Question

Steven Company has fixed costs of $239,080. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below.

Product	Selling Price per unit			Variable Cost per unit			Contribution Margin per unit
X	$1,248			$468			$780
Y	473			253			220

The sales mix for products X and Y is 60% and 40% respectively. Determine the break-even point in units of X and Y combined. Round answer to nearest whole number.
units

Sleep Tight, Inc. manufactures bedding sets. The budgeted production is for 20,700 comforters this year. Each comforter requires 1.5 hours to cut and sew the material. The cost of cutting and sewing labor is $11.10 per hour. Determine the direct labor budget for this year.
$

Dean Company has sales of $221,000, and the break-even point in sales dollars is $119,340. Determine the company's margin of safety percentage. Round answer to the nearest whole number.
%

Osprey Cycles, Inc. projected sales of 58,039 bicycles for the year. The estimated January 1 inventory is 4,239 units, and the desired December 31 inventory is 7,192 units. What is the budgeted production (in units) for the year?
units

Entries for Flow of Factory Costs for Process Cost System

Sweeties, Inc., manufactures a sugar product by a continuous process involving three production departments—Refining, Sifting, and Packing. Assume that records indicate that direct materials, direct labor, and applied factory overhead for the first department, Refining, were $441,600, $154,600, and $101,600, respectively. Also, work in process in the Refining Department at the beginning of the period totaled $24,700, and work in process at the end of the period totaled $30,500.

a. Journalize the entries to record the flow of costs into the Refining Department during the period for (1) direct materials, (2) direct labor, and (3) factory overhead.

1.
2.
3.

b. Journalize the entry to record the transfer of production costs to the second department, Sifting.

Answer 1

Solution:

1.

units selling price of sales mix = (1248 x 60%) + (473 x 40%) = 748.8 + 189.2 = 938

Units variable cost of sales mix = (468 x 60%) + (253 x 40%) = 280.8 + 101.2 = 382

Units contribution margin of sales mix = 938 - 382 = 556

Break even sale (units ) = 239080 / 556 = 430

X = 430 X 60% = 258

Y = 430 X 40% = 172

2.  

Hours required for comforters = 20,700comforters x 1.5 = 31,050

hourly rate = $11.10

Total direct labour cost = 31050 x 11.10 = $344,655

3.

Margin of safety % = (actual sales - Break even sales) / actual sales =

= (221,000 - 119,340) / 221000

= 46%

4. Budgeted production = sales + closing inventory - Opening inventory

=58039 + 7192 - 4239

= 60,992 Units

5. a.

Transaction no	Accounts titles and explanation	Debit($)	Credit($)
1	Work in process - Refining department a/c Dr	441,600
	To materials a/c		441,600
	( Being record usage of direct materials)
2	Work in process - Refining department a/c Dr	154,600
	To wages payable a/c		154,600
	(Being record usage of direct labor)
3	Work in process - Refining department a/c Dr	101,600
	To factories overhead - Refining department a/c		101,600
	(Being record of applied manufacturing overhead)

5b.

Transaction no	Accounts titles and explanation	Debit($)	Credit($)
1	Work in process - shifting department a/c Dr	692,000
	To work - in - process - Refining department a/c		692,000
	(Being transfer costs to the second department)
	24700+441600+154600+101600-30500)