1)Rocky Company has signed a contract that requires them to produce and sell Gadgets for$10 per unit. A recent study of costs indicatedthat their fixed production and fixed sellingand administrative costswere $100,000 and $40,000 respectively. Variable production costs were discovered to be $4 per unit while their variable selling and administrative costs are $2 per unit. Rocky'stax rate is 30 percent
Required:
a)What is the net income for Rocky Company if sales are 60,000 units?
b)What are the sales quantity in units needed to obtain an after-taxprofit of $21,000?
2)Ferris Corporation has the followingbudgeted operating results for 2013:
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Revenues (10,000 units @ $50) Variable costs:
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$500,000
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Manufacturing
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$200,000
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Selling
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60,000
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260,000
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Contribution inargin
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$240,000
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Fixed costs:
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Manufacturing
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$80,000
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Selling
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50,000
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130000
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Operating income
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$110.000
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Required:
a)Should the company produce a special order for 3,000 units for $30 pet unit? Justify your answer. If Ferris Corporation acceptsthe special order, they must produce and sell the entire 3,000 units for $30
3) Johnson Company produced10,000 units and sold 9,000units in theyear 2013. Beginning inventory was zero.The selling pricewas $60. Dilringthe period, the following costswere incurred:
Fixed manufacturing overhead $90,000
Fixed selling and administrative expenses 100,000
Variable manufacturing overhead 50,000
Variable sellingexpenses, per unit 6
Direct labor, per unit 10
Direct materials, per unit 11
Tax rate is 3 percent.
Required:
a. Calculateeach of the following:
i.V11riableproduction cost perunit
ii.Full absorption costper unit
iii.Variable costper unit
iv.Full (total)cost per unit
v.Contributionmargin per unit
vi.Gross margin per unit