Cost Accounting homework-E10-6 P10-8 P10-8.....................

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E10-6

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When final double ruled amounts are correct the cell will change to green.
Exercise 10-6
$ Amount / Units = Rate
Budgeted fixed overhead per unit $1,500,000 / 500,000 = $3.00 per unit
First Year Second Year Third Year
Net income (variable costing) $ 500,000 $ 521,000 $ 497,000
Adjustment to absorption costing:
First year
Second year
Third year
Absorption costing net income
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E10-12

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Section:
When final double ruled amounts are correct the cell will change to green.
Exercise 10-12
Break-even sales
1. Contribution margin ratio = Variable costs - Total sales Contr. margin ratio
Fixed costs Fixed costs
Margin of safety ratio
= $1 - $750,000 = 75% Total sales
$600,000 Variable costs
2. Break-even sales volume = Fixed costs
Variable costs
= $600,000 = $800,000
75%
3. Margin of safety ratio = Total sales - Break-even sales
Total sales
= $1,000,000 - $800,000 = 20%
$1,000,000
4. Net income percentage = Contr. margin ratio ´ Margin of safety ratio
= 75% ´ 20% = 15%
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P10-5

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When double ruled amounts are correct the cell will change to green.
Problem 10-5
1. Clean-It Products, Inc.
Income Statement by Territory
Total Sales Territories
East % West %
Sales $ 1,000,000 $ 600,000 60.0% $ 400,000 40.0%
Less variable expenses * 600,000 370,000 62.0% 230,000 38.0%
Contribution margin 400,000 230,000 2.0% 170,000 2.0%
Less direct fixed costs 200,000 54,000 36,000
Segment margin $ 200,000 $ 176,000 $ 134,000
Less common fixed costs: 120,000
Net income $ 80,000
* Variable expense calculation:
Sales Variable Expense Rate Total Variable Expenses
East:
Brooms $ 400,000 70% $ 280,000
Mops 200,000 45% 90,000
Total $ 600,000 $ 370,000
West:
Brooms $ 200,000 70% $ 140,000
Mops 200,000 45% 90,000
Total $ 400,000 $ 230,000
2. It can be used as a guide that shows long-run profitability in each segment.
It measures product ability to recover vairable costs and direct fixed costs that keep
the company able to pay its debts in the long run.
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P10-8

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When final double ruled amounts are correct the cell will change to green.
Problem 10-8
1. Selling Price Per Unit
Amount Percent
Materials $ 4.00
Direct labor 0.60
Factory overhead 1.00
Administraative expense 1.20
Net income 2.00
Subtotal $ 8.80 95%
Selling expense (5%) 0.46 5%
Selling price per unit $ 9.26 100%
2. Venetian Manufacturing Company
Income Statement
For the Year Ended December 31, 2013
Sales $ 222,316
Less Cost of goods sold:
Materials $ 96,000
Direct labor 14,400
Factory overhead 24,000 (134,400)
Gross margin on sales $ 87,916
Operating expenses:
Selling expense $ 11,116
Administrative expense 28,800
Total operating expenses (39,916)
Net operating income $ 48,000
3. Break-even sales volume
a. Total fixed costs
b. 1 - (Variable cost per unit ÷ Sales price per unit)
c. a ÷ b
d. Selling price per unit
e. Break even sales volume in units (c ÷ d)
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P10-11

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When final double ruled amounts are correct the cell will change to green.
Problem 10-11
1. Total Expenses Percent Fixed Fixed Expenses Percent Variable Variable Expenses
Materials $ 19,000 10% $ 1,900
Labor 26,000 20% 5,200
Overhead 40,000 40% 16,000
Marketing & admin. 14,000 60% 8,400
Commission 20,000
Total $ 119,000 $ 31,500 $ 87,500
Total var. expenses
Unit variable cost = = =
Total units
Break-even sales volume (units) = Fixed cost = = units
Unit contr.
margin
2.
Total units
less break-even units
Margin of safety ratio = = =
Total units
3.
Total sales less variable costs
Contribution margin ratio = = =
Total sales
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