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)
Question 1: If the company desires a net operating income of $20,000, the number of units needed to be sold is:
A) 28,500
B) 31,000
C) 31,750
D) 26,500
Question 2: The sales manager is convinced that a $60,000 expenditure on advertising will increase unit sales by fifty percent without any other increase in fixed expenses. If the sales manager is correct, the company's net operating income would increase by:
A) $44,000
B) $34,000
C) $30,000
D) $49,000
Beanston Company, which has only one product, has provided the following data concerning its most recent month of operations:
Selling price ........................................................ $104
Units in beginning inventory .................................... 0
Units produced .................................................. 2,800
Units sold .......................................................... 2,500
Units in ending inventory ..................................... 300
Variable costs per unit:
Direct materials .................................................. S16
Direct labor ........................................................ 544
Variable manufacturing overhead ........................ S4
Variable selling and administrative ..................... $6
Fixed costs:
Fixed manufacturing overhead................. $50,400
Fixed selling and administrative............... $22,500
Question 3: What is the unit product cost for the month under variable costing?
A) $90
B) $66
C) $72
D) $84
Question 4: What is the unit product cost for the month under absorption costing?
A) $66
B) $72
C) $90
D) $84
The controller of Kleyman Company estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below:
Wall Mirrors Speciality Windows
Total expected units produced 4,000 3,000
Total expected material moves 500 400
Expected direct labor-hrs unit 7 6
The total materials handling cost for the year is expected to be $28,400
Question 5: If the materials handling cost is allocated on the basis of material moves, how much of the total materials handling cost should be allocated to the specialty windows? (Round off your answer to the nearest whole dollar.)
A) $12,622
B) $13,108
C) $12,224
D) $14,200