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ACC 650 MODULE 5 HOMEWORK 5

ACC 650 MODULE 5 HOMEWORK 5

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PROBLEM 9-43
FreshPak Corporation manufactures two types of cardboard boxes used in shipping canned food, fruit,
and vegetables. The canned food box (type C) and the perishable food box (type P) have the following
material and labor requirements.
Type of Box
C P
Direct material required per 100 boxes:
Paperboard ($.20 per pound) ..............................................................................30 pounds 70 pounds
Corrugating medium ($.10 per pound) ................................................................ 20 pounds 30 pounds
Direct labor required per 100 boxes ($12.00 per hour) ................................................. .25 hour .50 hour
The following manufacturing-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 495,000 units for each type of box. Manufacturing overhead is applied on the basis of direct-labor hours.
Indirect material ................................................................................................................ $ 10,500
Indirect labor ....................................................................................................................... 50,000
Utilities ............................................................................................................................... 25,000
Property taxes ..................................................................................................................... 18,000
Insurance ............................................................................................................................ 16,000
Depreciation ........................................................................................................................ 29,000
Total ................................................................................................................................. $148,500
The following selling and administrative expenses are anticipated for the next year.
Salaries and fringe benefits of sales personnel .................................................................... $ 75,000
Advertising ........................................................................................................................... 15,000
Management salaries and fringe benefits ................................................................................ 90,000
Clerical wages and fringe benefits .......................................................................................... 26,000
Miscellaneous administrative expenses .................................................................................... 4,000
Total ................................................................................................................................. $210,000
The sales forecast for the next year is as follows:
Sales Volume Sales Price
Box type C ......................................... 500,000 boxes $ 90.00 per hundred boxes
Box type P ......................................... 500,000 boxes 130.00 per hundred boxes
The following inventory information is available for the next year. The unit production costs for each product are expected to be the same this year and next year.
Expected Inventory
January 1
Desired Ending Inventory
December 31
Finished goods:
Box type C ................................................................................ 10,000 boxes 5,000 boxes
Box type P ................................................................................ 20,000 boxes 15,000 boxes
Raw material:
Paperboard .............................................................................. 15,000 pounds 5,000 pounds
Corrugating medium ................................................................. 5,000 pounds 10,000 pounds


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