ACCT 505 help A Guide to career/uophelp.com ACCT 505 help A Guide to career/uophelp.com | Page 46

Variable costs per unit:
Direct materials $150
Direct labor $75
Variable manufacturing overhead $25
Variable selling and admin $15
Fixed costs:
Fixed manufacturing overhead $275,000
Fixed selling and admin $200,000
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ACCT 505 Week 1 Case Study
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Top Switch Inc. designs and manufactures switches used in
telecommunications. Serious flooding throughout the state of Tennessee
affected Top Switch’s facilities. Inventory was completely ruined, and
the company’s computer system, including all accounting records, was
destroyed.
Before the unfortunate incident, recovery specialists cleaned the
buildings. The company controller is very nervous and anxious to
recover whatever records he can to support the insurance claim for the
destroyed inventory. After consulting with the cost accountant, they
decide to retrieve the previous year’s annual report for the beginning
inventory numbers. In addition, they also agreed that they need first
quarter cost data.
The cost accountant was working on the first quarter results before the
storm hit, and to his surprise, the report was still in his desk drawer.