Question

Dream Threads Company sells hand−sewn shirts for $40 per shirt. It incurs monthly fixed costs of $8,000. The contribution margin ratio is calculated to be 40​%.

What is the breakeven point in​ units? (Round your answer up to the nearest whole​ unit.)

A. 500 units

B. 3,200 units

C. 200 units

D. 100 units

2)

Alpine Productions uses a standard cost system for recording transactions. Alpine reported the following data for the year ended December​ 31: Sales​ revenues: $650,000

Cost of goods sold​ (standard costing): $382,500 Selling​ & administrative​ expenses: $100,000 Variances:

Sales revenue variance	$4,100	F
Direct materials cost variance	40	U
Direct materials efficiency variance	250	F
Direct labor cost variance	80	U
Direct labor efficiency variance	20	F
Variable overhead cost variance	225	U
Variable overhead efficiency variance	95	F
Fixed overhead cost variance	410	U
Fixed overhead volume variance	100	F

What is the net operating income on a standard cost income​ statement?

Answer 1

1.

Required sales in dollars = (Fixed costs + Target profit) / Contribution margin ratio
Required sales in dollars = ($8000 + 0) / 40% = $20000
Number of units to be sold to break even = $20000 / $40 = 500 units

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2.

Sales revenue(standard)			$650000
Sales revenue variance			4,100
Sales revenue (actual)			654100
Cost of goods sold (standard)		$382,500
Manufacturing variances (Credit balances in parentheses)
Direct materials price variance	40
Direct materials efficiency variance	(250)
Direct labor price variance	80
Direct labor efficiency variance	(20)
Variable overhead spending variance	225
Variable overhead efficiency variance	(95)
Fixed overhead spending variance	410
Fixed overhead volume variance	(100)	290
Cost of goods sold (actual)			382790
Gross profit			271310
Marketing and admin. expense			100000
Net operating income/(loss)			171390