Week 5 Assignment In WileyPlus: Complete The Following

Week 5 Assignment In Wileypluscomplete The Following Week 5 Assignment

For Turgo Company, variable costs are 63% of sales, and fixed costs are $180,300. Management’s net income goal is $60,903. Compute the required sales in dollars needed to achieve management’s target net income of $60,903.

Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs. Polk Company sells the fishing lures for $27.00. During 2012, the company sold 80,900 lures and produced 95,200 lures. Variable Cost per Unit: Direct materials $8.10, Direct labor $2.65, Variable manufacturing overhead $6.21, Variable selling and administrative expenses $4.21. Fixed Costs per Year: Fixed manufacturing overhead $254,184, Fixed selling and administrative expenses $259,308. Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g., 10.50.)

Assuming the company uses absorption costing, calculate Polk’s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g., 10.50.)

Prepare an absorption costing income statement for 2012.

Gundy Company expects to produce 1,318,080 units of Product XX in 2012. Monthly production is expected to range from 78,450 to 124,470 units. Budgeted variable manufacturing costs per unit are: direct materials $4, direct labor $8, and overhead $10. Budgeted fixed manufacturing costs per unit for depreciation are $5 and for supervision are $2. Prepare a flexible manufacturing budget for the relevant range value using 23,010 unit increments.

Paper For Above instruction

This assignment encompasses a series of accounting and financial calculations designed to evaluate a comprehensive understanding of cost behaviors, managerial decision-making, and budget preparation. The primary focus revolves around calculating sales targets to meet specific income goals, determining manufacturing costs under different costing methods, preparing income statements, and developing flexible budgets. These tasks are fundamental in managerial accounting, providing insights into how companies plan, control, and evaluate their financial performance within a dynamic environment.

First, the calculation of required sales to meet management’s net income target involves understanding the relationship between sales, variable costs, fixed costs, and net income. The formula applied is derived from the break-even analysis, modified to include target net income. The sales required are computed by adding fixed costs and desired net income, then dividing by the contribution margin ratio, which reflects the portion of sales revenue remaining after variable costs are deducted.

Second, Polk Company's manufacturing cost per unit calculated under variable costing adds up the direct materials, direct labor, variable manufacturing overhead, and variable selling and administrative expenses. The total provides an insight into the variable component of manufacturing costs, necessary for short-term decision-making. The absorption costing method, however, incorporates fixed manufacturing overhead into the cost per unit, spreading fixed costs over produced units, affecting inventory valuation and gross profit calculations.

Next, preparing an absorption costing income statement involves calculating cost of goods sold (COGS), which includes both variable and fixed manufacturing costs allocated to units sold, and subtracting it from sales revenue to determine gross profit. Operating expenses encompass selling and administrative expenses, and the net income is derived accordingly. This method aligns with external financial reporting standards, as it capitalizes fixed manufacturing overhead in inventory.

Finally, developing a flexible manufacturing budget for Gundy Company demonstrates how budgeting adapts to varying production levels within the relevant range. Using per-unit variable costs and fixed costs apportioned per unit, the budget estimates total costs at different production volumes, facilitating effective cost control and planning. It highlights the significance of understanding cost behavior and activity-based budgeting in manufacturing operations.

References

  • Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial accounting (16th ed.). McGraw-Hill Education.
  • Horngren, C. T., Datar, S. M., Rajan, M. V., & Battista, M. (2018). Cost accounting: A managerial emphasis (16th ed.). Pearson.
  • Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2020). Financial and managerial accounting (11th ed.). Wiley.
  • Kaplan, R. S., & Cooper, R. (1998). Cost & Effect: Using Integrated Cost Systems to Drive Profitability and Competitiveness. Harvard Business School Press.
  • Drury, C. (2018). Management and Cost Accounting (10th ed.). Cengage Learning.
  • Anthony, R. N., Hawkins, D. F., & Merchant, K. A. (2014). Accounting: Texts and Cases (13th ed.). McGraw-Hill Education.
  • Hilton, R. W., & Platt, D. E. (2017). Managerial Accounting: Creating Value in a Dynamic Business Environment. McGraw-Hill Education.
  • Blocher, E., Stout, D., Juras, P., & Cokins, G. (2019). Cost Management: A Strategic Emphasis (8th ed.). McGraw-Hill Education.
  • Goyal, P., & Goyal, S. (2019). Budgeting Control and Cost Accounting. Springer.
  • De Luca, C., & Welch, G. (2014). Managerial Accounting for Managers. Cengage Learning.

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