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Target gross profit percentage
Total cost of production percentage
Total sales
Total cost of production percentage ×
Target cost of production
Total Cost of Production = Cost of Procedure 1 (P1) + Cost of Procedure 2 (P2)
Total cost of Procedure 1 is twice that of Procedure 2:
P1 = 2(P2)
Substitute for P1 in the formula:
= 2(P2) + P2
= 3(P2)
= P2
P1 = 2(P2) = ( 2 × ) =
Cost makeup of Procedure 1:
Percentage Amount
Labor
Materials
Overhead
Total
Score:
Key Code:
Instructions
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Problem 28(14)-2A
Name:
Section:
0%
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Cost makeup of Procedure 2:
Percentage Amount
Labor
Materials
Overhead
Total
2.
Materials cost of Procedure 1
Percentage
Materials cost = of P1, so P1 total cost =
Procedure 1 cost twice as much as Procedure 2, so P2 total cost =
Cost makeup of Procedure 1:
Percentage Amount
Labor
Materials
Overhead
Total
Cost makeup of Procedure 2:
Percentage Amount
Labor
Materials
Overhead
Total
3.
Current total cost of production (P1 + P2)
Less target total cost of production
P2 materials cost savings needed
Current P2 overhead materials cost (60% of total overhead)
Less P2 overhead materials cost savings needed
Maximum new cost of P2 overhead materials
Total Cost of Production = Cost of Procedure 1 (P1) + Cost of Procedure 2 (P2)
Total cost of Procedure 1 is twice that of Procedure 2:
P1 = 2(P2)
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Score:
Instructions
Answers are entered in the cells with gray backgrounds.
ON
Problem 28(14)-2A
Name:
Solution
Section:
Cost makeup of Procedure 2: