Question 1 - The Wisconsin Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below:
Percent completed
Units Materials Conversion
Work in process, June 1 60,000 65% 45%
Work in process, Jun 30 55,000 75% 65%
The department started 275,000 units into production during the month and transferred 280,000 completed units to the next department.
REQUIRED: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs.
Question 2 - Drake Company's income statement for the most recent year appears below:
Sales (26,000 units) $650,000
Less: Variable expenses 442,000
Contribution margin 208,000
Less: Fixed expenses 234,000
Net operating loss $(26,000)
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 $20,000, how many units must it sell?
Question 3 - The Dean Company produces and sells a single product. The following data refer to the year just completed:
Selling Price $ 350
Units in beginning Inventory 0
Units Produced 20000
Units sold 19000
Variable Costs per unit:
Direct materials $ 190
Direct labor $ 40
Variable manufacturing overhead $ 25
Variable selling and admin $ 10
Fixed Costs:
Fixed manufacturing overhead $ 250,000
Fixed selling and admin $ 225,000
Assume that direct labor is a variable cost.
Required:
a. Compute the cost of a single unit of product under both the 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.