Problem 1: Kray Inc., which produces a single product, has provided the following data for its most recent month of operations:
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Number of units produced
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2,700
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Variable costs per unit:
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Direct materials
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$84
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Direct labor
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$10
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Variable manufacturing overhead
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$7
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Variable selling and administrative expense
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$5
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Fixed costs:
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Fixed manufacturing overhead
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$225,000
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Fixed selling and administrative expense
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$156,000
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There were no beginning or ending inventories. The unit product cost under variable costing was:
(a) $94
(b) $114
(c) $101
(d) $119
Problem 2: Blake Corporation, which produces a single product, has provided the following absorption costing income statement for the month of June:
Blake Corporation
Income Statement
For the month ended June 30
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Sales (9,700 units)
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$349,200
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Cost of goods sold:
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Beginning inventory
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$ 8,500
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Add cost of goods manufactured
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101,700
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Goods available for sale
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110,200
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Less ending Inventory
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20,100
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Cost of goods sold
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90,100
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Gross margin
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259,100
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Selling and administrative expenses:
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Fixed
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$ 80,000
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Variable
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19,400
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99,400
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Net operating income
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$ 159,700
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During June, the company's variable production costs were $10 per unit and its fixed manufacturing overhead totaled $70,000. A total of 8,000 units were produced during June and the company had 850 units in the beginning inventory. The company uses the LIFO method to value inventories.
The break-even point in units for the month under variable costing would be (rounded):
(a) 6,250 units
(b) 6,402 units
(c) 6,100 units
(d) 7,255 units
Problem 3: During its first year of operations, Carlos Manufacturing Company incurred the following costs to produce 9,400 units of its product:
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Direct materials
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$6 per unit
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Direct labor
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$3 per unit
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Variable manufacturing overhead
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$12 per unit
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Fixed manufacturing overhead
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$483,630 in total
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The company also incurred the following costs in the sale of 6,900 units of product during its first year:
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Variable selling and administrative
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$3 per unit
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Fixed selling and administrative
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$59,000 in total
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Assume that direct labor is a variable cost.
If Carlos' absorption costing net operating income for this first year is $117,425, what would its variable costing net operating income be for this first year?
(a) $86,000
(b) $-11,200
(c) $146,250
(d) $104,125
Problem 4: Dearne Company, which has only one product, has provided the following data concerning its most recent month of operations:
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Selling price
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$60
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Units in beginning inventory
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0
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Units produced
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6,000
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Units sold
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4,600
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Units in ending inventory
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1,400
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|
|
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Variable costs per unit:
|
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Direct materials
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$21
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Direct labor
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$14
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Variable manufacturing overhead
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$3
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Variable selling and administrative
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$6
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|
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Fixed costs:
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Fixed manufacturing overhead
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$41,000
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Fixed selling and administrative
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$74,200
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What is the total period cost for the month under the absorption costing approach?
(a) $101,800
(b) $114,300
(c) $100,300
(d) $110,000
Problem 5: Decaprio Inc. produces and sells a single product. The company has provided its contribution format income statement for June.
Sales (8,800 units) $528,000
Variable expenses 290,400
Contribution margin 237,600
Fixed expenses 211,700
Net operating income $25,900
If the company sells 9,200 units, its net operating income should be closest to:
(a) $25,900
(b) $36,700
(c) $27,077
(d) $49,900
Problem 6: The margin of safety in the Flaherty Company is $24,000. If the company's sales are $120,000 and its variable expenses are $80,000, its fixed expenses must be:
(a) $8,000
(b) $32,000
(c) $24,000
(d) $16,000
The following data are available for the Phelps Company for a recent month:
Product A Product B Product C Total
Sales $150,000 $130,000 $90,000 $370,000
Variable expenses 91,000 104,000 27,000 222,000
Contribution margin $59,000 $26,000 $63,000 148,000
Fixed expenses 55,000
Net operating income $93,000
The break-even sales for the month for the company are:
(a) $203,000
(b) $137,500
(c) $148,000
(d) $91,667
Problem 7: Newham Corporation produces and sells two products. In the most recent month, Product R10L had sales of $28,000 and variable expenses of $6,440. Product X96N had sales of $22,000 and variable expenses of $7,560. And the fixed expenses of the entire company were $32,710. The break-even point for the entire company is closest to:
(a) $32,710
(b) $46,710
(c) $17,290
(d) $45,431
Problem 8: Taylor, Inc. produces only two products, Acdom and Belnom. These account for 60% and 40% of the total sales dollars of Taylor, respectively. The unit variable expense as a percentage of the selling price is 60% for Acdom and 85% for Belnom. Total fixed expenses are $150,000. There are no other costs.
Assuming that the total fixed expenses of Taylor increase by 30% and the sales mix remains constant, what amount of sales dollars would be necessary to generate a net operating income of $9,000?
(a) $204,000
(b) $464,000
(c) $659,000
(d) $680,000
Problem 9: Taylor, Inc. produces only two products, Acdom and Belnom. These account for 60% and 40% of the total sales dollars of Taylor, respectively. The unit variable expense as a percentage of the selling price is 60% for Acdom and 85% for Belnom. Total fixed expenses are $150,000. There are no other costs.
What is Taylor's break-even point in sales dollars?
(a) $214,286
(b) $300,000
(c) $150,000
(d) $500,000