The total cost amounts to $8,817. The expense formula for Sherburne Snow Removal's vehicle is a $2,510 monthly base charge along with an additional $371 for each snowfall day. The actual activity level was 17 snow days. The flexible budget will adjust the standard costs to reflect actual utilization. The calculated fixed costs total $2,510, and the variable costs, multiplied by the number of snow days, amount to $6,307, combining for a total of $8,817.
$553,950 represents the total production costs. The accompanying table elucidates various factors leading to this total cost calculation. The standard product production for three months is calculated as (30,000*$15) = $450,000, while the deluxe product yields (6,930*$15) = $103,950. When these amounts are summed, the total cost amounts to $553,950.
Rhanda Merchandising Inc.
Income Statement
Total revenue $2,980,000
-Cost of goods sold ($1,520,828)
Gross profit $1,459,172
-Depreciation expense ($250,000)
Operating profit $1,209,172
Gain on condemnation of company property $266,000
-Loss of assets from meteor strike ($656,000)
Income from continuing operations before taxes $819,172
-Income taxes ($207,000)
Income from continuing operations after taxes $612,172
Gain from discontinued operations $755,000
-Loss from discontinued operations ($475,000)
Net income $892,172
Response:
Clarification:
Last year's customer orders totaled 15000
Predicted orders for next year with a 15% rise = 15000 x 1.15 = 17250
Each customer order takes 1.5 hours to fulfill
Total time needed to satisfy customer orders = 17250 x 1.5 = 25875
Knowing that the standard work year comprises 2000 hours
Hence, the effective work year with a 2% capacity cushion
= Standard work year x ( 1 – Capacity cushion %/100)
= 2000 x 0.98 = 1960 hours
Workers required by manager
= Total time needed for orders / effective work year
= 25875 / 1960 = 13.20, rounded to 13
Thus, the manager will require 13 workers next year
Solution and Explanation:
1. MC = Cost of raw materials + Labor cost
MC = 5 plus (10 divide by 2)
MC = $10
2. TFC = $300
Q = 300, AFC = TFC/Q = 300 divide by 300 = $1
3. Nicholas's optimum output is likely to be greater
Rationale: P = MR = $15, MC = $10
With MR exceeding MC, increasing output is advisable until MR equals MC to maximize profits.
4. His profit-maximizing output would likely increase
Reason: P = MR = $15, MC = $4 + $5 = $9
Since MR > MC, Nicholas should amplify his output until they are equated at the profit-maximizing point.
