10) Atlantic Company sells a product with a break-even point of 4,664 sales units. The variable...

10)

Atlantic Company sells a product with a break-even point of 4,664 sales units. The variable cost is $93 per unit, and fixed costs are $153,912. Determine the following:

a. Unit sales price	$
b. Break-even point in sales units if the company desires a target profit of $33,858		units

Which of the following graphs in Figure 1 illustrates the behavior of a total variable cost?

a.Graph 3

b.Graph 2

c.Graph 1

d.Graph 4

Adirondack Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead.

	Overhead	Total Direct Labor Hours	DLH per Product
	Overhead	Total Direct Labor Hours	A	B
Painting Dept.	$257,100	11,600	2	5
Finishing Dept.	75,500	11,900	3	9
Totals	$332,600	23,500	5	14

The single plantwide factory overhead rate for Adirondack Marketing Inc. is

a.$14.15 per dlh

b.$22.16 per dlh

c.$3.80 per dlh

d.$6.34 per dlh

Solutions

Expert Solution

10)	a)

	Break-even point in units = fixed cost / contribution margin per unit

	4664 =$153912/ contribution margin per unit

	153912/4664 = contribution margin per unit

	Contribution margin per unit =$33

	Sales price per unit = contribution margin + variable cost per unit

	=$33+93

	=$126


	b)

	Number of units need to be sold for proft $33858

	= (Desired profit + Fixed cost)/ contribution margin per unit

	= ($33858 + $153912) /33

	=$187770/33

	=5690 units





8)	Plantwide overhead rate = total overhead / number of direct labor hours


	=$332600/23500

	=$14.15 per dlh

ekkarill92 answered 1 year ago

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