Class Notes (836,153)
United States (324,358)
BUS 202 (26)
Nick Ross (26)
Lecture 3

# BUS 202 Lecture 3: January 27th Premium

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Department
Course
BUS 202
Professor
Nick Ross
Semester
Spring

Description
January 27th Friday, January 27, 20179:12 AM • Review Problem ○ Parker: § Number of units produced and sold \$60k \$80k \$90k Total variable cost \$150k \$2.5 * \$80=\$200.00 \$2.5*90=\$225.00 Tot fixed cost \$360k \$360 \$360 § Per unit variable co\$150/\$60 = \$2.5 \$200/\$80=\$2.5 \$225/\$90=\$2.5 Per unit fixed cost \$360/\$60 = \$6.00 \$360/\$80=\$4.5 \$360/\$90=\$4.00 § Assume that we sell 90,000 hats at \$7.50 each § Contribution income statement: □ Sales: 90,000 * \$7.50 = \$675,000.00 □ Variable expense: \$225,000 ® Contribution margin: \$675,000.00 -\$225,000 = \$450,000.00 □ Fixed expenses: \$360,000 ® Net income: \$450,000 -\$360,000 = \$90,000.00 • Job Costing: ○ Example: Levis jeans: Skinny Jeans Bellbottoms jeans § 1 yard of materia2 yards or material § Each yard costs \$10 Each day 10 batches of jeans are made and each batch is 1000 pairs of jeans § § 5 batches of skinny, 5 of bell bottom § Machine uses \$5,000 worth of cleaner each day and \$25,000 in lubricant § Cost object: Pair of Jeans: Direct/Indirect Period/product Yard Direct Product Direct materials □ Cleaner Indirect Product MOH Lubricant Indirect Product MOH □ What is the cost of a pair of Jeans?: ® Total MOH/ # 0f jeans = ((25,000 + 5,000)/10,000) = \$3 ◊ Cost of a pair of skinny jeans are: \$10 + \$3 = \$13.00 January 27th Friday, January 27, 20179:12 AM • Review Problem ○ Parker: § Number of units produced and sold \$60k \$80k \$90k Total variable cost \$150k \$2.5 * \$80=\$200.00 \$2.5*90=\$225.00 Tot fixed cost \$360k \$360 \$360 § Per unit variable co\$150/\$60 = \$2.5 \$200/\$80=\$2.5 \$225/\$90=\$2.5 Per unit fixed cost \$360/\$60 = \$6.00 \$360/\$80=\$4.5 \$360/\$90=\$4.00 § Assume that we sell 90,000 hats at \$7.50 each § Contribution income statement: □ Sales: 90,000 * \$7.50 = \$675,000.00 □ Variable expense: \$225,000 ® Contribution margin: \$675,000.00 -\$225,000 = \$450,000.00 □ Fixed expenses: \$360,000 ® Net income: \$450,000 -\$360,000 = \$90,000.00 • Job Costing: ○ Example: Levis jeans: Skinny Jeans Bellbottoms jeans § 1 yard of materia2 yards or material § Each yard costs \$10 Each day 10 batches of jeans are made and each batch is 1000 pairs of jeans § § 5 batches of skinny, 5 of bell bottom § Machine uses \$5,000 worth of cleaner each day and \$25,000 in lubricant § Cost object: Pair of Jeans: Direct/Indirect Period/product Yard Direct Product Direct materials □ Cleaner Indirect Product MOH Lubricant Indirect Product MOH □ What is the cost of a pair of Jeans?: ® Total MOH/ # 0f jeans = ((25,000 + 5,000)/10,000) = \$3 ◊ Cost of a pair of skinny jeans are: \$10 + \$3 = \$13.00 □ Cleaner Indirect Product MOH Lubricant Indirect Product MOH □ What is the cost of a pair of Jeans?: ® Total MOH/ # 0f jeans = ((25,000 + 5,000)/10,000) = \$3 ◊ Cost of a pair of skinny jeans are: \$10 + \$3 = \$13.00 ◊ Cost of a pair of bell bottoms are: \$20 + \$3 = \$23.00 \$13.3 for 1 pair of skinny ® Cleaner and lubricant is a function of the total number of yards of
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