,000 biscuits
- Anticipated market share - 10%
- Budgeted sales price per biscuit - $5.00
- Variable cost per unit - $1.10
A report was received at the end of the month from a marketing company which determined the industry volume. That information along with actual sales results are below.
- Actual sales volume - 350,000 biscuits
- Total market - 4,375,000 biscuits