Accounting Management Cost Classification and Ethics

TASK 1: Cost Classification and Ethics The Sorrel Pharmaceuticals Corporation manufactures a variety of drugs that are marketed internationally. Inventories on May 31 and June 30 were as follows: May 31 June 30 Materials Inventory $354,100 $327,400 Work in Process Inventory 112,600 116,400 Finished Goods Inventory 138,500 142,800 Purchases of materials for June were $142,600. Direct labor costs were incurred and computed on the basis of 27,000 hours at $8 per hour. Actual overhead costs incurred in June were as follows: operating supplies used, $5,700; janitorial and materials handling labor, $38,100; employee benefits $110,800; heat, light, and power, $50,000; factory depreciation, $8,400; property taxes, $8,000; and expired†¦show more content†¦ANSWER: We have: †¢ Expected variable unit cost: $24 ïÆ'Ëœ Direct materials $10.90 ïÆ'Ëœ Direct labor $7.18 ïÆ'Ëœ Overhead $1.92 ïÆ'Ëœ Selling cost $ 4.00 †¢ Annual fixed costs: $68,700 ïÆ'Ëœ Taxes on property used $8,870 ïÆ'Ëœ Depreciation on building and equipment $18,920 ïÆ'Ëœ Advertising $38,840 ïÆ'Ëœ Other $2,070 a. Compute the number of units that must be sold to earn a profit of $80,000. Call A is the number of units that must be sold to earn a profit of $80,000 We have: ïÆ'Ëœ Sale = 49A ïÆ'Ëœ Variable cost = 24A ïÆ'Ëœ CM = 49A – 24A = 25A ïÆ'Ëœ Annual fixed cost: $68,700 ïÆ'Ëœ Operating income = CM - Annual fixed cost = 25A - $68,700 Profit by $80,000 that means: 25A - $68,700 = $80,000 = A = 5,948 units So the number of units that must be sold to earn a profit of $80,000 is 5,948 units b.Show MoreRelatedAnnual Report Of Woolworths Limited 2016 Essay1509 Words   |  7 Pagesa) In accordance to the annual report of Woolworths Limited 2016, the current accounting practice that is applied to the business regarding its inventory disclosure includes; a perpetual inventory system which continually updates the information by increasing or decreasing inventory from reports throughout the year to verify accounting records (Bragg 2016).  A perpetual inventory system in comparison to a periodic inventory system is more efficient and effective for larger corporations. 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