coma- blackheath manufacturing company - revisited (has errors)
TRANSCRIPT
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January Acti
Estimate Actual
Production 2350 2250
Sales Revenu 14000 15750
raw mat end 600 D Material 1762.5 1660
all unpaid Direct Labor 237.5 2!12
Indirect Lab 470 !5
Electricity 235 325
Other overh 1175 1600
Indirect Mat 1350 1570
Factory Insu 562.5 562
ofce expen 3514.5 2260
commission 1400 1400
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ity
"ariance "ariance #
100 4.2553114
$1750 $12.5
102.5 5.!15602!37
125.5 4.272340426
$425 $0.425531
$0 $3!.27!723
$425 $36.170212!
$220 $16.26263
0.5 0.0!!!!!!!
1254.5 35.64775
0 0
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Note Strai%&t 'ine (epreciation assumed
All )%ures in *
A!!E"!
1 +urrent Assets
2 +as& ,507
3 Receiva-les 15330
4 Raw aterials 525
/0.75unit
5 inis&ed %ood inventor 520!
/*4.6unit
6 oce eupment 12027 actor euipment 66625
! 'and 5000
otal Assets 114223.5
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#LA$%&EA"& MAN'FA$"'(IN) $OM*AN+
#ALAN$E !&EE" A! ON MA($& ,-
1
2
1
2
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LIA#ILI"IE!
Accounts Paa-le 1500
otes Paa-le 30000
!"O$%&OLDE( E.'I"+
+apital 8 ra9al%ar :lac;&eat& !56!7
Retained Earnin%s 240
!317
otal 'ia-
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ote 8
All )%ures in *
#LA$%&EA"& $OM*AN+
$ash #ud/et
As on March ,-
JAN FE# MA($&
Initial $ash #alanc 10,000 !,!4! ,0!5
$ollections 13510 14350 14210
$ash Available 23,510 23,1! 23,25
*ayments
( purc&ase 1762.5 1537.5 1500
(irect 'a-or 237.5 2562.5 2500=ndirect 'a-or 470 410 400
Electricit 235 205 200
=ndirect aterials 1350 1350 1350
actor =nsurance 562.5 563 563
>t&er >ver&ead 45 45 45
+ommisions 1400 1540 1330
Personal 1400 1400 1400
+onsultin% 9ee 00 00 00
Salaries 1!00 1!00 1!00
Rent 00 00 00
?tilities 450 450 450
"otal *ayments 14662.5 14113 137!!
Endin/ $ash #alan !,!4! ,0!5 ,507
+as& :urn 1,153 $237 $422
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Note
1
2
3
4
5
6
7
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Strai%&t 'ine (epreciation assumed
All )%ures in *
#LA$%&EA"& MAN'FA$"'(IN) $OM*AN+
IN$OME !"A"EMEN" FO( *E(IOD ENDIN) MA($&
JAN'A(+ FE#('A(+
Sales Revenue 14000 15400
+ost o9 %ood sold 1000 10060
@ross ar%in 3100 5340
S,@A eBpenses and ot&ers 7214.5 7354.5
E:= $4114.5 $2014.5
=ncome aBC25# 0 0
et =ncome $4114.5 $2014.5
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$olumn- Jan 0eb
co/s 1000 10060
dm 1762.5 1537.5
MA($& .'A("E( dl 237.5 2562.5
over&ead plu 6200 560
13300 42700
20 30!!0
33!0 11!20 Mar1etin/ and !ales23ariable4
7144.5 21713.5 JAN FE#
$3764.5 $!3.5 per unit Sale 7 7
0 0 EBpected uni 2000 2200
$3764.5 $!3.5 @ross Sale 14000 15400
Sales commi 1400 1540
)eneral admin expenses
per mont&/D
7!1per wee; 3514.5
"O"AL !)A expense
Jan Feb March
414.5 5054.5 4!44.5
other expe
Jan
*ersonal Expenses 0or 1400
$onsultin/ 0ees 00
total 5mont 2300
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march total
20 30!!0
1500 4!00
2500 !000
520 1!0!0
MA($&
7
100
13300
1330
.5
ses
Feb March
1400 1400
00 00
2300 2300
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#'D)E"
3A(IA#LE $O!"!
$ost Formula
per unit cost
0.75
1.25
0.2
0.1
0.5
FI6ED $O!"!
FA$"O(+
=ndirect la-or per wee;
=ndirect materials per wee;
Electricit per wee;
actor =nsurance per wee;
>t&er over&ead per wee;
(epreciation
otal +ost
+ost?nit
OFFI$E
Salaries /includin% 9rin%e -ene)ts and paroll taB
Rent on oce(epreciation on oce euipment
?tilities
otal +ost
O"&E(!
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Personal EBpenses 9or ra9al%ar
+onsultin% 9ees
"O"AL FI6ED $O!" per month
2assumin/ - month 7 89 days4
$O!"!
otal "aria-le +ost o9 production
Sales commision paid /10# o9 %ross sales
>A' =E( +>S per mont&
"otal estimated costs per month
1
2
1
2
3
4
M
1
2
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3
1
2
3
4
1
2
3
4
5
1
2
3
4
56
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All $ost In :
$ost Item January
*ro;ected units produce
2350
Material 1762.5
Direct Labor 237.5
Indirect Labor 470
Electricity 235
Other overhead Err850
"otal 3ariable $ost o0 productio 65!0
cost per wee; per mont&/D4.2!
100 42!
300 12!4
75 321
125 535
110 470.!
262.5 1125
72.5 4163.!
cost per wee; per mont&/D4.2!
400 1712
200 !56!1 346.6!
100 42!
7!1 3342.6!
per mont&
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1400
00
10134.5
JAN FE#
65!0 5740
1400 1540
10134.5 10134.5
-9-- -?F 1!!0
iBed >F 315
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(epreciation 1125
otal >F 6200
#LA$%&EA"& MAN'FA$"'(IN) $OM*AN+
*(OD'$"ION #'D)E"
JAN'A(+
EBpected Sale /o. o9 ?nits 2000
E> =nventor 1100
:> =nventor 750
Production Estimate 2350
#LA$%&EA"& MAN'FA$"'(IN) $OM*AN+
DI(E$" MA"E(IAL '!E #'D)E"
JAN'A(+
?nits Produced 2350
( per unit 1
:ud%eted ( 2350
+ost o9 ( per unit 0.75
:ud%eted ( +ost 1762.5
#LA$%&EA"& MAN'FA$"'(IN) $OM*AN+
DI(E$" MA"E(IAL *'($&A!E #'D)E"
JAN'A(+
( reuired 2350
E> Raw aterial 700
:> Raw aterial !00
( Purc&ase 2250
( costunit 0.75:ud%et ( cost 16!7.5
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Note
$olumn- Feburary
(a@ Material used *ro;ected units produce
2350 2050
1537.5
2562.5
410
205
Err850
5740
per mont&/4.5
450
1350
337.5
562.5
45
1125
4320
per mont&/4.5
1!00
00364.5
450
3514.5
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MA($&
5600
1330
10134.5
-?B
#'D)E"
FE#('A(+ MA($&
2200 100
7 7
15400 13300
FE#('A(+ MA($&
2050 2000
1 1
2050 2000
1.25 1.25
2562.5 2500
FE#('A(+ MA($&
1640 1600
315 315
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1125 1125
560 520
FE#('A(+ MA($&
2200 100
50 1050
1100 50
2050 2000
FE#('A(+ MA($&
2050 2000
1 1
2050 2000
0.75 0.75
1537.5 1500
FE#('A(+ MA($&
2050 2000
700 700
700 700
2050 2000
0.75 0.751537.5 1500
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Strai%&t 'ine (epreciation assumed
All )%ures in *
$olumn8 March
(a@ Material used *ro;ected units produce
2050 2000
1500
2500
400
200
Err850
5600
Mar1etin/ and !ales23ariable4
JAN
per unit Sale price 7
EBpected unit Sale 2000
@ross Sale 14000
Sales commision paid /10# o9 %ross s 1400
3ariable Manu0 Overhead Jan
Indirect Labor 470
Electricity 235Other overhead 1175
otal 1!!0
Fixed Manu0 Overhead
710per wee;
plus depreciation 1125
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+olumn1 Jan
co/s 1000
dm 1762.5
dl 237.5
over&ead plus depr 6200
?nits sold 2350
cost per unit 4.63!27!723
.'A("E(
6100
7
0
Err850!
.'A("E(
6400
1
6400
1.25
!000
.'A("E(
5120
Err850
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Err850!
1!0!0
.'A("E(
6100
1050
750
6400
.'A("E(
6400
1
6400
0.75
4!00
.'A("E(
6400
700
!00
6300
0.754725
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$olumn, $olumn<
(a@ Material used
2000
"ar (c
"ar (+
"ar >F
"ar >F
"ar >F
FE# MA($&
7 7
2200 100
15400 13300
1540 1330
Feb March
410 400
205 2001025 1000
1640 1600
per mont&/D4.5
315
4320
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0eb march total
10060 20 Err850!
1537.5 1500 Err850!
2562.5 2500 Err850!
560 520 Err850!
2050 2000
4.073170732 4.6
+ontri-ution ar%in
/Revenue$ All "aria-le +osts
JAN'A(+ FE#('A(+
EBpected Sale /o. o9 2000 2200
otal Revenues 14000 15400 otal "aria-le +ost 65!0 5740
+ontr-ution 7420 660
+ontri-ution ar%in/# 53 62.72727273
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Depriciation on 0actory and eCuipment
5 ears 60 mont&s
70000 2500
per mont& cost o9 depreciation
1125
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MA($& .'A("E(
100 6100
13300 427005600 1720
7700 247!0
57.!4736!421 5!.0327!6!
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-= *roduction #ud/et
9or Gan,9e-,marc&
ont&
(ecem-er
Hanuar
e-ruar
arc&
April
ont& EBpected Sales
(ec 1!00
Han 2000
e- 2200
arc& 100
April 2100
#LA$%&EA"& MAN
*(OD'$"ION #'D)
1 EBpected Sale /o. o
2 E> =nventor
3 :> =nventor
4 Production Estimate
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#LA$%&EA"& MAN
DI(E$" MA"E(IAL
1 ?nits Produced
2 ( per unit
3 :ud%eted (
4 +ost o9 ( per unit
5 :ud%eted ( +ost
#LA$%&EA"& MAN
DI(E$" MA"E(IAL
1 ( reuired
2 E> Raw aterial3 :> Raw aterial
4 ( Purc&ase
5 ( costunit
6 :ud%et ( cost
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(a@ Materials !chedule
EBpected Sales
1!00
2000
2200
100
2100
E> ar%et =nventor /&al9 o9 eBpected sales o9 neBt mont&
1100
50
1050
IREJ
Final "ables *roduction and ra@ material
'FA$"'(IN) $OM*AN+
" JAN'A(+
2000
1100
750
2350
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'FA$"'(IN) $OM*AN+
'!E #'D)E"
JAN'A(+
2350
1
2350
0.75
1762.5
'FA$"'(IN) $OM*AN+
*'($&A!E #'D)E"
JAN'A(+
2350
700!00
2250
0.75
16!7.5
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KEL
E> End o9 mont&
:> :e% o9 mont&
ont&
octo-er
novem-er
Raw aterial "alue in :>
Raw aterial uantit :cost o9 raw material/uni
E> Raw aterial /not less t&an 700 :> Raw material
700 !00
700 700
700 700
700 700
FE#('A(+ MA($&
2200 100
50 1050
1100 50
2050 2000
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FE#('A(+ MA($&
2050 2000
1 1
2050 2000
0.75 0.75
1537.5 1500
FE#('A(+ MA($&
2050 2000
700 700700 700
2050 2000
0.75 0.75
1537.5 1500
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Note Strai%&t 'ine (epreciati
All )%ures in *
Actual Sales
1500
2300
Han/* 600
Han/units !00 0.75
:> =nventor Production Raw aterial ?se
750 2350 Err850
1100 2050 Err850
50 2000 Err850
1050 Err850
.'A("E(
6100
Err850
Err850
Err850!
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.'A("E(
Err850!
1
6400
0.75
4!00
.'A("E(
Err850!
700!00
Err850!
0.75
Err850!
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on assumed
Raw aterial to purc&ase +ost o9 Production +ost o9 Purc&ase
4.72 0.75
at t&e rate o9 *unit at t&e rate o9 *unit
2250 1102 16!7.5
2050 676 1537.5
2000 440 1500
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(ou/h
@ross ar%in M @PS
@ross Pro)t
/pro9. measure
et mar%in M npns
Pro)t mar%in /t&e ratio o9 net income to net sales
+>@S M "ARSS /eBcludin% admin
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et Sales
onl prod cost no
sales$var
/not )Bed over&ead
n% inventor and 9or determinin% t&e c
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RevMsalesMnet sales
income M pro)t
rom an accountin% standpoint, sales do not occur until t&e product
salesMprice paid - cB
revenue M total amount o9 mone ta;en in 9rm all activities inc sale
over&ead, paroll, taBation, and interest paments.
Sales$+>@S$ot&er "ar+osts
t&ree measures o9 a companOs pro)t mar%in
@ross ar%in M @PS
operatin% pr mar%innet pro)t mar%in
et sales /revenue
N +ost o9 %oods sold
@ross Pro)t
N S@A eBpenses /com-ined costs o9 operatin% t&e compan
N R(
E:=(A
N (epreciation and amortiation
E:=
N =nterest eBpense /cost o9 -orrowin% mone
E:
N aB eBpense
et =ncome /EA :>> '=E
"aria-le costin% is a mana%erial accountin% cost concept. ?nder t&i
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account rec
%ross pro)t a9ter prod cost
pro)t a9ter op costsde-t interest, taBes and an additional costs
met&od, manu9acturin% over&ead is incurred in t&e p
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riod t&at a product is produced.