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Flow of Inventoriable Costs; CVP analysis

Problem One: Flow of Inventoriable Costs. Hofstra Plastics' selected data for August 2008 are presented here (in millions):

Direct materials inventory 8/ 1/ 2008 $ 90
Direct materials purchased $360
Direct materials used $375
Total manufacturing overhead costs $480
Variable manufacturing overhead costs $250
Total manufacturing costs incurred during August 2008 $1,600
Work- in- process inventory 8/ 1/ 2008 $200
Cost of goods manufactured $1,650
Finished goods inventory 8/ 1/ 2008 $125
Cost of goods sold $1,700

Calculate the following costs:
1. Direct materials inventory 8/ 31/ 2008
2. Fixed manufacturing overhead costs for August
3. Direct manufacturing labor costs for August
4. Work- in- process inventory 8/ 31/ 2008
5. Cost of goods available for sale in August
6. Finished goods inventory 8/ 31/ 2008

Problem Two: CVP analysis, service firm. Wildlife Escapes generates average revenue of
$4,000 per person on its five- day package tours to wildlife parks in Kenya. The variable costs per person are:

Airfare $ 1,500
Hotel accommodations $1,000
Meals $300
Ground transportation $600
Park tickets and other costs $200
Total $ 3,600
Annual fixed costs total $ 480,000.

1. Calculate the number of package tours that must be sold to break even.
2. Calculate the revenue needed to earn a target operating income of $ 100,000. 3. If fixed costs increase by $ 24,000, what decrease in variable cost per person must be achieved to maintain the breakeven point calculated in requirement 1?

Solution Summary

The flows of inventoriable costs for CVP analysis are examined.

$2.19