Question

1. Using the following data for Xylo Corporation how much were the total manufacturing costs for the year?

sales	$963,000
direct labor cost	$220,700
raw material purchases	$128,000
selling expenses	$94,000
administrative expenses	$75,100
manufacturingoverhead applied to work in process	$300,000
actual manufacturing overhead costs	$324,000

inventories	beginning of year	end of year
raw materials	$4000	$10,000
work in process	$16,000	$19,000
finished goods	$44,000	$32,000

		$666,700
		$648,700
		$639,700
		$642,700

2.

Polka Dots, Inc. manufactures polka dot dresses which sell for $50 each. The firm expects to sell 90,000 dresses next year. At this level of sales, variable expenses will total $922,500 and fixed expenses will total $596,250. The marketing department forecasts that sales of dresses will increase 10% next year if Polka Dots increases the yearly advertising budget by $5,000 and adds trim to the dresses that would increase variable expenses by $2 per unit. If these changes are made, what would be the new projected net operating income?

		$3,316,000
		$3,631,000
		$3,136,000
		$3,663,000 3. Polka Dots, Inc. manufactures polka dot dresses which sell for $50 each. The firm expects to sell 90,000 dresses next year. At this level of sales, variable expenses will total $922,500 and fixed expenses will total $596,250. If Polka Dots wants to make $198,750 in profit next year, what will total sales in dollars have to be next year? $795,000 $900,000 $1,000,000 $1,717,500

Answer 1

2-	new level of sales	old level of sales*(1+growth rate)	90000*(1.10)	99000
	new level of variable cost per unit	(total variable cost/no of units produced)+additional cost per unit	(922500/90000)+2	12.25
	sales			99000*50	4950000
	variable cost			90000*12.25	1212750
	contribution margin				3737250
	less fixed cost				601250
	operating profit				3136000
3-	variable cost per unit = total variable cost/no of units			922500/90000	10.25
	contribution margin per unit = selling price per unit-variable cost per unit			50-10.25	39.75
	contribution margin ratio = contribution margin per unit/selling price per unit			39.75/50	0.795
	fixed cost				596250
	target profit				198750
	break even point in dollar			(fixed cost+target profit)/contribution margin per unit = (596250+198750)/.795	1000000
	statement of cost of goods manufactured
1-	Direct material
	opening stock		4000
	purchases		128000
	less closing stock		-10000
	raw material used in production			122000
	direct labor cost			220700
	prime cost			342700
	add manufacturing overhead			300000
	total manufacturing cost			642700
	add opening work in progress			16000
	less closing work in progress			-19000
	cost of goods manufactured			639700