Assignment
1. T-Tunes, Inc. is considering the introduction of a new music player with the following price and cost characteristics:
Sales price per unit: $120
Variable cost per unit: $60
Annual fixed costs: $150,000
(a) How many units must T-Tunes sell to break even?
(b) How many units must T-Tunes sell to make an operating profit of $240,000 for the year?
(c) What will the operating profit be, assuming that the projected sales for the year are 8,000 units?
Consider requirements (b) and (c) independent of each other.
2. Kramer Company has decided to use a predetermined rate to assign factory overhead to production. The following predictions have been made for 2010:
Total factory overhead costs $180,000
Direct labor hours 50,000 hours
Direct labor costs $250,000
Machine hours 60,000 hours
Compute the predetermined factory overhead rate under three different bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours.