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Bristo Corporation has sales of 2,500 units at $50 per unit. Variable expenses are 20% of the selling price. If total fixed expenses are $90,000, the degree of operating leverage is:

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Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$116
Units in beginning inventory	0
Units produced	9,000
Units sold	8,600
Units in ending inventory	400

Variable costs per unit:
Direct materials	$ 19
Direct labor	$ 61
Variable manufacturing overhead	$ 7
Variable selling and administrative expense	$ 11
Fixed costs:
Fixed manufacturing overhead	$135,000
Fixed selling and administrative expense	$ 8,900

What is the net operating income (loss) for the month under variable costing?

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Gabuat Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$ 164
Units in beginning inventory	0
Units produced	3,700
Units sold	3,260
Units in ending inventory	440

Variable costs per unit:
Direct materials	$ 51
Direct labor	$ 32
Variable manufacturing overhead	$ 6
Variable selling and administrative expense	$ 6
Fixed costs:
Fixed manufacturing overhead	$88,800
Fixed selling and administrative expense	$32,600

The total gross margin for the month under the absorption costing approach is:

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Krepps Corporation produces a single product. Last year, Krepps manufactured 27,120 units and sold 21,800 units. Production costs for the year were as follows:

Direct materials	$222,384
Direct labor	$124,752
Variable manufacturing overhead	$208,824
Fixed manufacturing overhead	$461,040

Sales totaled $915,600 for the year, variable selling and administrative expenses totaled $128,620, and fixed selling and administrative expenses totaled $197,976. There was no beginning inventory. Assume that direct labor is a variable cost.

Under variable costing, the company's net operating income for the year would be:

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Mio Canoe Livery rents canoes and transports canoes and customers to and from their canoe trip on a local river. The trip is priced at $20 per person and has a CM ratio of 30%. Mio's fixed expenses are $84,000. Last year, sales were $400,000 and profit was $36,000. How many units need to be sold to break-even, and how many need to be sold to earn a profit of $42,000?

Answer 1

Question 1
a	Sales		$125,000.00
b	`-Variable Expense		$25,000.00
c=a-b	Contribution		$100,000.00
d	`-Fixed Expense		$90,000.00
e=c-d	Net Operating Income		$10,000.00
c/e	Operating Liverage		`= contribution /net operating income
			`=100000/10000
			10.00
Question 2
a	Sales	`116*8600		$997,600.00
b	`-Variable Expense
	Direct Material	`19*8600	$163,400.00
	Direct Labor	`61*8600	$524,600.00
	Variable Manufacturing Overheads	`7*8600	$60,200.00
	Variable Selling And Administrative Overheads	`11*8600	$94,600.00
b				$842,800.00
c=a-b	Contribution			$154,800.00
d	Fixed Costs
	Fixed Manufacturing Overheads		$135,000.00
	Fixed Selling And Administrative Overheads		$8,900.00
d				$143,900.00
e=c-d	Net Operating Income			$10,900.00
Question 3
	sale price			$164.00
	cost
	Direct Material		$51.00
	Direct Labor		$32.00
	Variable Manufacturing Overheads		$6.00
	Variable Selling And Administrative Overheads		$6.00
	Fixed Manufacturing Overheads	`=88800/3700	$24.00
	Fixed Selling And Administrative Overheads	`=32600/3700	$8.81
	Cost			$127.81
	Gross margin			$36.19
Question 4
A	Sales	21800		$915,600.00
B	Variable cost
	Direct Material	`222384*21800/27120	$178,760.00
	Direct Labor	`124752*21800/27120	$100,280.00
	Variable Manufacturing Overheads	`208824*21800/27120	$167,860.00
	Variable Selling And Administrative Overheads	`128620	$128,620.00
B				$575,520.00
C=A-B	Contribution			$340,080.00
D	Fixed cost
	Fixed Manufacturing Overheads		$461,040.00
	Fixed Selling And Administrative Overheads		$197,976.00
				$659,016.00
E	Net Operating Income/(loss)			($318,936.00)
Question 5
	Sales		$400,000.00
	contribution	400000*30%	$120,000.00
	`-fixed expense		$84,000.00
	profit		$36,000.00
	break even	fixed cost/ cm	$280,000.00
	sales for 42000 profit	`42000+84000/30%	322000