Catalyst Ltd. Makes a single product with the following details:Description Current Situation Proposed ChangeSelling Price (` /unit) 10Direct Costs (` /unit) 5Present number of setups per production period,(before each production run, setup is done) 42Cost per set up (` ) 450 Decrease by` 90Production units per run 960 1,008Engineering hours for production period 500 422Cost per engineering hour (` ) 10The company has begun Activity Based Costing of fixed costs and has presently identified twocost drivers, viz. production runs and engineering hours. Of the total fixed costs presently at`96,000, after the above,` 72,100 remains to be analyzed. There are changes as proposed abovefor the next production period for the same volume of output.Required(i) COMPUTE units and production runs Catalyst Ltd. should produce in the changed scenariofor break-even.(ii) ADVISE whether Catalyst Ltd. should continue to break up the remaining fixed costs intoactivity- based costs

Question 461 ptsCosts that vary depending on the number of units produced or sold are referred to as fixed costs.Group of answer choicesfalsetrue PreviousNext

During its first month of operations, a manufacturer incurs the following costs (in dollars) related to activities within its factory:Direct materials $15,000Direct labor $30,000Manufacturing overhead $40,000What amount should be reported as cost of goods sold on the income statement if 5,000 units are produced and 4,000 are sold? $56,000 $68,000 $70,000 $85,000

Fill in the Blank QuestionFill in the blank question.In costing, only costs that change in total with changes in production levels are included in product costs.

1. A motor manufacturer is to develop a new car model to be produced from 1 January2002 for six years until 31 December 2007. The development cost will be §33 million,of which §18 million will be incurred on 1 January 2000, §10 million on 1 July 2000and §5 million on 1 January 2001. The production cost of each car is assumed tobe incurred at the beginning of the calendar year of production and will be §9,000during 2002. The sale price of each car is assumed to be received at the end ofthe calendar year of production. Both the production costs and the sale prices areassumed to increase by 5.00% on each 1 January, the first increase occurring on 1January 2003. It is also assumed that 5,000 cars will be produced each year andthat all will be sold. The sale price of each car produced in 2002 is §12,100.(a) Calculate the discounted payback period at an effective rate of interest of 9.00%per annum.(b) Without doing any further calculations, explain whether the discounted payback period would be greater than, equal to, or less than the period calculatedin (a) if the effective rate interest were substantially less than 9.00% per annum

The following information was extracted from the accounting records of MIXED-UP (PTY) LTD, an entity engaged in the repair and servicing of heavy-duty machinery and equipment: Quarter 1 Quarter 2 Quarter 3 Output [units] 90,000 180,000 150,000 Production costs 670,000 940,000 850,000 The newly appointed cost accountant, Ms. Hagar-Abrams stated that the step costs comprise of both variable and fixed cost components. She further stated that it is important to separate the mixed costs between its different cost components in order to make effective operating decisions. You are required to: (a) Discuss whether the statement made by Ms. Hagar-Abrams about step costs comprising of both variable and fixed cost components are correct. (b) Classify the production costs based on its behaviour in relation to the level of output. Support your answer with calculations and reasons. (c) Calculate the variable and fixed overhead cost components for the production costs using the High-Low method.