Question -
Q1. Travelers Aids most recent income statement follows Total Per Unit Sales (3,000 units) $90,000 $30.00 Variable expenses $54,000 $18.00 Contribution margin $36,000 $12.00 Fixed Expenses $22,000 Net operating income $14,000 Prepare a new contribution format income statement under the following condition: The sales volume increases by 150 units. (New sales are 3,150 units)
Q2. Housewares Inc, distributes a single product, food processors whose selling price is $200 and whose variable cost is $140 per unit. The company's monthly fixed expense is $18,000. a. What is the company's breakeven point in unit sales using the equation method? Show computations b. What is the company's breakeven point in sales dollars using the contribution margin method with the CM ratio? Show computations.
Q3. Strong Wood Company is a distributor of patio furniture. Data concerning the next month's budget appear below. Selling price $290 per unit Variable expense $274 per unit Fixed expenses $158,000 per month Unit Sales 1,500 units per month a. What is the company's margin of safety? Show computation b. What is the company's margin of safety as a percentage of sales? Show computation
Q4. Sharpens Inc. produces knife sets for use in the commercial kitchens. They sell for $400 each. Selected data for the company's operations last year follow Units in beginning inventory 0 Units produced 3,000 Units sold 2,500 Units in ending inventory 500 Variable costs per unit Direct materials $120 Direct labor $80 Variable manufacturing overhead $40 Variable selling and administrative $20 Fixed Costs Fixed manufacturing overhead $300,000 Fixed selling and administrative $200,000 a. Assume that the company uses variable costing, compute the unit cost for one knife set. Show computations b. Assuming that the company uses absorption costing, compute the unit cost for one knife set. Show computations
Q5. Soccer nets for use in professional games. They sell them for $200 each. Selected data for the company's operations last year follow. Units in beginning inventory 0 Units produced 500 Units sold 300 Units in ending inventory 200 Variable costs per unit Direct materials $75 Direct labor $30 Variable manufacturing overhead $10 Variable selling and administrative $5 Fixed costs Fixed manufacturing overhead $2000 Fixed selling and administrative $1000 a. Assume that the company uses variable costing, compute the net operating income. Show computations b. Assuming that the company uses absorption costing, compute the net operating income. Show computations.