Module+2000+VII+Homework,+Discussion+Questions,+and+Learning+Objective+Solutions

VII. Module 2000 Homework, Discussion Questions, and Learning Objective Solutions ka


 * Homework: Exercise 2-1 **

Information: Carreker Company manufactures cell phones. For next year, Carreker predicts that 30,000 units will be produced with the following total costs: Direct Materials ---$150,000 Direct Labor --- $90,000 Variable Overhead-- $30,000 Fixed Overhead -- $450,000

1. Calculate the prime cost per unit. Unit prime cost
 * Solution ** :

$8
2. Calculate the conversion cost per unit. Unit conversion cost = (Direct labor + overhead )/Units = ($90,000 + $30,000 + $450,000)/30,000 = $19
 * Solution ** :

3. Calculate the total variable product per unit. Unit variable product cost = (Direct materials + Direct labor + Variable overhead)/Units = ($150,000 + $90,000 + $30,000)/30,000 = $9
 * Solution: **

4. Calculate the total product (manufacturing cost) cost per unit Unit product cost = (Direct materials + Direct labor + Variable overhead + Fixed overhead)/Units = ($150,000 + $90,000 + $30,000 + $450,000)/30,000 = $24
 * Solution: **

5. What if 32,000 cell phones could be manufactured next year? Explain in words how that would affect the unit prime cost, the unit conversion cost, the unit variable product cost and the unit total product cost. ** Solution: ** If the number of units produced increases, there will be mo impact on any variable cost. Unit prime cost and unit variable cost would stay the same. However, unit conversion cost and unit product cost would go down due to the presence of fixed factory overhead. Fixed overhead will remain the same in total, but decrease per unit as the number of units goes up. Conversely, if the number of units goes down, unit fixed overhead will increase. ** Reference ** Cornerstones of Cost Accounting Hansen & Mowen