How does the break-even point move when changes occur in;

a. Variable cost
b. Fixed cost

2)

Gable Company uses three activity cost pools. Each pool has a cost driver. Information for Gable Company follows:

Suppose that Gable Company manufactures three products, A, B, and C. Information about these products follows:

Required:
1. Using activity proportions, determine the amount of overhead assigned to each product.

use transaction cost thoery to analyze how amazon has minimized its transactional cost?

Site sources

True or false: (False) When digital music cost $1 per song and digital movie rentals cost $4 each, an individual chose to purchase 9 songs and rent 4 movies per month. When the price of digital music increases to $1.25 per song, that individual now chooses to purchase 4 songs and rent 5 movies per month. Because their consumption of one good has increased and their consumption of the other good has decreased, this individual’s utility could be either higher or lower than it was before the price increase. [Hint: If you’re having trouble with this question, a graph showing the original situation and the new situation might be helpful.]

Process Cost Accounting & Cost-Volume-Profit Analysis

This module focuses on measuring costs in process production companies. We explain process production, describe how to assign costs to processes, and compute and analyze cost per equivalent unit. Discuss two of the three topics:

What is meant by equivalent units of production, and why are they important when a process costing system is used?

What are the four steps in accounting for production activity in a period?

Job order costing and process costing are two major costing systems used in manufacturing. Briefly contrast the characteristics of these two systems.

Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income

Werner Company produces and sells disposable foil baking pans to retailers for $2.50 per pan. The variable cost per pan is as follows:

Fixed manufacturing cost totals $136,541 per year. Administrative cost (all fixed) totals $18,619.

Required:

1. Compute the number of pans that must be sold for Werner to break even.
pans

2. Conceptual Connection: What is the unit variable cost? What is the unit variable manufacturing cost? Round your answers to the nearest cent.

Which is used in cost-volume-profit analysis?

3. How many pans must be sold for Werner to earn operating income of $7,848?
pans

4. How much sales revenue must Werner have to earn operating income of $7,848?
$

Standard cost information:

Actual cost information:

Do not enter dollar signs or commas in the input boxes.
Round all Unit values to 2 decimal places. Round all other answers to the nearest whole number.
Enter all variances as positive values.

a) Complete Direct Materials variance analysis.

b) Complete Direct Labor variance analysis.

c) Complete Variable Overhead variance analysis.

1. Mastery Problem: Cost-Volume-Profit Analysis

   Cost Behavior

   Cover-to-Cover Company is a manufacturer of shelving for books. The company has compiled the following cost data, and wants your help in determining the cost behavior. After reviewing the data, complete requirements (1) and (2) that follow.

   Units Produced	Total Lumber Cost	Total Utilities Cost	Total Machine Depreciation Cost
   15,000 shelves	$165,000	$19,250	$140,000
   30,000 shelves	330,000	36,500	140,000
   60,000 shelves	660,000	71,000	140,000
   75,000 shelves	825,000	88,250	140,000

   1. Determine whether the costs in the table are variable, fixed, mixed, or none of these.

   Lumber	Variable Cost
   Utilities	Mixed Cost
   Depreciation	Fixed Cost

   2. For each cost, determine the fixed portion of the cost, and the per-unit variable cost. If there is no amount or an amount is zero, enter "0". Recall that, for N = Number of Units Produced, Total Costs = (Variable Cost Per Unit x N) + Fixed Cost. Complete the following table with your answers. Round variable portion of cost (per unit) answers to two decimal places.

   Cost	Fixed Portion of Cost	Variable Portion of Cost (per Unit)
   Lumber	$	$
   Utilities
   Depreciation

   Feedback

   Review the definitions for fixed, variable, and mixed costs, and the relationships between units produced and total cost for each type of cost. Recall that the high-low method may be used to separate a cost into its fixed and variable components.

   High-Low

   Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions (1) through (3) that follow.

   	Units Produced		Total Cost
   January	4,360	units	$65,600
   February	300		6,250
   March	1,000		15,000
   April	5,800		88,750
   May	1,750		32,500
   June	3,015		48,000

   1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs = (Variable Cost Per Unit x Number of Units Produced) + Fixed Cost. Complete the following table.

   Total Fixed Cost	Variable Cost per Unit
   $	$

   2. With your Total Fixed Cost and Variable Cost per Unit from the high-low method, compute the total cost for the following values of N (Number of Units Produced).

   Number of Units Produced	Total Cost
   3,500	$
   4,360
   5,800

   3. Why does the total cost computed for 4,360 units not match the data for January?

   a. The high-low method is accurate only for months in which production is at full capacity.

   b. The high-low method only gives accurate data when fixed costs are zero.

   c. The high-low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest.

   d. The high-low method gives accurate data only for levels of production outside the relevant range.

   c

   Feedback

   Review the high-low method, and use the smallest and largest levels of production in your computation.

   Contribution Margin

   Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 79,800 units during the year.

   	Cover-to-Cover Company	Biblio Files Company
   Contribution margin ratio (percent)	%	%
   Unit contribution margin	$	$
   Break-even sales (units)
   Break-even sales (dollars)	$	$

   Feedback

   Review the definitions of contribution margin ratio and unit contribution margin. Also review the formulas for break-even in terms of units sold and sales dollars.

   Income Statement - Cover-to-Cover

   Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8
   Sales		$399,000
   Variable costs:
   Manufacturing expense	$239,400
   Selling expense	19,950
   Administrative expense	59,850	(319,200)
   Contribution margin		$79,800
   Fixed costs:
   Manufacturing expense	$5,000
   Selling expense	4,000
   Administrative expense	10,950	(19,950)
   Operating income		$59,850

   Income Statement - Biblio Files

   Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8
   Sales		$399,000
   Variable costs:
   Manufacturing expense	$159,600
   Selling expense	15,960
   Administrative expense	63,840	(239,400)
   Contribution margin		$159,600
   Fixed costs:
   Manufacturing expense	$81,750
   Selling expense	8,000
   Administrative expense	10,000	(99,750)
   Operating income		$59,850

   Sales Mix

   Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings.

   Type of Bookshelf	Sales Price per Unit	Variable Cost per Unit
   Basic	$5.00	$1.75
   Deluxe	9.00	8.10

   The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called “Combined,” the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $332,640. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table.

   Type of Bookshelf	Percent of Sales Mix	Break-Even Sales in Units	Break-Even Sales in Dollars
   Basic	%		$
   Deluxe	%		$

   Feedback

   Review the definition of break-even point.

   Recall that the Combined unit contribution margin is given by [(Basic unit contribution margin) x (Basic percent of sales mix)] + [(Deluxe unit contribution margin) x (Deluxe percent of sales mix)]. Since these percents must add up to 100%, we have the following:

   (Basic percent of sales mix) + (Deluxe percent of sales mix) = 100%, so that

   (Deluxe percent of sales mix) = 100% - (Basic percent of sales mix)

   Target Profit

   Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions (1) - (3) that follow, assuming that all data for the coming year is the same as the current year, except for the amount of sales.

   1. If Cover-to-Cover Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be?
   $

   2. If Biblio Files Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be?
   $

   3. What would explain the difference between your answers for (1) and (2)?

   a. Biblio Files Company has a higher contribution margin ratio, and so more of each sales dollar is available to cover fixed costs and provide operating income.

   b. Cover-to-Cover Company’s contribution margin ratio is lower, meaning that it’s more efficient in its operations.

   c. The companies have goals that are not in the relevant range.

   d. The answers are not different; each company has the same required sales amount for the coming year to achieve the desired target profit.

   a

Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost Employee Hours January $6,800 420 February $9,699 610 March $7,940 710 April $9,587 670 May $8,290 540 June $7,331 410 July $9,290 630 August $7,250 370 Assume that this information was used to construct the following formula for monthly labor cost. Total Labor Cost = $6499 + ($2.03 x Employee Hours) Required: Assume that 665 employee hours are budgeted for the month of September. Use the total labor cost formula for the following calculations: 1. Calculate total variable labor cost for September. Round your answer to nearest whole number.

Factory Overhead Cost Variance Report Tannin Products Inc. prepared the following factory overhead cost budget for the Trim Department for July of the current year, during which it expected to use 18,000 hours for production: Variable overhead cost: Indirect factory labor $43,200 Power and light 13,500 Indirect materials 21,600 Total variable overhead cost $ 78,300 Fixed overhead cost: Supervisory salaries $76,490 Depreciation of plant and equipment 20,130 Insurance and property taxes 37,580 Total fixed overhead cost 134,200 Total factory overhead cost $212,500 Tannin has available 22,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 17,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows: Actual variable factory overhead cost: Indirect factory labor $39,780 Power and light 12,520 Indirect materials 21,400 Total variable cost $73,700 Construct a factory overhead cost variance report for the Trim Department for July. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If an amount box does not require an entry, leave it blank. Round your interim computations to the nearest cent, if required.