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### Tarbell Manufacturing Company has a maximum productive capacity

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Comprehensive Review Problem:

Break-even point; absorption, and variable cost analysis (Similar to Self-Study Problem 1)

Tarbell Manufacturing Company has a maximum productive capacity of 210,000 units per year. Normal capacity is 180,000 units per year. Standard variable manufacturing costs are \$10 per unit. Fixed factory overhead is \$360,000 per year,
Variable selling expense is \$5 per unit and fixed selling expenses is \$252,000 per year. The unit sales price is \$20.
The operating results for the year are as follows: sales, 150,000 units; production 160,000 units; beginning inventory, 10,000 units. All variances are written off as additions to (or deductions from) the standard cost of sales.
Required:
1. What is the break-even point expressed in dollar sales?
2. How many units must be sold to earn a net income of \$100,000 per year?
3. Prepare a formal income statement for the year under the following:
a. Absorption costing (Hint: Don't forget to compute the volume variance.)
b. Variable costing.