Question

In: Accounting

41. 1 . a business operated at 100% of capacity during its first month and incurred...

41. 1 . a business operated at 100% of capacity during its first month and incurred the following costs:

Production costs (20,200 units):
Direct materials $177,700
Direct labor 221,800
Variable factory overhead 268,100
Fixed factory overhead 92,500 $760,100
Operating expenses:
Variable operating expenses $132,800
Fixed operating expenses 40,800 173,600

If 1,900 units remain unsold at the end of the month and sales total $1,081,000 for the month, what would be the amount of income from operations reported on the absorption costing income statement?

a.$210,094 b.$71,495 c.$62,794 d.$218,7954

2. At the beginning of the period, the Cutting Department budgeted direct labor of $140,000, direct materials of $169,000 and fixed factory overhead of $14,000 for 7,700 hours of production. The department actually completed 11,300 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting?

Round your final answer to the nearest dollar. Do not round interim calculations.

a.$474,013 b.$323,000 c.$329,545 d.$467,468

If sales are $800,000, variable costs are 61% of sales, and operating income is $224,000, what is the contribution margin ratio?

a.43% b.39% c.61% d.57%

3.If fixed costs are $868,000 and variable costs are 62% of sales, what is the break-even point in sales dollars?

a.$1,406,160 b.$2,284,211 c.$538,160 d.$3,152,211

4. When Isaiah Company has fixed costs of $138,600 and the contribution margin is $28, the break-even point is

a.10,970 units b.5,730 units c.9,900 units d.4,950 units

5. If fixed costs are $232,000, the unit selling price is $125, and the unit variable costs are $78, what is the break-even sales (units)?

a.4,936 units b.2,974 units c.1,856 units d.1,143 units

6.

Changes in the quantity of finished goods inventory, caused by differences in the levels of sales and production, directly affect the amount of income from operations reported under absorption costing.

True or False

Solutions

Expert Solution

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41.2 Appropriate total budget
7700 Hours 11300 Hour Working
Direct Labor 140000 205455 140000/7700*11300
Direct Material 169000 248013 169000/7700*11300
Fixed Overhead 14000 14000 Fixed hence same
323000 467468
Anser is d. 467368
41.3
Fixed Cost 868000
Variable Cost 62% of Sale
Hence Contribution Margin Ration (100-62) 38%
Break Even Point in Sales Dollar Fixed Cost/Contribution Margin Ratio
868000/38%
Answer is b. 2284211
41.4
Fixed Cost 138600
Contribution Margin 28
Break Even Point (Units) Fixed Cost/Contribution Maring
138600/28
Answer is d. 4950
41.5
Fixed Cost 232000
Selling Price per unit 125
Variable Cost 78
Contribution Margin (Selling Price-Variable Cost) 47
Break Even Point (Units) Fixed Cost/Contribution Maring
232000/47
Answer is a. 4936

41.6: Statement is TRUE as can be seen in Option 1 wherein income from operations is changing due ot inventory.


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