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Mendel Paper Company

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Submitted By tmcknight30
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Case 2B (Mendel Paper Company)
Tara McKnight
BUS630: Managerial Accounting
Prof Moustafa Ahmed
July 14, 2014

Mendel Paper Company
Introduction
The paper will talk about the Mendel Paper Company’s concern in regards to their four basic paper product lines. It will show the cost and price data for the next fiscal quarter, plus showing the contribution margins per unit and the revisions. The paper will include the break-even point for sales mix along with the margin of safety for the estimated sales volume of the original estimates and the revised estimates as well. Lastly, it will address Herbert’s concern about the variable cost of the place mats.
Original Estimated Contribution Margins – (1)
Computer Paper has 6 units per hour and $9.00 variable overhead per hour; Napkins has 10 units per hour and $6.00 variable over per hour; Place mats has 5 units per hour and $12.00 variable overhead per hour; and Poster Board has 4 units per hour and $8.00 variable overhead per hour. Here is the break-down of everything: Comp Paper Napkins Place Mats Poster Board Total Volume 30000 120000 45000 80000
Selling price 14 7 12 8.5
Material cost 6 4.5 3.6 2.5
Units per hour 6 10 5 4
Variable overheads 9 6 12 8
Variable O/H per unit 1.5 0.6 2.4 2
Total Sales 420000 840000 540000 680000 2480000
Material cost 180000 540000 162000 200000
Variable overheads 45000 72000 108000 60000
To get the variable overhead per unit is to divide the variable overheads by the units per hour. To get the Total Sales of each item is to multiply the volume and the

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