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ACC561 Week4 Wiley BE18-1 BE18-7 BE18-11 E19-2

Price: $5.99


Question 1
Monthly production costs in Pesavento Company for two levels of production are as
follows.

Cost 3,000 Units 6,000 Units
Indirect labor 10000 20000
Supervisory salaries 5000 5000
Maintenance 4000 7000

Indicate which costs are variable, fixed, and mixed, and give the reason for each answer.

Question 2
Bruno Manufacturing Inc. had sales of $2,200,000 for the first quarter of 2010.
In making the sales, the company incurred the following costs and expenses.

 Variable   Fixed 
Cost of goods sold   920,000  440,000
Selling expenses   70,000  45,000
Administrative expenses   86,000  98,000
Complete the CVP income statement for the quarter ended March 31, 2010.

Question 3
For Dousmann Company actual sales are $1,200,000 and break-even sales
are $840,000. Compute (a) the margin of safety in dollars and (b) the margin of safety ratio.

Question 4
In the month of June, Angela’s Beauty Salon gave 3,500 haircuts, shampoos, and
permanents at an average price of $30. During the month, fixed costs were $16,800 and
variable costs were 80% of sales.

Instructions
(a) Determine the contribution margin in dollars, per unit, and as a ratio.
(b) Using the contribution margin technique, compute the break-even point in dollars
and in units.

(c) Compute the margin of safety in dollars and as a ratio.

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