Gundy company expects to produce

1. Meriden Company has a unit selling price of $590, variable costs per unit of $354, and fixed costs of $172,280.

Compute the break-even point in units using the mathematical equation.

Break-even point 730 units.

2. For Turgo Company, variable costs are 62% of sales, and fixed costs are $185,600. Management’s net

Compute the required sales in dollars needed to achieve management’s target net income of $58,322.ncome goal is $58,322. Required sales__________.

Answer:

Required Contribution = (Fixed Cost + Desired Income) = ($185600 + $58322) = $243922

Contribution Margin = (100% – 62%) = 38%

Sales = (Contribution x 100) / 38 = (243922 x 100) / 38 = $641900

3. For Kozy Company, actual sales are $1,146,000 and break-even sales are $733,440.

Compute the margin of safety in dollars and the margin of safety ratio ____________.

Margin of safety _412560_________.

Margin of safety ratio __36%______.

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

Direct materials ------ $14,022

Direct labor--------$25,549

Fixed manufacturing overhead----$9,755

Variable manufacturing overhead------$31,576

Selling costs------$20,733

What are the total product costs for the company under variable costing? Total products $71147

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 ---$8.10

Direct labor-----$2.65

Variable manufacturing overhead----$6.21

Variable selling and administrative expenses----- $4.21

Fixed Costs per Year

Fixed manufacturing overhead-- $254,184

Fixed selling and administrative expenses---$259,308

Polk Company sells the fishing lures for $27.00. During 2012, the company sold 81,000 lures and produced 95,200 lures.

Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g.10.50.)

Manufacturing cost per unit $16.96

Prepare a variable costing income statement for 2012.

Polk Company

Income Statement

For the Year Ended December 31, 2012

Variable Costing

Administrative Expenses $_____

Contribution Margin $_

Fixed Manufacturing Overhead

Fixed Selling and Administrative Expenses

Gross Profit

Net Income/Loss

Sales

Total Fixed Expenses

Total Variable Expenses

Variable Cost of Goods Sold

Variable Selling and Administrative Expenses

6. For the quarter ended March 31, 2012, Maris Company accumulates the following sales data for its product, Garden-Tools: $312,400 budget; $334,600 actual.

Prepare a static budget report for the quarter.

MARIS COMPANY

Sales Budget Report

For the Quarter Ended March 31, 2012

Product Line Budget Actual Difference

Garden Tools $312400 $334600 $22200

7. Gundy Company expects to produce 1,317,120 units of Product XX in 2012. Monthly production is expected to range from 80,700 to 121,360 units. Budgeted variable manufacturing costs per unit are: direct materials $3, direct labor $7, and overhead $10. Budgeted fixed manufacturing costs per unit for depreciation are $4 and for supervision are $3.

Prepare a flexible manufacturing budget for the relevant range value using 20,330 unit increments. (List variable costs before fixed costs.

GUNDY COMPANY

Monthly Flexible Manufacturing Budget

For the Year 2012

Variable Cost

Direct Materials _ _____________ _____________ ___________

Finished Units________

Fixed Costs___________ $__________ $____________ $__________

Total Cost_______ _________ __________ ________

_Overhead_______ ___________ ___________ ___________

_Activity Level ___________ $____________ $____________ $________

_Deprecation_______

Supervision________ _____________ _____________ ____________

_Direct Labor_________ __________ ___________ __________

Total Fixed Costs________ _________ _________ __________

Total Variable Cost $____________ $_______________ $________________

Gundy Company

Monthly Flexible Manufacturing Budget

Activity Level

Finished Units

80700

101030

121360

$

$

$

Variable Costs

Direct Material

242100

303090

364080

Direct Labour

564900

707210

849520

Overhead

807000

1010300

1213600

Total Variable Costs

1614000

2020600

2427200

Fixed Costs

Depreciation

439040

439040

439040

Supervision

329280

329280

329280

Total Fixed Costs

768320

768320

768320

Total Costs

2382320

2788920

3195520

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