Runaround corporation sells running shoes and during january they ran production machines for 20,000 hours total and incurred
1 answer:
The corporation deals with both fixed costs and variable costs. The variable costs vary depending on how long the production machines are run and how many shoes are produced. The fixed costs are, just that, fixed. Whatever amount is fixed does not change no matter how long the machines run or how many shoes are produced.
Let's called the fixed cost f and the variable cost v.
Running the machines for 20,000 hours leads to $9,000 in maintenance costs. That $9,000 includes the fixed cost (f) and the cost paid per hour for running the machines (v) times the number of hours the machines ran. We put this into an equation as follows:
20000v + f = 9000
Running the machines for 14,000 hours leads to $7,200 in maintenance costs. That $7,200 includes the fixed cost (f) and the cost paid per hour for running the machines (v) times the number of hours the machines ran. We put this into an equation as follows:
14000v + f = 7200
We now have two equations and two unknowns. This is called a system of equations. When we subtract one equation from the other, the variable f will drop out. This gives us one equation with one unknown which we can solve. Here's what the process looks like:
Since
from before we replace c with .3 and solve for f.
That is, the fixed cost is $3,000
Let's called the fixed cost f and the variable cost v.
Running the machines for 20,000 hours leads to $9,000 in maintenance costs. That $9,000 includes the fixed cost (f) and the cost paid per hour for running the machines (v) times the number of hours the machines ran. We put this into an equation as follows:
20000v + f = 9000
Running the machines for 14,000 hours leads to $7,200 in maintenance costs. That $7,200 includes the fixed cost (f) and the cost paid per hour for running the machines (v) times the number of hours the machines ran. We put this into an equation as follows:
14000v + f = 7200
We now have two equations and two unknowns. This is called a system of equations. When we subtract one equation from the other, the variable f will drop out. This gives us one equation with one unknown which we can solve. Here's what the process looks like:
Since
That is, the fixed cost is $3,000
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Answer:
1. Purchase materials to manufacture 750 speakers
Debit Raw and In Process Inventory $86,250
Credit Accounts payable $86,250
2. Conversion costs to 715 units
Debit Raw and In Process inventory $64,350
Credit Conversion costs $64,350
3.Completed and transferred 665 units to Finished Goods
Debit Finished Goods Inventory $136,325
Credit Raw and In Process Inventory with $136,325
4. Sales of 655 units
Debit Account receivable $204,360
Credit Sales $204,360
5. Cost of Goods sold - 655 units
Debit Cost of Goods sold $134,275
Credit Finished Goods inventory $134,275
Closing balance of Raw & In process Materials = $14,275
Closing balance of Finished Goods inventory = $2,050
Explanation:
Vintage Audio Inc.
Cell process time = 15 minutes per speaker
Conversion cost for 165 operating hours = $59,400.
Units produced in 165 hours = (165hrs x 60mins) / 15
= 660 units
Conversion costs per Unit = $59,400 / 660 units = $90
Refer to the attached for very detailed presentation of answers
