Question

15.

Kevin company manufactures and sells one product. The following information pertains to the company's first year of operations:

Selling price per unit	$100
Variable costs per unit:
Manufacturing:
Direct materials	$8
Direct labor	$20
Variable manufacturing overhead	$11
Variable selling and administrative expense	$18
Fixed costs per year:
Fixed manufacturing overhead	$48,000
Selling and administrative expense	$72,200

Production	6,000 units
Sales	4,500 units

(Q.) What is net operating income under variable costing in the first year?

16.

The following data are average times per order over the last month for Gamora Corp.

	days
Queue time	3
Inspection time	12
Move time	1
Wait time to start production	5
Process time	4

(Q.) What is Manufacturing Cycle Efficiency (MCE)? Use two decimal places in the answer (for example, if the answer is 44%, key in "0.44").

Answer 1

Q1.
Compute the Variable costing Unit Product cost
Direct Material			8
Direct labour			20
Variable Manufacturing overheads	11
Variable costing unit prroduct cost	39
Construct The Variable Costing Income Statement
				Amount $
Sales					4,50,000
Less: Variable cost
variable cost of goods sold		1,75,500
Variable selling expense		81,000	2,56,500
Contribution margin				1,93,500
Fixed expense:
Fixed Manufacturing overheads			48,000
Fixed selling expense			72,200
Net operating Income			73,300
Q2.
Value added time (Process time)			4 days
Divide: Total Manufacturing cycle time (3+12+1+5+4)	25 days
Manufacturing cycle efficiency			0.16