Acct 240 MT #2

Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total monthly fixed manufacturing cost is:

1) (Change in cost / Change in units) = ((1,027,350-1,004,700) / (14,000-12,500)) = 15.1 2) (12,500 x 15.1) = 188,750 3) (1,004,700 - 188,750) = 815,950

Last year Easton Corporation reported sales of $770,000, a contribution margin ration of 40% and a net loss of $29,000. Based on this information, the break-even point was:

1) CM + Net loss = Fixed costs =337,000 2) Sales x CMRatio = Fixed costs Sales x .40 = 337,000 =842,500

Jacob Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $141 per unit. The best estimate of the total contribution margin when 10,370 units are sold is:

1) Cost of sales / Sales volume = Unit cost of goods sold 834,200 / 9,700 = $86 948,580 / 11,030 = $86 = Cost of sales is variable 2) Selling and admin / Sales volume = Unit s&a cost 717,000 / 9,700 = $73.91 742,270 / 11,030 = $67.29 = Not variable cost 3) ((742,270-717,000) / (11,030-9,700)) = $19 (717,000 - (19 x 9700)) = $532,700 4) Sales (10,370 units x 141.00 per unit) = 146,2170 - Cost of sales (10,370 x 86) = 891,820 - Variable S&A (10,370 x 19) = 197,030 Best estimate CM = 373,320

Your boss would like you to estimate the fixed and variable components of a particular cost. Actual data for this cost over four recent periods appear below. Using the least-squares regression method, what is the cost formula for this cost?

1) Period 1: (37x401)= 14,837 (37^2)=13,769 Period 2: (36x390)=14,040 (36^2)=1,296 Period 3: (33x368)=12,144 (33^2)=1,089 Period 4: (38x412)=15,656 (38^2)=1,444 Totals= 144, 1,571, 56,677, 17,598 2) (4x56,677 - 144x1,571) / (4x17,598-144^2) = .009 3) (1,571 - .009 x 144) / 4 =

Deidoro Company has provided the following data for maintenance cost: Maintenance cost is a mixed cost with variable and fixed components. The fixed and variable components of maintenance cost are closest to:

1) Variable cost per unit = (Change in cost/Change in activity) ((31,970-28,200) / (17,000-14,100)) = 1.3 2) Fixed cost = Total cost x Variable cost (Machine HRS x Hour rate) 31,970 - (17,000 x 1.3) = $9,870

Newham Corporation produces and sells two products. In the most recent month, Product R10L had sales of $42,000 and variable expenses of $11,880. Product x96N had sales of $55,000 and variable expenses of $15,280. The fixed expenses of the entire company were $46,170. The break-even point for the entire company is closest to:

CM = (Sales - Variable costs) R: (42,000-11,880) = 30,120 X: (44,000-18,470) = 25,530 Total Cm = 55,650 Total Sales = 97,000 CMRatio = CM / Sales (55,650/97,000) = .573 Overall break-even = Fixed costs / CMRatio 46,170/.57 = 81,000

Crewel corporation's fixed monthly expenses are $21,500 and its contribution margin ratio is 60%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $75,000?

CM = Sales x CMRatio (75,000x.60)= 45,000 Net operating income = CM - Fixed exps (45,000-21,500) = 23,500

Corbel Corporation has two divisions: Division A and Division B. Last month, the company reported a contribution margin of $41,400 for Division A. Division B has a contribution margin ratio of 25% and its sales were $293,000. Net operating income for the company was $28,700 and traceable fixed expenses were $56,700. Corbel Corporation's common fixed expenses were:

CM DB = 25% x Sales value = .25 x 293,000 = 73,250 CM DA: 41,400 Total CM: 114,650 Office segment margin = Total CM - Traceable fixed expenses = 114,650 - 56,700 = 57,950 Common fixed expenses = Office segment margin - Net operating income = 57,950 - 28,700 = 29,250

A cement manufacturer has supplied the following data: The company's contribution margin ratio is closest to:

CMRatio = Contribution / Sales x 100 = Sales - Variable cost / Sales x 100 (Sales Revenue - V Manufacturing expense - V S&A expense / Sales Revenue) x 100 ((999,000 - 236,000 - 153,610) / 999,000) x 100 = 61

Bendel Inc. has an operating leverage of 4.1. If the company's sales increase by 13%, its net operating income should increase by about:

Change in operating income = Change in sales x Operating leverage .13 x 4.1 = .533

Data concerning Follick Corporation's single product appear below: The break-even in monthly dollar sales is closest to:

Contribution per unit = Selling price per unit - Variable expense per unit (260-78) = 182 CS Ratio = (182/260)= 0.7 Break-even in dollar sales = Fixed expense per month / CS Ratio (152,600/.7)=218,000S

Bistro Corporation has sales of 2,000 units at $40 per unit. Variable expenses are 35% of the selling price. If total fixed expenses are $42,000, the degree of operating leverage is:

Degree of operating leverage = Sales - Variable cost / (Sales - Variable cost - Fixed cost) Sales = 2,000 x $40 = 80,000 Variable cost = 80,000 x .35 = 28,000 Fixed cost = 42,000 Degree of operating leverage = 80,000-28,000 / (80,000-28,000-42,000) = 5.2

Beamish Inc. which produces a single product, has provided the following data for its most recent month of operations: There were no beginning or ending inventories. The absorption costing unit product cost was:

Direct materials: 90 Direct labor: 71 Variable MOH: 4 Fixed MOH cost: 35 (FMOH/# of units produced): (360,500/10,300) = 200

Mcmurty Corporation sells a product for $140 per unit. The product's current sales are 12,500 units and its break-even sales are 11,250 units. The margin of safety as a percentage of sales is closest to:

Margin of safety as percentage = (Actual sales - Break-even Sales) / Actual sales x 100 ((12,500 x 140) - (11,250 x 140)) / (12,500 x 140) x 100 = 10

Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. If the company sells 6,800 units, its net operating income should be closest to:

Sales (A): (400,200/6,900)x6,800=394,300 Variable expenses (B): (262,200/6,900)x6,800=258,400 CM (C=A-B): 136,000 -Fixed exps: 103,500 Operating net income: 32,500

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the total period cost for the moth under variable costing?

Total period cost under V costing = V S&A costs + FMOH costs + F S&A costs 23,000 + 388,300 + 136,800 = 563,600 V S&A costs = ( Units sold x V S&A cost per unit) = 23,000

Carroll Corporation has two products, Q and P. During June, the company's net operating income was $24,500, and the common fixed expenses were $53,000. The contribution margin ratio for Product Q was 40%, its sales were $138,000, and its segment margin was $45,000. If the contribution margin for Product P was $43,000, the segment margin for Product P was:

Total segment margin = Net operating income + common fixed expenses 24,500 + 53,000 = 77,500 Total segment margin = SM Q + SM P 77,500 = 45,000 + SM P SM P = 32,500

Bellue Inc. manufactures a single product. Variable costing net operating income was $89,600 last year and its inventory decreased by 3,000 units. Fixed manufacturing overhead cost was $2 per unit for both units in the beginning and in ending inventory. What was the absorption costing net operating income last year?

Variable costing net operating income: 89,600 - FMOH cost in ending inventory (3,000 x $2) 89,600 - 6,000 = 83,600

Surf Corporation is planning to sell 160,000 units for $3.70 per unit and will break even at this level of sales. Fixed expenses will be $80,000. What are the company's variable expenses per unit?

Variable costs = X CM per unit = Sales - Variable costs (3.70 - X) At Breakeven units = Fixed costs / CM (80,000 / (3.70 - X)) 160,000 = (80,000 / (3.70 - X)) 160,000 x (3.70 - X) = 80,000 592,000 - 160,000X = 80,000 (592,000 - 80,000)/160,000 = x =3.2