Chapter 8&9 calculations acct2301

Segment margin is equal to segment sales revenue minus

variable cost of goods sold, variable selling expense, and direct fixed costs

Using absorption costing, calculate Cost of Goods Sold

(Variable cost per unit + Fixed Overhead cost per unit) * Units Sold

Using absorption costing, calculate the value of Ending Inventory

(Variable cost per unit + Fixed Overhead cost per unit) * Units in Ending Inventory

Using variable costing, calculate Cost of Goods Sold

(Variable cost per unit) * Units Sold

Using variable costing, calculate the value of Ending Inventory

(Variable cost per unit) * Units in Ending Inventory

Using variable costing, what is the Contribution Margin?

(Selling price per unit * Units Sold) - ([Production + Selling Variable costs per unit] * Units Sold)

Calculating budgeted dollar amount for Total Overhead in a given month

(Units of production * labor hours per unit * Variable Overhead Rate per hour) + Fixed Manufacturing Overhead

Calculate average annual carrying cost

(# units being ordered at a time / 2) x (cost of carrying one unit in inventory for a year)

Calculating budgeted gross margin for a given month

(Budgeted Sales Quantity * Selling Price per unit) - (Budgeted Sales Quantity * Cost of Goods Sold per Unit)

What is the value of ending inventory using the absorption costing method?

(Direct labor per unit + Direct materials per unit + Variable overhead per unit + Fixed overhead per unit) x (Ending inventory)

What is the value of ending inventory using the variable costing method?

(Direct labor per unit + Direct materials per unit + Variable overhead per unit) x (Ending inventory)

Using absorption costing, what is Gross Margin?

(Selling price per unit * Units Sold) - (Production costs per unit * Units Sold)

Watson Corporation manufactures boxes. The estimated numbers of boxes sold for the first three months of the current year are as follows: Month Sales January 3,000 February 4,200 March 3,900 Finished goods inventory at the end of December was 600 units. Ending finished goods inventory is equal to 20% of the next month's sales. Watson Corporation expects to sell the boxes for $5 each. April sales are projected at 4,500 boxes. How many boxes should be produced in February?

4,200 + (0.20 × 3,900) − (0.20 × 4,200) = 4,140 boxes

Given budgeted gross margin for a month, calculate budgeted operating income

Budgeted Gross Margin - (Variable Selling Expense per unit * Number of Units Sold) - Fixed Selling & Administrative Expenses

Suppose that a company has the following accounts receivable collection pattern: Paid in the month of sale 30% Paid in the month following sale 70% All sales are on credit. If credit sales for January and February are $200,000 and $100,000 respectively, the cash collection for February is?

Cash from January sales (0.7 × $200,000) $140,000 Cash from February sales (0.3 × $100,000) 30,000 Cash received in February $170,000

Using absorption costing, what is Operating Income?

Contribution Margin - (Variable selling costs per unit * Units Sold) - Fixed selling and administrative

Calculating segment margin for a product line

Contribution Margin of Product Lines less direct fixed expenses

Using variable costing, calculate the per-unit product cost

Direct Materials + Direct Labor + Variable Overhead + Fixed Overhead per unit produced

A company requires 200 pounds of plastic to meet the production needs of a product. It currently has 20 pounds of plastic inventory. The desired ending inventory of plastic is 60 pounds. How many pounds of plastic should be budgeted for purchasing during the coming period?

Pounds of plastic to purchase = 200 + 60 − 20 = 240

The company must have ending inventory equal to 40 percent of the next month's materials usage. How many ounces of materials must be purchased in August?

Materials needed for Production + materials needed for Ending Inventory - materials in Beginning Inventory or (Units of Production * ounces per unit) + % of next month's material usage - % of current months usage

Bickford Company plans to sell 135,000 units in November and 180,000 units in December. Bickford's policy is that 10% of the following month's sales must be in ending inventory. On November 1, there were 14,000 units in inventory. It takes 30 minutes of direct labor time to make one unit. Direct labor wages average $17 per hour. Variable overhead is applied at the rate of $5 per direct labor hour. Fixed overhead is budgeted at $56,500 per month. What is the budgeted production in units for November?

November production = 135,000 + (0.10 × 180,000) − 14,000 = 139,000 units

Calculating income for a company

Project A operating income + Project B operating income - Common expenses

Calculating segment margin for a company with more than one division

Sales - Variable selling and administrative expenses - Direct fixed expenses - Variable expenses - Direct fixed selling and administrative expenses

What is the formula used to compute the units to be produced?

Units Produced = Units sold − Units in beginning inventory + Units in ending inventory

Calculating budgeted labor hours for a given month

Units of production * labor hours per unit

Calculating budgeted dollar amount for Variable Overhead in a given month

Units of production * labor hours per unit * Variable Overhead Rate per hour

Calculating budgeted labor dollars for a given month

Units of production * labor hours per unit * labor rate per hour

A company plans on selling 400 units. The selling price per unit is $5. There are 40 units in beginning inventory, and the company would like to have 75 units in ending inventory. How many units should be produced for the coming period?

Units to produce = 400 + 75 − 40 = 435

The formula for total carrying cost is

average number of units in inventory × cost of carrying one unit in inventory