Reference no: EM132736869

Problem - PELLE, SA is a company dedicated to the manufacturing and sales of leather shoes and bags. The data corresponding to the costs of the last financial year are as follows. There were no stocks of work in process or finished goods at the beginning, and all production started was finished during the same period.

Cost item	Amount (€)
Leather used for making bags	85.917
Thread, used for both products	8.000
Consumption of office supplies	10.000
Soles used for making shoes	76.000
Cost of personnel for manufacturing of bags (fixed salaries)	154.083
Electricity consumption for the operation of machines	20.000
Other supplies for offices	70.000
Cost of advertising the products	80.000
Cost of personnel for manufacturing of shoes (fixed salaries)	144.400
Office rent	70.000
Wages of materials warehouse staff (fixed wages)	122.068
Depreciation of the machines for cutting leather	33.000
Leather used for making shoes	65.008
Maintenance of the company's website	20.000
Depreciation of the machines for making shoes	10.000
Salaries of sales representatives	125.000
Cost of transporting final products to customers	50.000
Municipal taxes (IBI)	9.000
Fire insurance	2.800
Cost of external repairs and maintenance of all machinery	34.500
Salaries of administrative staff (fixed salaries)	185.000
Cost of banking services	50.000

REQUIRED -

1 Classify the costs above according to whether they are related to production, marketing, & sales, or administration & general activities.

2. Regarding the production costs, also indicate whether they are for capacity or flexible resources, and whether they are direct or indirect in relation to the shoes and bags manufactured.

3. Determine the full production cost per unit of each type of product, knowing that the production of bags has been 12.000 units and that of shoes of 29.600 pairs. Indirect production costs are allocated based on the total number of units of product manufactured.

4. Prepare an income statement, assuming that the sale price of the bags is £50 and the price of a pair of shoes €30, and that all production has been sold.

5. How much would the profit or loss be if, producing the same quantity of units as before, sales were only 10.000 bags and 28.000 pairs of shoes? What would be the value of the remaining stocks of finished products?

6. If the normal production capacity is 14.120 bags and 32.200 pairs of shoes, what is the cost of the unused capacity? Which are the affected resources? What is the full cost per unit of the products, and how much is the profit / loss? How much is the value be of the final stock of finished products?