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Q1. XXX Co. uses absorption (full) costing, and the planned production level and sale level is...

Q1. XXX Co. uses absorption (full) costing, and the planned production level and sale level is at 10,000 units per month. Given estimated unit cost for: direct material = $20; direct labor = $18; variable manufacturing overhead = $12; fixed manufacturing overhead = $4; variable selling = $2; and fixed selling = $3. Find

  1. prime costs, conversion costs, and total production costs.
  2. Estimated total variable costs per unit
  3. Estimated total fixed cost per unit
  4. Assuming the production level of 10,000 units and sale level of 8,000, what are the estimated total costs that would incur during a month.

Q2. Based on potential sales of 500 units per year, a new product has estimated traceable costs of $990,000. What is the target price to obtain a 10% profit margin on sales?

Q3. YYY Co. plans to discontinue a division with a $20,000 contribution to overhead. Overhead allocated to the division is $50,000, of which $5,000 are non-avoidable. The effect of this discontinuance on company pretax income would be…

Is it increase or decrease and by how much?

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ekkarill92 answered 2 years ago
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