What are the total monthly manufacturing costs

Assignment Help Financial Accounting

Reference no: EM13940443

COST IDENTIFICATION AND ANALYSIS, COST ASSIGNMENT, INCOME STATEMENT

Melissa Vassar has decided to open a printing shop. She has secured two contracts. One is a five-year contract to print a popular regional magazine. This contract calls for 5,000 copies each month. The second contract is a three-year agreement to print tourist bro- chures for the state. The state tourist office requires 10,000 brochures per month.

Melissa has rented a building for $1,400 per month. Her printing equipment was purchased for $40,000 and has a life expectancy of 20,000 hours with no salvage value. Depreciation is assigned to a period based on the hours of usage. Melissa has scheduled the delivery of the products so that two production runs are needed. In the first run, the equipment is prepared for the magazine printing. In the second run, the equipment is reconfigured for brochure printing. It takes twice as long to configure the equipment for the magazine setup as it does for the brochure setup. The total setup costs per month are $600.

Insurance costs for the building and equipment are $140 per month. Power to oper- ate the printing equipment is strongly related to machine usage. The printing equipment causes virtually all the power costs. Power costs will run $350 per month. Printing mate- rials will cost $0.40 per copy for the magazine and $0.08 per copy for the brochure. Me- lissa will hire workers to run the presses as needed (part-time workers are easy to hire). She must pay $10 per hour. Each worker can produce 20 copies of the magazine per printing hour or 100 copies of the brochure. Distribution costs are $500 per month. Melissa will receive a salary of $1,500 per month. She is responsible for personnel, accounting, sales, and production-in effect, she is responsible for administering all aspects of the business.

Required:

1. What are the total monthly manufacturing costs?

2. What are the total monthly prime costs? Total monthly prime costs for the regional magazine? For the brochure?

3. What are the total monthly conversion costs? Suppose Melissa wants to determine monthly conversion costs for each product. Assign monthly conversion costs to each product using direct tracing and driver tracing whenever possible. For those costs that cannot be assigned using a tracing approach, you may assign them using direct labor hours.

4. Melissa receives $1.80 per copy of the magazine and $0.45 per brochure. Prepare an income statement for the first month of operations.

Reference no: EM13940443

Questions Cloud

Cost of an accountant : The cost of an accountant for Carlos Candies static budget based on expected activity of 2,000 units

Camp company uses a job-order costing system : Camp Company uses a job-order costing system. The company has two departments through which most jobs pass. Selected budgeted and actual data for the past year follow:

Legal or moral right to own a gun : Do you have not only a legal, but a moral right to own a gun? Do you believe that you have either a moral or a legal right to park a car with a loaded gun in a privately owned parking lot, regardless of what the lot's owner wants?

Create an efficient object-oriented java application : Create an efficient Object-Oriented Java application that maintains information about college roommates who are renting a house together, for their realtor.

What are the total monthly manufacturing costs : What are the total monthly manufacturing costs? What are the total monthly prime costs? Total monthly prime costs for the regional magazine? For the brochure?

Compare characteristics of men and women on death row : Compare and contrast the characteristics of men and women on death row. Discuss why there are fewer women on death row than men and explain the significance of this difference.

Determine torque required to overcome the fluid resistance : Determine the torque T required to overcome the fluid resistance and rotate the tube with a constant angular velocity of w. Assume the velocity profile within the liquid is linear.

Standard server and the ms sql standard database : In assignment 2 you will be installing Windows 2012 Standard Server and the MS SQL Standard database. In order to do this, you should have a set approach that outlines what you need to do, how to do it, in what order and why you are doing it. You ..

Find both the growth rate of dividends and the price : Find both the growth rate of dividends and the price of the stock if the company reinvests the following fraction of its earnings in the firm: (i) 0%; (ii) 40%; (iii) 60%

User Account

All Pages