Variable Cost Per Unit:
Manufacturing:
Direct Materials = $20
Direct Labor = $12
Variable Manufacturing Overhead = $4
Variable Selling and Administrative = $2
Fixed costs per year:
Fixed manufacturing overhead = $960,000
Fixed selling and administrative expenses = $240,000
During its first year of Operations, produced 60,000 units and sold 60,000 units. During it's second year of operations, it produced 75,000 and sold 50,000 units. In its third year, it produced 40,000 units and sold 65,000 units. The selling price of the companys product is $58 per unit.
1. Compute the companys break even point in units sold.
2. Assume the company uses the variable costing:
a. Compete the unit product cost for year 1, year 2, year 3
b. Prepare an income statement for year 1, 2, and 3
3. Assume the company uses absorption costing:
a. Compute the unit product cost for year 1, 2, and 3
b. Prepare an income statement for year 1, 2, and 3
4. Compare the net operating income figures that you computed in requirements 2 and 3 to the break even point that you computed in requirement 1. which net operating income figures seem counterintuitive? why?
Solved
Show answers
More tips
- S Style and Beauty Is Hot Scissor Haircutting Beneficial or Dangerous?...
- S Style and Beauty How to Get Rid of Under Eye Bruises?...
- F Food and Cooking Is Bacon Good for You?...
- S Style and Beauty Discover the Art of Nail Design: How Do You Paint Your Nails?...
- P Philosophy How to Develop Extrasensory Abilities?...
- O Other Everything You Need to Know About Kudyabliks...
- C Computers and Internet The Twitter Phenomenon: What it is and How to Use it...
- C Computers and Internet How to Choose a Laptop: Expert Guide and Tips...
- C Computers and Internet How to Choose a Monitor?...
- H Horoscopes, Magic, Divination Where Did Tarot Cards Come From?...
Answers on questions: Business
- B Business Upton Co. is growing quickly. Dividends are expected to grow at 20 percent for the next three years, with the growth rate falling off to a constant 8 percent thereafter. If the required...
- B Business The sales process at Xerox typically follows the six stages of the personal selling process. During the second stage, the salesforce prepares for a presentation by...
- B Business Most standardized test publishers today distribute reports like the Criterion-Reference Skills Analysis included in your text. While such reports contain a wealth of information,...
- B Business We have said that strategic management is an evolution and a destination. What does this mean? Discuss in detail...
- B Business During 2019, Jerry is a self-employed therapist, and his net earned income is $121,000 from his practice. Jerry s SEP Plan, a defined contribution plan, states that he will contribute...
- B Business T-bills currently yield 3.5 percent. Stock in Deadwood Manufacturing is currently selling for $72 per share. There is no possibility that the stock will be worth less than $65 per...
- B Business You plan to build an apartment building with a 12-month construction. The total project cost is $12,000,000 linearly spread out over the 12 months. The equity partners fund the first...
- B Business Christopher corp. is preparing its statement of cash flows using the indirect method. it provides the following information about transactions for the year: plant assets, net – beginning...
- H History What effect did abolishing slavery and the restriction of immigration to texas from the united states by the mexican government have?...
- H History Which russian tsar disguised himself as a carpenter in order to travel around europe and see for himself how western technology worked? a. ivan the great b. ivan the terrible c....
Ответ:
1. Break-even point in units sold = Fixed cost/Contribution margin
= $1,200,000/$20 = 60,000 units
2-a. First Year Second Year Third Year
Unit variable product costs:
Direct Materials = $20
Direct Labor = $12
Manufacturing Overhead = $4
Product costs $36 $36 $36
Selling and admin. cost $2
Total variable mfg. costs = $38 $38 $38
b. Income Statements:
First Year Second Year Third Year
Sales unit 60,000 50,000 65,000
Sales revenue $3,480,000 $2,900,000 $3,770,000
Variable cost of goods sold:
Manufacturing 2,160,000 1,800,000 2,340,000
Product contribution $1,320,000 $1,100,000 $1,430,000
Selling and administrative 120,000 100,000 130,000
Contribution margin $1,200,000 $1,000,000 $1,300,000
Total fixed costs 1,200,000 1,200,000 1,200,000
Net income $0 ($200,000) $100,000
3. Absorption costing:
First Year Second Year Third Year
Unit product costs:
Variable cost per unit $36 $36 $36
Total variable cost $2,160,000 $2,700,000 $1,440,000
Fixed manufacturing 960,000 960,000 960,000
Total manufacturing $3,120,000 $3,660,000 $2,400,000
Production units 60,000 75,000 40,000
Unit product costs $52 $48.80 $60
b. Income Statements:
First Year Second Year Third Year
Sales unit 60,000 50,000 65,000
Sales revenue $3,480,000 $2,900,000 $3,770,000
Cost of goods sold 3,120,000 2,440,000 3,900,000
Gross profit $360,000 $460,000 ($130,000)
Selling and admin. 240,000 240,000 240,000
Net income (loss) $120,000 $220,000 ($370,000)
4. The net operating income from absorption costing seem counterintuitive. The reason is because of the use of different measures; Requirement 2 is based on variable product costs while requirement 3 is based on absorption product costs.
Explanation:
a) Data and Calculations:
Variable Cost Per Unit:
Manufacturing:
Direct Materials = $20
Direct Labor = $12
Variable Manufacturing Overhead = $4
Variable manufacturing costs = $36
Variable Selling and Administrative = $2
Total variable costs = $38
Fixed costs per year:
Fixed manufacturing overhead = $960,000
Fixed selling and administrative expenses = $240,000
Total fixed costs = $1,200,000
Production and Sales Units
First Year Second Year Third Year
Production units 60,000 75,000 40,000
Sales unit 60,000 50,000 65,000
Selling price per unit = $58
Variable cost per unit = 38
Contribution margin $20
Ответ:
$650 million
Explanation:
Calculation to determine the What does its balance at the Fed has to be on the last day of the maintenance period in order to have a zero cumulative reserve deficit
First step is to determine the balance maintained for 13 days in term of product
Using this formula
Product=Numbers of days Balance maintained for those days
Day Balance Product
1 *$750 million=$750 million
2* $725 million=$1,450 million
3* $625 million=$1,875 million
3* $775 million=$2,325 million
2*$700 million=$1,400 million
2*$675 million=$1,350 million
13 $9,150 million
($750 million +$1,450 million+$1,875 million+$2,325 million+$1,400 million+$1,350 million)
Now let calculate the required balance on the last day
Maintained required for 14 days in term of product $9,800 million
(14*$700 million)
Less balance maintained for 13 days in term of product ($9,150 million)
Required balance on the last day $650 million
($9,800 million-$9,150 million)
Therefore its balance at the Fed has to be $650 million on the last day of the maintenance period in order to have a zero cumulative reserve deficit.