Drake Dean Company

1. (TCO B) Drake Company's income statement for the most recent year appears below.

Sales (45,000 units)$1,350,000

Less: variable expenses 750,000

Contribution margin 600,000

Less: fixedexpenses 375,000

Net operating income $225,000

Required:

a. Calculate the unit contribution margin.

b. Calculate the break-even point in dollars.

 c. If the company desires a net operating income of $290,000, how many units must it sell?

2. (TCO E) The Dean
Company produces and sells a single product. The following data refer to the year just completed: Selling price $450 Units in beginning Inventory 0 Units produced 25,000 Units sold 22,000 Variable costs per unit: Direct materials $ 200 Direct labor $ 50 Variable
manufacturing overhead $ 30 Variable selling and admin $ 15 Fixed Costs: Fixed manufacturing overhead $ 275,000 Fixed selling and admin $ 230,000 Assume that direct labor is a variable cost.


Required:


a. Compute the cost of a single unit of product under boththe absorption costing and variable costing approaches.


b. Prepare an income statement for the year using absorption costing.


c. Prepare an income statement for the year using variable costing.