Variable costs = 56% of sales
Fixed costs = $187,100
Management's net income goal = $82,092
Contribution margin ratio = (100%-variable cost percentage)
Contribution margin ratio = (100%-56%)
Contribution margin ratio = 54%
Required sales to reach target income of $82,092 = (Total fixed cost + Target income)/(Contribution margin ratio)
Required sales to reach target income of $82,092 = (187100+82092)/54%
Required sales to reach target income of $82,092 = $498,503.7
Answer wrong according to book
a) Manufacturing cost per unit (variable costing) = Direct material + Direct labor + Variable manufacturing overhead
Manufacturing cost per unit (variable costing) = $7.73 + $2.52 + $5.92
Manufacturing cost per unit (variable costing) = $16.17 per unit
b) Variable costing income statement:-
POLK COMPANY
Income statement
For the year ended December 31, 2012
Variable costing
| Have to show debit and credit columns |
Categories Wrong |
| |
Amt. |
| Sales |
$ 2,060,000.0 |
| Less: Variable costs |
$ 1,615,200.0 |
| |
|
| Contribution margin |
$ 444,800.0 |
| Less: Fixed costs |
$ 450,503.0 |
| |
|
| Operating profit |
$ (5,703.0) |
| |
|