Materials = $116,488 (= 116,920 $2,520 + $2,088) – purchased d. Gross margin % = Gross margin ÷ Sales revenue = (Sales revenue – 38% ÷ Sales revenue Cost of goods sold) 38% x Sales revenue = Sales revenue Cost of goods sold – Cost of sold = Sales revenue (38% x Sales revenue) – Cost of sold = Sales revenue x (1 38%) – Sales revenue = Cost of goods sold ÷ (100% 38%) – = $595,200 (from a) ÷ 62% $960,000 (40 min.) Cost Allocation and Regulated Prices: The City of Imperial Falls. a. The rate is 20 percent above the average cost of collection: Total cost of collection = $400,000 + $1,280,000 + $320,000 = $2,000,000 Total waste collected (tons) = 4,000 + 12,000 = 16,000 tons = 32,000,000 pounds Average cost per pound = $2,000,000 ÷ 32,000,000 pounds = $.0625 per pound Price per pound = $.0625 x 1.20 = $.075 per pound b. First, allocate costs to the two cost objects: households and businesses: Allocation of administrative and truck costs: Total costs = $400,000 + $1,280,000 = $1,680,000 Number of customers = 12,000 + 3,000 = 15,000 customers Allocated cost per customer = $1,680,000 ÷ 15,000 customers = $112 per customer
Materials purchased = $116,488 (= 116,920 – $2,520 + $2,088) d. Gross margin % = Gross margin ÷ Sales revenue 38% = (Sales revenue – Cost of goods sold) ÷ Sales revenue 38% x Sales revenue = Sales revenue – Cost of goods sold Cost of sold = Sales revenue – (38% x Sales revenue) Cost of sold = Sales revenue x (1 – 38%) Sales revenue = Cost of goods sold ÷ (100% – 38%) = $595,200 (from a) ÷ 62% $960,000 (40 min.) Cost Allocation and Regulated Prices: The City of Imperial Falls. a. The rate is 20 percent above the average cost of collection: Total cost of collection = $400,000 + $1,280,000 + $320,000 = $2,000,000 Total waste collected (tons) = 4,000 + 12,000 = 16,000 tons = 32,000,000 pounds Average cost per pound = $2,000,000 ÷ 32,000,000 pounds = $.0625 per pound Price per pound = $.0625 x 1.20 = $.075 per pound b. First, allocate costs to the two cost objects: households and businesses: Allocation of administrative and truck costs: Total costs = $400,000 + $1,280,000 = $1,680,000 Number of customers = 12,000 + 3,000 = 15,000 customers Allocated cost per customer = $1,680,000 ÷ 15,000 customers = $112 per customer