Question

In: Accounting

Brooks Inc manufacturer, sold 10,000 shelves in 2011. Below is a partial list of the company...

Brooks Inc manufacturer, sold 10,000 shelves in 2011. Below is a partial list of the company accounts:

Sales....... 990,000

Direct materials used ......242,000

Direct Labour ......330,000

Variable Manufacturing Overhead..... 55,000

Variable Selling and Admin Expenses .....63,000

Variable Selling and Admin Expenses .....110,000

Fixed Selling and Admin Expenses ......90,000

There are 2,000 units in inventory at the beginning of the year and 3,000 units in inventory at the end of the year. The company uses variable costing. There has been no change in the variable cost per unit from 2010 to 2011. 11,000 units were manufactured in 2011.

A) What is the variable cost of goods manufactured cost per unit? List the components and show your calculations.

B) What is the Contribution Ratio?

C) What is the Contribution Per Unit?

D) What is the Break Even Point in Units?

E) What is the Break Even Point in Sales Dollars?

F) How many units need to be sold to realize a net income of $135,000?

G) What amount will the ending inventory on the balance sheet be in dollars under the variable costing approach?

H) What is the cost per unit under absorption costing for 2011?

I) What amount will the ending inventory on the balance sheet be in dollars under the absorption costing approach?

J) Why is there a difference in the ending inventory values between the variable costing and absorption costing?

Expert Solution

	$
Sales (units 10,000)	990,000
Direct materials	242,000
Direct Labour	330,000
Variable Manufacturing Overhead	55,000
Variable Selling and Admin Expenses	63,000
Variable Selling and Admin Expenses	110,000
Contribution Margin	190,000
Fixed Selling and Admin Expenses	90,000
Net Income	100,000

Beginning Inventory	2,000
Ending Inventory	3,000

Question A
Direct materials	242,000
Direct Labour	330,000
Variable Manufacturing Overhead	55,000
	627,000
Variable cost of goods manufactured cost per unit	63	(627,000/10,000)

Question B
Contribution Ratio	19.19%	Contribution Margin/Sales *100

Question C
Contribution Per Unit	19	Contribution /units sold

Question D
Break Even Point in Units	4,737	Fixed expense/contribution per unit

We are supposed to answer only 4 multi part questions

Please note that Variable Selling and Admin Expenses repeated twice in the question with different amounts

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