Prepare journal entries to record the following production activities.
1
Purchased $30,000 of raw materials on credit.
Event
Debit
Credit
1
$30,000
$30,000
2
Used $21,000 of direct materials in production.
Event
Debit
Credit
1
$21,000
$21,000
3
Used $19,500 of indirect materials.
Event
Debit
Credit
1
$19,500
$19,500
General Journal
Raw materials inventory
Accounts payable
General Journal
Goods in process inventory
Raw materials inventory
General Journal
Factory overhead
Raw materials inventory
Prepare journal entries to record the following production activities.
1
Incurred total labor cost of $83,000 which is paid in cash
Event
Debit
Credit
1
$83,000
$83,000
2
Used $64,000 of direct labor in production.
Event
Debit
Credit
1
$64,000
$64,000
3
Used $19,000 of indirect labor.
Event
Debit
Credit
1
$19,000
$19,000
General Journal
Factory payroll
Cash
General Journal
Goods in process inventory
Factory payroll
General Journal
Factory overhead
Factory payroll
Prepare journal entries to record the following production activities.
1
Transferred completed products with a cost of $133,000
to finished goods inventory
Event
Debit
Credit
1
$133,000
$133,000
2
Sold $448,000 of products on credit. Their cost is $166,000
Event
Debit
Credit
1
$448,000
$448,000
General Journal
Finished goods inventory
Goods in process inventory
General Journal
to finished goods inventory
$270,000
$330,000
50%
1
Compute the amount of total dollar sales.
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2
Compute the amount of total variable costs.
Total dollar sales
Bloom Company management predicts that it will incur fixed costs of $270,000
and earn pretax income of $330,000 in the next period. Its expected
contribution margin ratio is 50%.
Dollar Sales
Choose Numerator: Choose Denominator:
Total dollar sales
Sales
Fixed Costs
Pretax income
Variable costs
fixed costs
pretax income
contribution margin ratio
Total dollar sales
Total dollar sales
Felix & Co. reports the following information about its sales and total costs.
Period Units Sold
Total
Costs Period Units Sold
Total
Costs
1
0
2,660
6
2,160
5,660
2
560
3,260
7
2,560
6,260
3
960
3,860
8
2,960
6,860
4
1,360
4,460
9
3,360
7,460
5
1,760
5,060
10
3,760
9,804
Hint: (Draw an estimated line of cost behavior using a scatter diagram offline.)
Complete the below table to calculate the fixed cost and variable cost of sales by using the high-low method. (Round cost per unit to 2 decimal places.)
Total fixed costs
Total cost at the high point
Volume at the high point
Variable cost per unit
Variable costs at the high point:
Total fixed costs
High-Low method - Calculation of variable cost per unit
High-Low method - Calculation of fixed costs
Total variable costs at high point
Total variable costs at the low point
Variable costs at the low point
Total cost at the low-point
Volume at the low point
Variable cost per unit
Complete the below table to calculate the fixed cost and variable cost of sales by using the high-low method. (Round cost per unit to 2 decimal places.)
A jeans maker is designing a new line of jeans called the Slims. The jeans will sell for
$295
(Round your answers to 2 decimal places.)
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(1) Compute the contribution margin per pair
(2) Compute the contribution margin ratio
Choose Numerator:
Contribution margin
Contribution margin ratio
Contribution margin ratio
Choose Denominator:
per pair and cost
$188.80
per pair in variable costs to make.
Contribution margin ratio
Contribution margin ratio
Blanchard Company manufactures a single product that sells for $120 per unit and whose total variable costs are $84 per unit. The company’s annual fixed costs are $529,200.
$120
price per unit
$84
total variable costs per unit
$529,200
annual fixed costs
1
Prepare a contribution margin income statement for Blanchard Company at the break-even point
% of sales
2
Assume the company’s fixed costs increase by
$132,000
. What amount of sales (in dollars) is needed to break even?
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BLANCHARD COMPANY
Contribution Margin Income Statement (at Break-Even)
Sales
Contribution margin
Choose Numerator:
Break-even point in dollars
Break-even point in dollars
Break-even point in dollars
Choose Denominator:
Blanchard Company manufactures a single product that sells for $120 per unit and whose total variable costs are $84 per unit. The company’s annual fixed costs are $529,200.
Prepare a contribution margin income statement for Blanchard Company at the break-even point
. What amount of sales (in dollars) is needed to break even?
Break-even point in dollars
Break-even point in dollars
$184
$138
$805,000
30%
$699,200
(1) Compute the unit sales to earn the target after-tax income.
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(2) Compute the dollar sales to earn the target after-tax net income
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Units to achieve target
Blanchard Company manufactures a single product that sells for $184 per unit
and whose total variable costs are $138 per unit. The company targets an annual
after-tax income of $805,000. The company is subject to a 30% income tax rate.
Assume that fixed costs remain at $699,200.
Pretax income
Choose Numerator: Choose Denominator:
Units to achieve target
Choose Numerator: Choose Denominator:
Dollars to achieve target
Dollars to achieve target
price per unit
variable costs per unit
after-tax income
income tax rate
fixed costs
Units to achieve target
Units to achieve target
Dollars to achieve target
Dollars to achieve target
$420,000
variable costs
$980,000
fixed costs
$268,000
pretax income
$52
contribution margin per unit
(1) Compute the total expected dollar sales for next period
(2) Compute the number of units expected to be sold next period
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Units
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Units
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Pretax income
Nombre Company management predicts $420,000 of variable
costs, $980,000 of fixed costs, and a pretax income of
$268,000 in the next period. Management also predicts that
the contribution margin per unit will be $52.
Contribution margin
Choose Numerator: Choose Denominator:
contribution margin per unit
