Question

1. Gonyo Inc., which produces and sells a single product, has provided the following contribution format income statement for December appears below:

Sales (5,000 units)	$	290,000
Variable expenses		100,000
Contribution margin		190,000
Fixed expenses		105,700
Net operating income	$	84,300

Required:

Redo the company's contribution format income statement assuming that the company sells 5,200 units. 1b. The contribution margin ratio of Donath Corporation's only product is 65%. The company's monthly fixed expense is $455,300 and the company's monthly target profit is $41,300. Required: Determine the dollar sales to attain the company's target profit. (Round your answer to the nearest dollar amount.) 1c. Bartelt Inc., which produces a single product, has provided the following data for its most recent month of operations:   Number of units produced 6,900   Variable costs per unit:   Direct materials $139   Direct labor $126   Variable manufacturing overhead $7   Variable selling and administrative expense $12   Fixed costs:   Fixed manufacturing overhead $248,400   Fixed selling and administrative expense $538,200 There were no beginning or ending inventories. The absorption costing unit product cost was: 1d. Rehmer Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.04 direct labor-hours. The direct labor rate is $7.50 per direct labor-hour. The production budget calls for producing 5,100 units in June and 5,600 units in July. Required: Construct the direct labor budget for the next two months, assuming that the direct labor work force is fully adjusted to the total direct labor-hours needed each month. (Round your answers to 2 decimal places.) 1e. A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. Variable manufacturing overhead standards are based on machine-hours.   Standard hours per unit of output 4.70 machine-hours   Standard variable overhead rate $11.60 per machine-hour The following data pertain to operations for the last month:   Actual hours 8,600 machine-hours   Actual total variable manufacturing overhead cost $95,940   Actual output 1,700 units What is the variable overhead efficiency variance for the month?

Answer 1

1a.

Number of units sold = 5,000

Sales = $290,000

Hence, selling price per unit = 290,000/5,000

= $58

Total variable expenses of producing 5,000 units = $100,000

Hence, variable cost per unit = 100,000/5,000

= $20

Gonyo , Inc.

Income Statement

Sales (5,200 x 58)	$301,600
Less: Variable cost (5,200 x 20)	$104,000
Contribution margin	$197,600
Less: Fixed cost	$105,700
Net Operating income	$91,900

1b.

Contribution margin ratio = 65%

Monthly fixed expense = $455,300

Monthly target profit = $41,300

Sales to get desired profit = (Fixed expenses + Target profit)/Contribution margin ratio

= (455,300 + 41,300)/65%

= 496,600/65%

= $764,000

Hence, at $764,000 sales, target profit of $41,300 would be achieved.

1c.

Bartelt Inc.

Cost sheet

Production costs:
Direct materials (6,900 x 139)	959,100
Direct labor (6,900 x 126)	869,400
Variable manufacturing overhead (6,900 x 7)	48,300
Fixed manufacturing overhead	248,400
Cost of goods produced	2,125,200
Add: Variable selling and administrative expense (6,900 x 12)	82,800
Add: Fixed selling and manufacturing expense	538,200
Total cost	2,746,200

Cost per unit = Total cost/Number of units produced

= 2,746,200/6,900

= $398

1d.

Rehmar Corporation

Direct labor budget

	June	July
Production (units) (i)	5,100	5,600
Labor hour per unit (ii)	0.04	0.04
Labor hours required (i) x (ii) = (iii)	204	224
Direct labor rate (iv)	$7.5	$7.5
Direct labor cost (iii) x (iv)	$1,530	$1,680