|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Pangea Corporation |
| Pangea manufactures sunglasses with various fashion frame options. Their sunglasses generally sell for $1
|
|
| 0 |
-$15 per pair.
| The frames are created in-house (molded), with the lenses and screws purchased from other companies. |
| Week 3 Assignment |
| 1) Using your annual budget data from Week 3 (on the 2nd/3rd tab of this sheet) and the data provided, calculate the fixed and variable costs for the 3 production departments. |
| 2) Using your annual budget data from Week 3 and the data provided, calculate the standard costs of the 2 product lines produced in your factory. |
| Note: You will be using activity based costing; the various cost drivers available are specified in the data |
| 3) Using the budgeted sales data, calculate the standard gross margin for each of the 2 products – both per unit and total gross margin with budgeted volume. |
| Note: Present the standard gross margin in a contribution income statement format (per unit for each product line and total for each product line) |
| Note: Because we are costing products and only calculating through standard gross margin,
|
| Sales |
and Advertising Expense and
Interest |
Expense can be ignored this week.
| 4) Write a paragraph explaining the results and recommending which product line would be best to advertise to gain additional sales, and why you chose that product line. |
| (I asked professor if she wants me to use the format she had or what I submitted for as Week 3 data, she said “You should look at what I sent versus what had and make
|
|
|
|
|
|
|
|
|
| correct |
ions to yours and build for this week.
You had points off for not have some categories be
|
|
|
| volume based |
, the loan needs to come out and just let me know what loan interest method you are using. I
accepted |
4 methods. I prefer the $
| 100,000 |
/ month amortization method.”)
| Plant Equipment |
| Pangea’s Delaware plant has 3 production departments: Mixing, Extruding, and Assembly |
| The Mixing department has 1 mixing tank (to mix the plastic), and the Extruding department has 2 extruders (that fill metal molds with plastic to form the sunglass frames). |
| Each of the three machines was purchased when the plant first started up, and they all had the same original cost and useful life. |
| Assembly does not use any production equipment. |
| Mixing uses 40% of the plant’s warehouse square footage as well as 40% of utilities costs. |
| Extruding use 40% of the plant’s warehouse square footage as well as 40% of utilities costs. |
| Assembly uses 20% of the plant’s warehouse square footage as well as 20% of utility costs (climate controlled area). |
| Other plant department information |
| 20% of total Salaries are attributable to the mixing tank |
| 30% of total Salaries are attributable to the extruding line |
| 50% of total Salaries are attributable to the assembly area |
|
|
| Fringe Benefits |
and Travel expenses are allocated the same as Salaries
| The contractors divide their time between the mixing tank and extruder areas (50% each). |
| Manufacturing supplies are use evenly by all production areas. |
|
|
| Parts |
and Tools
are used only in the assembly area.
| Cost Driver |
| The main cost driver is machine hours for the Mixing and Extruding Department, and Man Hours for the Assembly Department |
| The Mixing Department expects to run 40 hours per week for 50 weeks this year. |
| The Extruding Department expects to run 40 hours per week for 50 weeks this year – for each machine. |
| The 5 employees in the Assembly Department are expected to each work 40 hour weeks for 50 weeks this year. |
| Product Information |
| There are two different frame styles produced in Pangea’s Delaware manufacturing plant. Your budget from the prior weeks only included total volume. |
| Your budgeted volume will be divided by product as follows: 60% Rayz frames, and 40% Beamz frames |
| Rayz glasses sell for $11.50 each, and Beamz glasses sell for $14.00 each. |
| Purchased Material Costs |
| Each pair of sunglasses requires 2 lenses, 4 screws, and 0.5 gallons of plastic polymer (which gets made into frames) |
| Sunglass lenses cost $1.00 per lens, and screws cost $0.10 per screw. |
| Polymer costs $5.00 per gallon |
| Production of Sunglasses |
| Each batch of sunglasses makes 1000 pairs of sunglasses. |
| One batch of Rayz glasses takes 3 hours in the Mixing Department, 5 hours in the Extruding Department, and 12 hours in Assembly |
| One batch of Beamz glasses takes 3 hours in the Mixing Department, 8 hours in the Extruding Department, and 21 hours in Assembly |
