MANAGERIAL ACCOUNTING
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1. Production in 2010 for YFZ Bikes was at its highest point in the month of June when 40 units were produced at a total cost of $600,000. The low point in production was in January when only 15 units were produced at a cost of $340,000. The company is preparing a budget for 2008 and needs to project expected fixed cost for the budget year.
Required:
- Using the high/low method, the projected variable rate per unit is:
- b) Using the high/low method, the projected amount of fixed cost is:
2. During its first year of operations, ACC Company paid $4,000 for direct materials and $8,500 for production workers' wages. Indirect manufacturing costs on the production facilities amounted to $7,500 while general, selling, and administrative expenses totaled $3,000. The company produced 5,000 units and sold 4,000 units at a price of $7.50 a unit.
What is the amount of Cost of Goods Sold for the first year?
3. During its first year of operations, CAC Company paid $23,000 for direct materials and $18,500 for production workers' wages. Indirect manufacturing costs on the production facilities amounted to $16,500 while general, selling, and administrative expenses totaled $3,000. The company produced 16,000 units and sold 14,000 units at a price of $8.50 a unit.
What is the average cost per unit manufactured?
4.Grandle Corporation sells products for $65 each that have variable costs of $40 per unit. Grandle's fixed cost is $350,000.
Required: Calculate the contribution margin per unit, then use the per unit contribution margin approachto find the break-even point in units and dollars.
5. The following information is for a product of Lazarus Company:
Last year, the variable cost per unit was $22. Total fixed costs were $800,000. At a volume of 170,000 units, the company achieved a profit of $50,000.
Required: What was the unit sales price for the product last year?
6. The following information is for a product manufactured and sold by Rivera Corporation:
Sales price per unit, $35
Variable cost per unit, $20
Total fixed costs, $300,000
Last year, Rivera earned a profit of $30,000.
Required:
(a) How many units did Rivera sell last year?
(b) Rivera's managers are considering decreasing the sales price to $30 in an effort to increase market share. Also, the company wants a profit of $80,000. How many units would it have to sell at the lower selling price to achieve this target?
7. Chan Company incurs annual fixed costs of $80,000. Variable costs are $6.00 per unit, and the sales price is $10 per unit. Chan desires to earn an annual profit of $40,000.
Required: Use the contribution margin ratio approach to determine the sales volume in dollars needed to earn the desired profit.
8. Bristol Company produces a product that sells for $80 per unit and has variable costs of $50 per unit. Bristol's annual fixed costs are $240,000, and the company wishes to earn a profit of $60,000.
Required: Use the equation methodto determine the sales volume in units and dollars required to earn the desired profit.
9.Luxlawn, Inc. produces and sells electric lawn mowers for $220 each. The variable costs of each mower total $160 while total monthly fixed costs are $24,000. Current monthly sales are $99,000. The company is considering a proposal that will increase the selling price by 10%, increase total fixed costs by 10% and increase unit sales to 500 units per month.
Required:
1) Compute the company's current break-even point in units and dollars.
2) What is the company's current margin of safety in units, dollars, and percentage?
10.The Pargo Company makes and sells two products, as follows:
The Pargo Company expects to incur annual fixed costs of $175,000. The relative sales mix of the products is 75% of A and 25% of unit of B.
Required:
1) Determine the total number of units of products (A and B combined) that Pargo must sell to break even.
2) What is the number of units of A and of B that Pargo would expect to sell at the break-even point?
13 years ago
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