Project #31420 - Managerial Accounting

Complete: Case 2B (Mendel Paper Company).


In this case, you are provided information regarding selling prices and costs of several products offered by Mendel Paper Company.  In addition, management has concerns about sales mix and rising costs. Address the questions (1-5) at the end of the case.  Based on the case questions, you are required to provide a three to five double-spaced written report addressing management’s concerns.  The written report should be properly formatted according to APA guidelines and demonstrate research and critical thinking skills.  Conclusions and recommendations should be supported by at least 2 scholarly sources from the Ashford Library or other external sources, excluding the textbook. 


For Questions 1 through 4, you will need to complete several calculations – be sure to label and clearly identify your work to demonstrate your understanding of the concept even if you arrive at the incorrect answer.  The calculations should be included as part of your analysis and written report required for submission. 


For Question 5, fully address management’s concerns as part of your written analysis using the new or the previous calculations to support your recommendation/explanation. As part of your written analysis, include how management might use these calculations to make decisions.  The written analysis should be supported by at least 2 scholarly sources, excluding the textbook.


Week 1 Written Assignment should:



  • Demonstrate graduate level work including appropriate research and critical thinking skills.


  • Be presented as a written analysis (not a question/answer format)


  • Incorporate case questions into the overall analysis.


  • Follow APA formatting guidelines including title page, reference page and in-text citations


  • Consists of three to five double-spaced pages of content


  • Provide at least 2 scholarly sources, excluding the textbook.



Carefully review the Grading Rubric for the criteria that will be used to evaluate your assignment.






Mendel Paper Company produces four basic paper product lines at one of its plants: computer


paper, napkins, place mats, and poster board. Materials and operations vary according to the line


of product. The market has been relatively good. The demand for napkins and place mats has


increased with more people eating out, and the demand for the other lines has been growing




The plant superintendent, Marlene Herbert, while pleased with the prospects for increased sales,


is concerned about costs:


"We hear talk about a paperless office, but I haven't seen it yet. The computers, if


anything, have increased the market for paper. Our big problem now is the high fixed


cost of production. As we have automated our operation, we have experienced increases


in fixed overhead and even variable overhead. And, we will have to add more equipment


since it appears that we need even more plant capacity. We are operating over our normal


capacity as it is.


The place mat market concerns me. We may have to discontinue printing the mats. Our


specialty printing is driving up the variable overhead to the point where we may not find


it profitable to continue with that line at all."




Cost and price data for the next fiscal quarter are as follows:




Computer Paper Napkins Place mats Poster board


Estimated sales volume in units 30,000 120,000 45,000 80,000


Selling prices……………………. $14.00 $7.00 $12.00 $8.50


Material costs…………………. 6.00 4.50 3.60 2.50




Variable overhead includes the cost of hourly labor and the variable cost of equipment operation.


The fixed plant overhead is estimated at $420,000 for the quarter. Direct labor, to a large extent,


is salaried; the cost is included as a part of fixed plant overhead. The superintendent's concern


about the eventual need for more capacity is based on increases in production that may reach and exceed the practical capacity of 60,000 machine hours.


In addition to the fixed plant overhead, the plant incurs fixed selling and administrative expenses per quarter of $118,000.


 "I share your concern about increasing fixed costs," the supervisor of plant operations replies.


"We are still operating with about the same number of people we had when we didn't have this sophisticated equipment. In reviewing our needs and costs, it appears to me that we could cut fixed plant overhead to $378,000 a quarter without doing any violence to our operation. This

would be a big help."


"You may be right," Herbert responds. "We forget that we have more productive power than we


once had, and we may as well take advantage of it. Suppose we get some hard figures that show


where the cost reductions will be made."


Data with respect to production per machine hour and the variable cost per hour of producing


each of the products are given as follows:




Computer Paper Napkins Place mats Poster board


Units per hour 6 10 5 4


Variable overhead per hour $9.00 $6.00 $12.00 $8.00




"I hate to spoil things," the vice-president of purchasing announces. "But the cost of our materials for computer stock is now up to $7. Just got a call about that this morning. Also , place mat materials will be up to $4 a unit."


"On the bright side," the vice-president of sales reports, "we have firm orders for 35,000 cartons of computer paper, not 30,000 as we originally figured."






1. From all original estimates given, prepare estimated contribution margins by product line


for the next fiscal quarter. Also, show the contribution margins per unit.


2. Prepare contribution margins as in part (1) with all revisions included.


3. For the original estimates, compute each of the following:


a. Break-even point for the given sales mix.


b. Margin of safety for the estimated sales volume.


4. For the revised estimates, compute each of the following:


a. Break-even point for the given sales mix.


b. Margin of safety for the estimated sales volume.


5. Comment on Herbert's concern about the variable




Subject Business
Due By (Pacific Time) 05/22/2014 09:00 am
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