4. Expected manufacturing costs for Robert’s Widgits are as follows: Variable Co
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Question
4. Expected manufacturing costs for Robert’s Widgits are as follows:Variable Costs Fixed Costs per month
Direct Materials $4.00/unit Supervisory salaries $100,000
Direct Labor $2.00/unit Factory overhead $350,000
Variable Overhead $1.50/unit
Estimate the manufacturing costs if Robert’s produces 100,000 widgits in January.
Estimate the manufacturing costs if Robert’s produces 120,000 widgits in February.
2. Rae’s Bakery makes apple pies. Rae’s Bakery plans to bake 2,000 pies in January and 2,500 pies in February. Each pie requires 2 pounds of baking apples. Baking apples cost $0.80 per pound. There will be 400 pounds of apples on hand on the first of January. The company wishes to have 500 pounds of baking apples on hand at the end of January and 300 pounds on hand at the end of February.
How many pounds of apples should Rae’s purchase in January?
What is the cost in dollars for the required January purchase of apples?
How many pounds of apples should Rae’s purchase in February?
Explanation / Answer
if Robert’s produces 100,000 widgits in January :- Variable Costs : Direct Materials $4.00/unit Direct Labor $2.00/unit Variable Overhead $1.50/unit ----------------------------------- Total Var cost pu = $7.50 Total Var costs = $7.50*100,000 = $750,000 Fixed Costs per month:- Supervisory salaries $100,000 Factory overhead $350,000 ---------------------------------- Total Fixxed costs = $450,000 SO Total Mfg cost for 100,000 units = $750,000+$350,000 = $1100,000 if Robert’s produces 120,000 widgits in February : Variable Costs : Direct Materials $4.00/unit Direct Labor $2.00/unit Variable Overhead $1.50/unit ----------------------------------- Total Var cost pu = $7.50 Total Var costs = $7.50*120,000 = $900,000 Fixed Costs per month:- Supervisory salaries $100,000 Factory overhead $350,000 ---------------------------------- Total Fixxed costs = $450,000 SO Total Mfg cost for 120,000 units = $900,000+$350,000 = $1250,000 2. Appls reqd for 2000 pies = 2000*2 = 4000 Lbs How many pounds of apples should Rae’s purchase in January? Purch Reqd = Apple reqd for 2000 pies+Clsoing Bal - Opening bal = 4000+500-400 = 4100 lbs ................Ans (1) What is the cost in dollars for the required January purchase of apples? Cost of Appls purchassed in Jan = 4100*$0.80 = $3,280 ......Ans (2) How many pounds of apples should Rae’s purchase in February? Appls reqd for 2500 pies = 2500*2 = 5000 Lbs Purch Reqd = Apple reqd for 2500 pies+Clsoing Bal - Opening bal = 5000+300-500 = 4800 lbs ................Ans (3)
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