Kubin Company

Relevant range 18,000 - 22,000

produce and sell 20,000 units
Ave. costs PER unit
DM $ 7.00
DL $ 4.00
VMOH $ 1.50
FMOH $ 5.00
F Sell Exp. $ 3.50
F Admin $ 2.50
Sales comm $ 1.00
V Admin $ 0.50
Required
1.) Cost object = units of production
a.) Total DIRECT Mftg. Costs. (20,000 units)
DM $ 7.00 20,000 $ 140,000.00
DL $ 4.00 20,000 $ 80,000.00
$ 220,000.00
b.) Total INDIRECT Mftg. Costs. (20,000 units)
VMOH $ 1.50 20,000 $ 30,000.00
FMOH $ 5.00 20,000 $ 100,000.00
$ 130,000.00
2.) Cost object = Mftg. Dept. output is 20,000 units
a.) Total Mft. Costs DIRECTLY traceable to Mftg. Dept.
DM $ 7.00 20,000 $ 140,000.00
DL $ 4.00 20,000 $ 80,000.00
VMOH $ 1.50 20,000 $ 30,000.00
FMOH $ 5.00 20,000 $ 100,000.00
$ 350,000.00
b.) Total Mftg. Costs INDIRECTLY and CANNOT be easily traceable to Mftg. Dept.
None. since cost object is Manufacturing Dept.
All Mftg. Costs are traceable
3.) Cost object = various SALES REP. Company spent $50,000 Total F Sell Exp. on advertising
a.) Total DIRECT Sell exp. Individually traced to sales rep. after selling 20,000 unit
F Sell Exp. $ 3.50 20,000 $ 70,000.00
Less: $ -50,000.00
Sales comm $ 1.00 20,000 $ 20,000.00
$ 40,000.00
b.) Total INDIRECT Sell exp. Cannot be easily traced to sales rep. individually afte
F Sell Exp. Advertising $ 50,000.00
$ 50,000.00
4.) Kubin's Admin Exp. Are ALWAYS INDIRECT COSTS in its Internal mgt. reports?
Admin Exp are costs associated with the general mgt. of an org.
it can be either direct or indirect depending on the cost object represented
It is not always indirect costs.
 ily traceable to Mftg. Dept.
acturing Dept.

tal F Sell Exp. on advertising and remainder is on company's Sales reps' compensation.
rep. after selling 20,000 units

o sales rep. individually after selling 20,000 units

nal mgt. reports?

mgt. of an org.
e cost object represented
Kubin Company
Relevant r 18,000 - 22,000
produce and sell 20,000 units
Ave. costs PER unit
DM $ 7.00
DL $ 4.00
VMOH $ 1.50
FMOH $ 5.00
F Sell Exp. $ 3.50
F Admin $ 2.50
Sales com $ 1.00
V Admin $ 0.50
Required
1.) FinAcc, Total Amount of Product Costs incurred to make 20,000 units
DM $ 7.00 20,000 $ 140,000.00
DL $ 4.00 20,000 $ 80,000.00
VMOH $ 1.50 20,000 $ 30,000.00
FMOH $ 5.00 20,000 $ 100,000.00
$ 350,000.00
2.) FinAcc, Total Amount of Period Costs incurred to sell 20,000 units
F Sell Exp. $ 3.50 20,000 $ 70,000.00
F Admin $ 2.50 20,000 $ 50,000.00
Sales com $ 1.00 20,000 $ 20,000.00
V Admin $ 0.50 20,000 $ 10,000.00
$ 150,000.00
3.) FinAcc, Total Amount of Product Costs incurred to make 22,000 units
DM $ 7.00 22,000 $ 154,000.00
DL $ 4.00 22,000 $ 88,000.00
VMOH $ 1.50 22,000 $ 33,000.00
FMOH $ 4.55 22,000 $ 100,000.00
$ 375,000.00
4.) FinAcc, Total Amount of Period Costs incurred to sell 18,000 units
F Sell Exp. $ 3.89 18,000 $ 70,000.00
F Admin $ 2.78 18,000 $ 50,000.00
Sales com $ 1.00 18,000 $ 18,000.00
V Admin $ 0.50 18,000 $ 9,000.00
$ 147,000.00
o make 20,000 units

sell 20,000 units

o make 22,000 units

sell 18,000 units

Kubin Company
Relevant r 18,000 - 22,000
produce and sell 20,000 units
Ave. costs PER unit
DM $ 7.00
DL $ 4.00
VMOH $ 1.50
FMOH $ 5.00
F Sell Exp. $ 3.50
F Admin $ 2.50
Sales comm $ 1.00
V Admin $ 0.50
Required
1.) 18,000 units produced and sold, VC PER UNIT?
DM $ 7.00
DL $ 4.00
VMOH $ 1.50
Sales comm $ 1.00
V Admin $ 0.50
$ 14.00
2.) 22,000 units produced and sold, VC PER UNIT?
DM $ 7.00
DL $ 4.00
VMOH $ 1.50
Sales comm $ 1.00
V Admin $ 0.50
$ 14.00
3.) 18,000 units produced and sold, TOTAL VC?
$ 14.00 18,000 $ 252,000.00
4.) 22,000 units produced and sold, TOTAL VC?
$ 14.00 22,000 $ 308,000.00
5.) 18,000 units produced, AVE. FMC PER UNIT?
FMOH @ 20,000 units
FMOH per unit $ 5.00
Total FMOH $ 100,000.00
FMOH @ 18,000 units
FMOH per unit $ 5.56
6.) 22,000 units produced, AVE. FMC PER UNIT?
FMOH @ 20,000 units
FMOH $ 5.00
Total FMOH $ 100,000.00
FMOH @ 22,000 units
FMOH per unit $ 4.55
7.) 18,000 units produced, TOTAL FMC?
$ 5.56 18,000 $ 100,000.00
8.) 22,000 units produced, TOTAL FMC?
$ 4.55 22,000 $ 100,000.00
Kubin Company
Relevant r 18,000 - 22,000
produce and sell 20,000 units
Ave. costs PER unit
DM $ 7.00
DL $ 4.00
VMOH $ 1.50
FMOH $ 5.00
F Sell Exp. $ 3.50
F Admin $ 2.50
Sales com $ 1.00
V Admin $ 0.50
Required
1.) Incremental manufacturing costs of producing to 20,001 from 20,000
DM $ 7.00 1 $ 7.00
DL $ 4.00 1 $ 4.00
VMOH $ 1.50 1 $ 1.50
$ 12.50
2.) Incremental manufacturing costs of producing and SELLING to 20,001 from 20,000
DM $ 7.00 1 $ 7.00
DL $ 4.00 1 $ 4.00
VMOH $ 1.50 1 $ 1.50
Sales com $ 1.00 1 $ 1.00
V Admin $ 0.50 1 $ 0.50
$ 14.00
3.) Produce 20,000. Sell 19,800. New customer for the 200 unsold units
Incremental MFTG. cost PER UNIT incurred to SELL the 200 units to the new custom
None.
already incurred since 20,000 produced > 19,800 sold.
the Mftg. Cost pertaining to these is already Sunk cost.
4.) Produce 20,000. Sell 19,800. New customer for the 200 unsold units
Incremental cost SELLING AND ADMIN EXP. PER UNIT incurred to SELL the 200 unit
Sales com $ 1.00
V Admin $ 0.50
$ 1.50
001 from 20,000

ELLING to 20,001 from 20,000

00 unsold units
e 200 units to the new customer?

19,800 sold.
dy Sunk cost.
00 unsold units
T incurred to SELL the 200 units to the new customer?
Devon Motor Company
April 1st Cost Qty. Total
RM, Beg invty. 0 0 0
Purchases (batteries) $ 80.00 8,000 $ 640,000.00
Withdrawn (current month) $ 80.00 -7,600 $ -608,000.00
RM End invty. 400 $ 32,000.00

WIP, Beg invty. 0 0 0

Transferred In from Storeroom $ 80.00 7,500 $ 600,000.00
Transferred Out to FG $ 80.00 -6,750 $ -540,000.00
WIP, End invty. 750 $ 60,000.00

FG, Beg. Invty. 0 0 0

Transferred In from WIP $ 80.00 6,750 $ 540,000.00
COGS $ 80.00 -4,725 $ -378,000.00
FG, End. Invty. (unsold) $ 80.00 2,025 $ 162,000.00

Required:
1.) April 30th
a.) Raw Materials
b.) Work In Process
c.) Finished Goods
d.) Cost of Goods Sold
e.) Selling Expense
 2.)
$ 32,000.00 BS
$ 60,000.00 BS
$ 162,000.00 BS
$ 378,000.00 IS
$ 8,000.00 IS
Milden Company
Sell 12,000 units next Quarter at Selling price of $100 PER UNIT

Cost Cost Formula

COGS $35 per unit sold
Advt. Exp. $210,000 per quarter
Sales comms 6% of sales
Ship Exp. $28,000 per quarter + $9.10 per unit sold
Admin Sal. $145,000 per quarter
Insur Exp. $9,000 per quarter
Dep. Exp. $76,000 per quarter
Required
1.) Contribution format IS
Milden Company
Contribution Format Income Statement
For the Quarter-Ended, 202X
Sales (12,000 x $100)
Variable Expenses:
COGS (12,000 x $35) $ 420,000.00
Sales comms (6% of 1,200,000) $ 72,000.00
Var. Ship Exp. (12,000 x $9.10) $ 109,200.00
Contribution Margin
Fixed Expenses:
Advt. Exp. $ 210,000.00
Fixed Ship Exp. $ 28,000.00
Admin Sal. $ 145,000.00
Insurance Exp. $ 9,000.00
Dep. Exp. $ 76,000.00
Net Operating Income
2.) Traditional format IS
Milden Company
Traditional Format Income Statement
For the Quarter-Ended, 202X
Sales (12,000 x $100)
COGS (12,000 x $35)
Gross Margin
Selling and Administrative Expenses:
Advt. Exp. $ 210,000.00
Admin Sal. $ 145,000.00
Ship Exp. $ 137,200.00
Dep. Exp. $ 76,000.00
Sales comms $ 72,000.00
Insurance Exp. $ 9,000.00
Net Operating Income
arter + $9.10 per unit sold

$ 1,200,000.00

$ 601,200.00
$ 598,800.00

$ 468,000.00
$ 130,800.00

$ 1,200,000.00
$ 420,000.00
$ 780,000.00

$ 649,200.00
$ 130,800.00