H & W is a pharmaceutical company that manufactures three products from natural materials, organic compounds, catalysts and suspension agents. Inventory balances for March and April 2012 were as follows:
March 31 April 30
Raw Materials $ 258,400 $ 228,100
Work in Process $ 138,800 $ 127,200
Finished Goods $ 111,700 $ 114,100
During April, purchases of raw materials totaled $612,600; direct labor costs were $160,000.
Other costs incurred in the factory were Indirect labor $50,000, heat, light and power $100,000, repairs and maintenance to factory equipment $25,000, depreciation on factory equipment 53,500, taxes 60,000, and miscellaneous expenses $15,000.
Sales for April were $2,188,400. Sales salaries were $120,000, shipping and import duties 130,000, advertising 75,000, and office salaries $37,000.
REQUIRED:
1. Prepare in good form a statement of cost of goods manufactured for the month ended April 30th.
2. Determine whether the following exhibit variable, fixed or mixed cost behavior.
a. Direct materials.
b. Hourly wages.
c. Sales commissions.
d. Depreciation computer (sum of the years' digits method).
e. Rent.
f. Payroll taxes.
g. Salaries.
h. A telephone invoice for a monthly rate of $25 plus $.05 cents per minute.
i. Depreciation (units of production method).
j. Income taxes.
3. Why is the impact of increased production on fixed costs per unit?