Campbell company is a metal and wood cutting manufacturer, selling products to the home contribution market. consider the following data for the year 2001.
Sandpaper.....................................................2,000
Material-handling cost..................................70,000
Lubricants and coolants..................................5,000
Miscellaneous indirect manufacturing cost.....40,000
Direct manufacturing labor .........................300,000
Direct materials, Jan.1,2001.........................40,000
Direct materials, Dec.31,2001.....................50,000
Finished good, Jan. 1,2001........................100,000
Finished good, Dec.31,2001......................150,000
Work in process, Jan. 1,2001.......................10,000
Wok in process, Dec.31,2001......................14,000
Plant-leasing cost.........................................54,000
Depreciation- Plant equipment....................36,000
Property taxes on plant equipment..................4,000
Fire insurance on plant equipment...................3,000
Direct materials purchased.........................460,000
Revenue..................................................1,360,000
Marketing promotion...................................60,000
Marketing salaries.....................................100,000
Distribution cost...........................................70,000
Customer service cost.................................100,000
Required:
1. Prepare an income statement with a separate supporting schedule of cost of goods manufactured. For all manufacturing item , indicate by V or F weather each is basically a variable cost or a fixed cost ( weather the cost object is a product unite) . If in doubt , decide on the basis of weather the total cost will change substantially over a wide range of unite produced.
2. Suppose that both direct materials and plant-leasing cost are tried to the production of 900,000 unites. What is the unite cost direct materials assigned to each unite produced? What is the unite cost of plant - leasing costs? Assume that the plant-leasing cost are fixed cost.
3. Repeat the computation in requirement 2 for direct materials and plant-leasing cost, Assuming that the cost are being predicted for the manufacturing of 1,000,000 unites next year. Assumed that the implied cost- behavior patterns persist.
4. As a management consultant, explain concisely to the president why the unit costs for direct materials didn't change in requirement 2 and 3 but the unite cost for plant-lessing cost did change.
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