Exercise

Question 1

Meriden Company has a unit selling price of $650, variable costs per unit of $325, and fixed costs of $238,875. Compute the break-even point in units using the mathematical equation.

Break-even point

units

Question 2

For Turgo Company, variable costs are 56% of sales, and fixed costs are $173,600. Management’s net income goal is $124,236. Compute the required sales in dollars needed to achieve management’s target net income of $124,236.

Required sales

$

Question 3

For Kozy Company, actual sales are $1,278,000 and break-even sales are $881,820. Compute the margin of safety in dollars and the margin of safety ratio.

Margin of safety		$
Margin of safety ratio			%

Question 4

Montana Company produces basketballs. It incurred the following costs during the year.

Direct materials		$14,359
Direct labor		$25,833
Fixed manufacturing overhead		$10,310
Variable manufacturing overhead		$31,684
Selling costs		$21,405

What are the total product costs for the company under variable costing?

Total product costs

$

Question 5 Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs. Variable Cost per Unit Direct materials $7.88 Direct labor $2.57 Variable manufacturing overhead $6.04 Variable selling and administrative expenses $4.10   Fixed Costs per Year Fixed manufacturing overhead $248,122 Fixed selling and administrative expenses $252,105 Polk Company sells the fishing lures for $26.25. During 2012, the company sold 80,900 lures and produced 95,800 lures.

(a) Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012.  (Round answer to 2 decimal places, e.g.10.50.) Manufacturing cost per unit $

Question 6

For the quarter ended March 31, 2012, Maris Company accumulates the following sales data for its product, Garden-Tools: $313,000 budget; $330,300 actual. Prepare a static budget report for the quarter.

MARIS COMPANY Sales Budget Report For the Quarter Ended March 31, 2012
Product Line		Budget		Actual		Difference
Garden-Tools		$		$		$

Question 7

Gundy Company expects to produce 1,226,880 units of Product XX in 2012. Monthly production is expected to range from 81,010 to 123,590 units. Budgeted variable manufacturing costs per unit are: direct materials $4, direct labor $7, and overhead $11. Budgeted fixed manufacturing costs per unit for depreciation are $6 and for supervision are $3. Prepare a flexible manufacturing budget for the relevant range value using 21,290 unit increments.  (List variable costs before fixed costs.)

GUNDY COMPANY Monthly Flexible Manufacturing Budget For the Year 2012
	$	$	$
	$	$	$
	$	$	$