Question

In: Accounting

One tents has provided their per-unit sales and cost information for the year ended December 31,...

One tents has provided their per-unit sales and cost information for the year ended December 31, 2018. All per-unit costs below are based on the production and sale of 3,000 name tents. the relevant range is 0 - 3,500 tents

Sales $45

Costs

variable costs

direct materials 5

direct labor 7

Manufacturing Overhead 13

Period Costs 4

Fixed Costs

Manufacturing Overhead 5

Period cost 7

1. if 2000 tents are produced and sold, what is the product cost per tent?

2. what is the fixed cost per tent at 1000 tents( including costs) produced and sold?

3. what are the total fixed costs in this example at 2000 name tent (produced and sold)?

4. what are the total variable costs in this example at 2000 name tents (produced and sold)?

5. what are the total period costs at 2000 name tents(produced and sold)?

6. will Nancy's turn a profit if they sell 2000 name tents?

7. what is the cost equation of nancy's?

8. what is the contribution margin per unit?

9. how many units does nancy need to sell in order to break even if she them at the price listed at above?

10. if nancy expects to sell only 2000 tents, what price should she charge to break even?

Expert Solution

1.

Direct Material	$ 10,000	=2000*5
Direct Labor	$ 14,000	=2000*7
Variable Manufacturing Overhead	$ 26,000	=2000*13
Fixed Manufacturing Overhead	$ 15,000	=3000*5
Total Product Cost	$ 65,000
Product Cost per unit	$ 32.50

2.
Total Fixed Cost = 3000 x (5+7) = $36000
Fixed cost per tent = $36000 / 1000 = $36 per tent

3.
Total Fixed Cost = 3000 x (5+7) = $36000

4.
Total Variable costs at 2000 tents = 2000 x (5+7+13+4) = $58000

5.
Total Period costs at 2000 tents = 2000 x 4 + 3000 x 7 = $29000

6. No, there will be loss of $4000

Sales	$ 90,000
Variable Costs	$ 58,000
Contribution Margin	$ 32,000
Fixed Cost	$ 36,000
Operating Income	$ -4,000

7.
Cost Equation = $36000 + $29 x

8.
Contribution Margin per unit = Selling Price - Variable cost per unit
= $45-29 = $16 per unit

9.
Break even point = Fixed Costs / Contribution Margin per unit
= $36000 / 16 = 2250 units

10.
Price to be charged = $45 + $4000/2000 = $47 per unit
Since there was loss of $4000

ekkarill92 answered 1 year ago

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