Prepare a schedule of variable and fixed cost for each of


Accounting: Cost Behavior Project

Bush incorporated, a manufacturing company reports the following actual costs for the year ended December 31, 2016.

Account

Classification

Cost

Direct materials
Direct manufacturing labor
Power
Supervision labor
Materials-handling labor
Maintenance labor
Depreciation
Rent, property taxes, admin

All Variable
All Variable
All Variable
20% Variable
50% Variable
40% Variable
All Fixed
All Fixed

$300,000
225,000
37,500
56,250
60,000
75,000
95,000
100,000

The company produced 75,000 units in 2016 and the management is estimating the costs for 2017 using the information from 2016. The following additional information is available for 2017.

a. Direct materials prices in 2017 are expected to increase by 5% compared with 2016.

b. Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 10% in 2017 compared with 2016.

c. Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change.

d. Depreciation costs, rent, property taxes, and administration costs are expected to increase by 10%.

e. The company expects to manufacture and sell 80,000 units in 2017.

Requirements:

1. Prepare a schedule of variable and fixed cost for each of the costs and total manufacturing cost for 2016 and 2017.

2. Calculate the company's per unit cost for 2016 and 2017.

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Cost Accounting: Prepare a schedule of variable and fixed cost for each of
Reference No:- TGS02496792

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