Week 5 WileyPlus Homework Exercises

ACC/561

Brief Exercise 18-8

Brief Exercise 18-10

Brief Exercise 18-11

Brief Exercise 19-16

Exercise 19-17

Brief Exercise 21-1

Brief Exercise 21-4

Question 1
Meriden Company has a unit selling price of $550, variable costs per unit of $330, and fixed costs of
$196,680.
Compute the break-even point in units using the mathematical equation.
The mathematical equation:
$550Q =
$330Q + $196,680 + $0
$220Q =
$196,680
Q=
894 units

X=
X=

$196,680 $220
894 units

Contribution margin per unit $220, or ($550 $330)

Question 2
For Turgo Company, variable costs are 63% of sales, and fixed costs are $179,700. Managements net
income goal is $50,070.
Compute the required sales in dollars needed to achieve managements target net income of $50,070.
If variable costs are 63% of sales, the contribution margin ratio is ($1 $0.63) $1 = 0.37.
Required sales in dollars = ($179,700 + $50,070) 0.37 = $621,000

Question 3
For Kozy Company, actual sales are $1,124,000 and break-even sales are $741,840.
Compute the margin of safety in dollars and the margin of safety ratio.
Margin of safety
Margin of safety ratio

=
=

$1,124,000 $741,840
$382,160 $1,124,000

=
=

$382,160
34%

Question 4
Montana Company produces basketballs. It incurred the following costs during the year.
Direct materials

$14,679

Direct labor

$25,916

Fixed manufacturing overhead

$9,759

Variable manufacturing overhead

$31,989

Selling costs

$21,364

What are the total product costs for the company under variable costing?

Direct materials
Direct labor
Variable manufacturing overhead
Total product costs

Variable Costing

$14,679
25,916
31,989
$72,584

Question 5
Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations,
2012, the company incurred the following costs.
Variable Cost per Unit
Direct materials

$8.18

Direct labor

$2.67

Variable manufacturing overhead

$6.27

Variable selling and administrative expenses

$4.25

Fixed Costs per Year

Fixed manufacturing overhead

$257,433

Fixed selling and administrative expenses

$261,709

Polk Company sells the fishing lures for $27.25. During 2012, the company sold 81,100 lures and
produced 95,700 lures.

(a) Assuming the company uses variable costing, calculate Polks manufacturing
cost per unit for 2012.
Unit Cost
Direct materials
Direct labor
Variable manufacturing overhead
Manufacturing cost per unit

(B) Prepare a variable costing income statement for 2012.

$8.18
2.67
6.27
$17.12

Sales
Variable cost of goods sold
Variable selling and administrative expenses

= (81,100 lures x $27.25)

= (81,100 lures x $17.12)
= (81,100 lures x $4.25)

= $2,209,975
= $1,388,432
= $344,675

(C) Assuming the company uses absorption costing, calculate Polks manufacturing cost per unit for
2012.
Unit Cost
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead ($257,433 95,700)
Manufacturing cost per unit

$8.18
2.67
6.27
2.69
$19.81

(D) Prepare an absorption costing income statement for 2012.

Sales
Cost of goods sold
Variable selling and administrative expenses

= (81,100 lures x $27.25)

= (81,100 lures x $19.81)
= (81,100 lures x $4.25)

= $2,209,975
= $1,606,591
= $344,675

Question 6
For the quarter ended March 31, 2012, Maris Company accumulates the following sales data for its
product, Garden-Tools: $317,400 budget; $331,000 actual.

Prepare a static budget report for the quarter.

MARIS COMPANY
Sales Budget Report
For the Quarter Ended March 31, 2012
Product
Line

Budget

GardenTools

317,400

Actual
$

Difference
$

331,000

(13,600)

Favorable

Question 7
Gundy Company expects to produce 1,295,040 units of Product XX in 2012. Monthly production is
expected to range from 81,160 to 118,460 units. Budgeted variable manufacturing costs per unit are:
direct materials $5, direct labor $8, and overhead $9. Budgeted fixed manufacturing costs per unit for
depreciation are $4 and for supervision are $1.
Prepare a flexible manufacturing budget for the relevant range value using 18,650 unit increments.
(List variable costs before fixed costs.)
GUNDY COMPANY
Monthly Flexible Manufacturing Budget
For the Year 2012
Activity Level
Finished Units

81,160

99,810

118,460

Variable Costs

Direct Materials

405,800

499,050

592,300

Direct Labor

649,280

798,480

947,680

Overhead

730,440

898,290

1,066,140

Total Variable Costs

1,785,520

2,195,820

2,606,120

Depreciation

431,680

431,680

431,680

Supervision

107,920

107,920

107,920

Total Fixed Costs

539,600

539,600

539,600

Fixed Costs

Total Costs

Depreciation

$
2,325,120

$4 x 1,295,040 12

$
2,735,420

3,145,720

$431,680

Supervision

$1 x 1,295,040 12

$107,920