Question

In: Accounting

25. A. If fixed costs are $256,000, the unit selling price is $34, and the unit...

25. A.

  1. If fixed costs are $256,000, the unit selling price is $34, and the unit variable costs are $18, what is the break-even sales (units) if fixed costs are reduced by $33,600?

    a. 13,900 units

    b. 20,850 units

    c. 16,680 units

    d. 11,120 units

25. B

  1. If sales totaled $665,288 for the year (83,161 units at $8 each) and the planned sales totaled $848,276 (77,116 units at $11 each), the effect of the quantity factor on the change in sales is:

    a. $66,495 increase

    b. $182,988 decrease

    c. $66,495 decrease

    d. $182,988 increase

25. C.

  1. A business operated at 100% of capacity during its first month, with the following results:

    Sales (97 units) $388,000
    Production costs (121 units):
        Direct materials $52,320
        Direct labor 13,358
        Variable factory overhead 23,377
        Fixed factory overhead 22,265 111,320
    Operating expenses:
        Variable operating expenses $5,349
        Fixed operating expenses 3,810 9,159

    What is the amount of the income from operations that would be reported on the absorption costing income statement?

    a. $307,450

    b. $387,879

    c. $289,600

    d. $311,260

Solutions

Expert Solution

Answer to question no.25 A

Calculation of Break-even sales (Units) if fixed cost is reduced by $33,600

Break-even sales (Units) = Fixed Cost / Contribution Per Unit

=($256,000-$33,600) / ($34-$18)

= 13,900 Units.

Accordigly, Option (a) is the correct answer.

Answer to question no. 25 B

Effect on the quantity factor of the sales

= ($665288-$848,276)

= ($182,988)

Accordingly option (b) is the correct answer as sales value is increase but the quantity is decreased as per planned sales quantity.

Answer to question no.25 C

Determination of Income from operation using absorption costing:

Particulars Per Unit Amount
Sales (For 97 Units) $4,000 $388,000
Less: Variable Cost (for 121 Units)
Direct material $432.40 $52,320
Direct labor $110.40 $13358
Variable Factory Overhead $193.20 $23377
Less: Fixed factory overhead $184 $22265
The production cost of 121 Units $920 $111,320
Less: Closing Inventory (24 Units) $920 $22,080
The production cost of goods sold $920 $89,240
Gross Profit $3080 $298,760
Less: Operating Expenses $9159
Operating Income $289601

Accordingly Option (c) is the correct answer.


Related Solutions

if fixed costs are $728,400, the unit selling price is $42, and the unit variable costs...
if fixed costs are $728,400, the unit selling price is $42, and the unit variable costs are $27, what is the break-even sales (units) if target profits are increased by $330,930? A) 26,498 B) 22,062 C) 48,560 D) 70,622 if the contribution margin ratio for 4 Zsons Company is 30%, sales were $843,000 and fixed costs were $113,295, what was the income from operations? A) 252,900 B) 139,605 C) 158,200 D) 377,650 Period Costs: A) are expensed as costs are...
If fixed costs are $247,000, the unit selling price is $116, and the unit variable costs...
If fixed costs are $247,000, the unit selling price is $116, and the unit variable costs are $73, what are the break-even sales in units (rounded to a whole number)?
32. A. If fixed costs are $1,323,000, the unit selling price is $233, and the unit...
32. A. If fixed costs are $1,323,000, the unit selling price is $233, and the unit variable costs are $104, what is the amount of sales required to realize an operating income of $205,000? a. 11,845 units b. 5,678 units c. 1,971 units d. 12,721 units 32. B.    Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to calculate Bounty' variable utilities costs per machine hour. Round your answer to the nearest cent....
19) If fixed costs are $274,000, the unit selling price is $124, and the unit variable...
19) If fixed costs are $274,000, the unit selling price is $124, and the unit variable costs are $79, the break-even sales (units) is a.3,468 units b.1,350 units c.6,089 units d.2,210 units 18) Strait Co. manufactures office furniture. During the most productive month of the year, 3,400 desks were manufactured at a total cost of $83,000. In the month of lowest production, the company made 1,140 desks at a cost of $64,400. Using the high-low method of cost estimation, total...
Assume the following (1) selling price per unit = $34, (2) total fixed expenses = $9,074,...
Assume the following (1) selling price per unit = $34, (2) total fixed expenses = $9,074, (3) the contribution margin ratio = 33%, and (4) net operating income = $10,000. Given these four assumptions, unit sales must be: Multiple Choice 1,139 units. 561 units. 2,278 units. 1,700 units. Assume the following (1) selling price per unit = $25, (2) variable expense per unit = $13, (3) the total fixed expenses = $15,400, and (4) net operating income = $17,900. Given...
Variable Direct Costs Machine Hours Fixed Production Costs Fixed Overhead Costs Units Sold Unit Selling price...
Variable Direct Costs Machine Hours Fixed Production Costs Fixed Overhead Costs Units Sold Unit Selling price Machine Hours per Unit Total Sales Dollars Variable Cost per Unit Total Contribution Dollars Contribution Dollars per Unit Contribution Margin Percentage Item #1 $65,000 10000 $25,000 $2,000 22500 $10 Item #2 $55,000 20000 $22,000 $2,500 23000 $8 Item #3 $42,000 7500 $15,000 $1,750 27500 $7 Item #4 $27,000 5000 $5,000 $500 11000 $6 Complete the grey cells in the above table Which product would...
Variable Direct Costs Machine Hours Fixed Production Costs Fixed Overhead Costs Units Sold Unit Selling price...
Variable Direct Costs Machine Hours Fixed Production Costs Fixed Overhead Costs Units Sold Unit Selling price Machine Hours per Unit Total Sales Dollars Variable Cost per Unit Total Contribution Dollars Contribution Dollars per Unit Contribution Margin Percentage Item #1 $65,000 10000 $25,000 $2,000 22500 $10 Item #2 $55,000 20000 $22,000 $2,500 23000 $8 Item #3 $42,000 7500 $15,000 $1,750 27500 $7 Item #4 $27,000 5000 $5,000 $500 11000 $6 Complete the grey cells in the above table Which product would...
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs:...
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs: $200,000 Required Each of these are separate situations: What is the break-even point in total sales in dollars? How many units need to be sold to make a profit of $20,000? How many units need to be sold to make a profit of $20,000 if fixed costs increase from $200,000 to $250,000? How many units would they need to sell if they wanted to...
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs:...
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs: $200,000 Required Each of these are separate situations: What is the break-even point in total sales in dollars? How many units need to be sold to make a profit of $20,000? How many units need to be sold to make a profit of $20,000 if fixed costs increase from $200,000 to $250,000? How many units would they need to sell if they wanted to...
20-Spice Inc.'s unit selling price is $54, unit variable costs are $33, fixed costs are $120,000,...
20-Spice Inc.'s unit selling price is $54, unit variable costs are $33, fixed costs are $120,000, and current sales are 9,300 units. How much will operating income change if sales increase by 5,500 units? 30 The contribution margin ratio is the a.same as the variable cost ratio b.portion of equity contributed by stockholders c.same as the profit-volume ratio d.same as profit
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT