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Flow of Inventoriable Costs; CVP analysis

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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?

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Solution Summary

The flows of inventoriable costs for CVP analysis are examined.

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