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Meal Cost Analysis for Production

The document outlines calculations for sales and cost of goods sold for meal production. If 300,000 meals are made and sold, total sales amount to $7,596,000, while the cost of goods sold is $2,598,000. If only 250,000 meals are sold, the cost of goods sold is $2,165,000, with 50,000 meals remaining in inventory valued at $433,000.

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villamorrommel49
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10 views3 pages

Meal Cost Analysis for Production

The document outlines calculations for sales and cost of goods sold for meal production. If 300,000 meals are made and sold, total sales amount to $7,596,000, while the cost of goods sold is $2,598,000. If only 250,000 meals are sold, the cost of goods sold is $2,165,000, with 50,000 meals remaining in inventory valued at $433,000.

Uploaded by

villamorrommel49
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Addt’l Questions

c. How much is Sales total if 300,000 meals are made and sold?
d. What is the Cost of Goods sold if 300,000 meals are made and sold?
e. What is the Cost of Goods sold if 300,000 meals are made, but only 250,000 meals are sold?

Answers:

Cost of meat for 2000 meals $ 3,600 / 2000 = 1.8


Cost of vegetables for 2000 meals $ 1,440 / 2000 = 0.72
Cost of plastic trays and utensils for 2000 meals $ 480 / 2000 = 0.24
Direct labor cost for 2000 meals $ 3,800 / 2000 = 1.9
$ 9,320 / 2000 = $ 4.66 per meal

Why divide the costs by 2,000? Because the costs indicated are for 2,000 meals. If we divide the costs by
2,000, we get the per meal cost. For example, Direct labor cost could have been given as needing 0.5
hours per meal, costing $3.8 per hour, which would equal to $ 1.9 per meal regardless.

1,200,000 / 150,000 =$ 8 per meal

Why divide the fixed costs by 150,000? Because that is our monthly production, and $ 1,200,000 is our
monthly fixed costs. Therefore, every month, we can assume that to produce 150,000 meals, we incur
1,200,000 in fixed costs, making a predetermined rate for our fixed costs, turning it into a variable cost
for this month’s costing purposes.

a. 4.66 + 8 = 12.66
b. 4.66 + 4 = 8.66

b) Why the change from $ 8 to $ 4? We changed the predetermined rate, since the assumption that we
incur fixed costs of 1,200,000 to produce 150,000 per month has changed to fixed costs 1,200,000 per
month to produce 300,000 per month.
c. 300,000 x 25.32 = 7,596,000
d. 300,000 x 8.66 = 2,598,000
e. 250,000 x 8.66 = 2,165,000

e) Where is the 50,000 unsold inventory? It is in the finished goods Ending Inventory.
Cost of Goods Sold = 250,000 x 8.66 = 2,165,000
Ending Inventory = 50,000 x 8.66 = 433,000
Meals Made = 300,000 x 8.66 = 2,598,000
(Goods Manufactured)

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