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# Costing Accounting: Budgets and Production

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Please help guide and help me with steps as per the requirement.
Please see attached file for full problem description.

Cost Accounting - A managerial emphasis
1. Cost behaviors: Exercise 2-21 on page 53 &#8594; try to use Excel for the graphs
2. CVP: Exercise 3-20 on page 84 &#8594; build an Excel worksheet to do this problem.
3. Costing methods: Exercise 4-17 on page 123 &#8594; try to do this with Excel
2-21: Variable costs and fixed costs. Consolidated Minerals (CM) owns the rights to extract minerals from beach sands on Fraser Island. CM has costs in three areas:

a. Payment to a mining subcontractor who charges \$80-per-ton of beach sand mined and returned to the beach (after being processed on the mainland to extract three minerals-ilmenite, rutile, and zircon).
b. Payment of a government mining and environmental tax of \$50 per ton of beach sand mined.
c. Payment to a barge operator. This operator charges \$150,000 per-month to transport each batch of beach sand - up to 100 tons per-batch per-day - to the mainland and then return to Fraser Island. (That is, 0-100 tons per day - \$150,000 per month; 101-200 tons per day - \$300,000 per month, and so on.) Each barge operates 25 days per month. The \$150,000 month1y charge must be paid even if fewer than 100 tons are transported on any day and even if Consolidated Minerals requires fewer than 25 days of barge transportation in that month.

CM is currently mining 180 tons of beach minerals per day for 25 days per month.

1. What is the variable cost per ton of beach sand mined? What is the fixed cost to CM per-month?
2. Plot a graph of the variable costs and another graph of the fixed costs of Consolidated Minerals. Your graphs should be similar to Exhibits 2-3 (p. 33) and 2-4 (p. 34). Is the concept of relevant range applica¬ble to your graphs? Explain. Do this with Excel.
3. What is the unit cost per ton of beach sand mined (a) if 180 tons are mined each day, or (b) if 220 tons are mined each day? Explain the difference in the unit-cost figures.

3-20 CVP exercises. The Super Donut owns and operates six doughnut outlets in and around Kansas City. You are given the following corporate budget data for next year:
Revenues \$10,000,000
Fixed costs 1,100,000
Variable costs 8,200,000
Variable costs change with respect to the number of doughnuts sold.
Compute the budgeted operating income for each of the following deviations from the original budget. (Consider each case independently.)

1. A 10% increase in contribution margin, holding revenues constant
2. A 10% decrease in contribution margin, holding revenues constant
3. A 5% increase in fixed costs
4. A 5% decrease in fixed costs
5. An 8% increase in units sold
6. An 8% decrease in units sold
7. A 10% increase in fixed costs and a 10% increase in units sold

4-17 Actual costing, normal costing, accounting for manufacturing overhead. Destin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Destin allocates manufacturing overhead costs using direct manufactur¬ing labor costs. Destin provides the following information:

Budget for 2004 Actual Results for 2004
Direct materials costs \$1,500,000 \$1,450,000
Direct manufacturing labor costs 1,000,000 980,000
Direct manufacturing overhead costs 1,750,000 1,862,000

1. Compute the actual and budgeted manufacturing overhead rates for 2004.
2. During March, the job-cost record for Job 626 contained the following information:
? Direct materials used \$40,000
? Direct manufacturing labor costs \$30,000
3. Compute the cost of Job 626 using (a) actual costing and (b) normal-costing.
4. At the end of 2004, compute the under- or over-allocated manufacturing overhead under normal costing. Why is there no under- or over-allocated overhead under actual costing?

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#### Solution Preview

Cost Accounting - A managerial emphasis
1. Cost behaviors: Exercise 2-21 on page 53 &#8594; try to use Excel for the graphs
2. CVP: Exercise 3-20 on page 84 &#8594; build an Excel worksheet to do this problem.
3. Costing methods: Exercise 4-17 on page 123 &#8594; try to do this with Excel
2-21: Variable costs and fixed costs. Consolidated Minerals (CM) owns the rights to extract minerals from beach sands on Fraser Island. CM has costs in three areas:

a. Payment to a mining subcontractor who charges \$80-per-ton of beach sand mined and returned to the beach (after being processed on the mainland to extract three minerals-ilmenite, rutile, and zircon).
b. Payment of a government mining and environmental tax of \$50 per ton of beach sand mined.
c. Payment to a barge operator. This operator charges \$150,000 per-month to transport each batch of beach sand - up to 100 tons per-batch per-day - to the mainland and then return to Fraser Island. (That is, 0-100 tons per day - \$150,000 per month; 101-200 tons per day - \$300,000 per month, and so on.) Each barge operates 25 days per month. The \$150,000 month1y charge must be paid even if fewer than 100 tons are transported on any day and even if Consolidated Minerals requires fewer than 25 days of barge transportation in that month.

CM is currently mining 180 tons of beach minerals per day for 25 days per month.

1. What is the variable cost per ton of beach sand mined? What is the fixed cost to CM per-month?

1. Variable cost per ton of beach sand mined
Subcontractor \$ 80 per ton
Government tax 50 per ton
Total \$130 per ton

Fixed costs per month
0 to 100 tons of capacity per day = \$150,000
101 to 200 tons of capacity per day = \$300,000
201 to 300 tons of capacity per day = \$450,000

2. Plot a graph of the variable costs and another graph of the fixed costs of Consolidated Minerals. Your graphs should be similar to Exhibits 2-3 (p. 33) ...

#### Solution Summary

The solution explains various problems relating to cost accounting.

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See Also This Related BrainMass Solution

## Identify Cost Cuts to Reduce the Budgets of Dilemma

Dr. Stephanie White, the Chief Administrator of Uptown Clinic, a community mental health agency, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable future but increasing demand for services. To plan for reduced budgets, she must first identify where costs can be cut or reduced and still keep the agency functioning. Below are some data from the past year.

Program Area Costs

Administration

Salaries:
Administrator \$60,000
Assistant \$35,000
Two Secretaries \$42,000
Supplies \$35,000
Advertising and promotion \$9,000
Professional meetings/dues \$14,000

Purchased Services:
Accounting and billing \$15,000
Custodial \$13,000
Security \$12,000
Consulting \$10,000

Community Mental Health Services
Salaries (two social workers) \$46,000
Transportation \$10,000

Outpatient mental health treatment
Salaries:
Psychiatrist \$86,000
Two Social Workers \$70,000

1. Provide a dollar range of costs to reduce budgets (worst and best case analysis).
2. She needs to cut \$94,000 in cost. Prioritize those cuts that can be made without impacting the operation or quality care of the organization.
Describe how managerial accounting is different from cost accounting.
Describe the lean production philosophy.
Compare and contrast accounting principles in lean production to those of typical production.
Describe how you would advise Dr. White to prepare for reduced budgets.

Instructions:

1. TITLE PAGE. Remember the Running head: AND TITLE IN ALL CAPITALS
2. ABSTRACT. A summary of your paper - not an introduction. Begin writing in third person voice.
3. BODY. The body of your paper begins on the page following the title page and abstract page and must be double-spaced (be careful not to triple- or quadruple-space between paragraphs). The type face should be 12-pt. Times Roman or 12-pt. Courier in regular black type. Do not use color, bold type, or italics except as required for APA level headings and references. In-body academic citations to support your decisions and analysis are required. A variety of academic sources is encouraged.
4. REFERENCE PAGE. References that align with your in-body academic sources are listed on the final page of your paper. The references must be in APA format using appropriate spacing, hang indention, italics, and upper and lower case usage as appropriate for the type of resource used. Remember, the Reference Page is not a bibliography but a further listing of the abbreviated in-body citations used in the paper. Every referenced item must have a corresponding in-body citation.

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