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ACC561 Week 5 Ch18 Ch19 Ch21

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BE18-8 Meriden Company has a unit selling price of $520, variable costs per unit of
$286, and fixed costs of $187,200. Compute the break-even point in units using (a) the
mathematical equation and (b) contribution margin per unit


BE18-10 For Turgo Company, variable costs are 60% of sales, and fixed costs are
$195,000. Management’s net income goal is $75,000. Compute the required sales in dollars
needed to achieve management’s target net income of $75,000. (Use the contribution
margin approach.)

BE18-11 For Kozy 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.

BE19-16 Montana Company produces basketballs. It incurred the following costs during
the year

Direct materials  $14,490
Direct labor  $25,530
Fixed manufacturing overhead  $10,000
Variable manufacturing overhead  $32,420
Selling costs  $21,000

*E19-17 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  $7.50
Direct labor  $2.45
Variable manufacturing overhead  $5.75
Variable selling and administrative expenses  $3.90
Fixed Costs per Year 
Fixed manufacturing overhead $234,650
Fixed selling and administrative expenses  $240,100

Polk Company sells the fishing lures for $25. During 2012, the company sold 80,000 lures
and produced 95,000 lures.
Instructions
(a) Assuming the company uses variable costing, calculate Polk’s manufacturing cost per
unit for 2012.
(b) Prepare a variable costing income statement for 2012.
(c) Assuming the company uses absorption costing, calculate Polk’s manufacturing cost
per unit for 2012.
(d) Prepare an absorption costing income statement for 2012.

BE21-1 For the quarter ended March 31, 2012, Maris Company accumulates the following
sales data for its product, Garden-Tools: $310,000 budget; $304,000 actual. Prepare
a static budget report for the quarter.

BE21-4 Gundy Company expects to produce 1,200,000 units of Product XX in 2012.
Monthly production is expected to range from 80,000 to 120,000 units. Budgeted variable
manufacturing costs per unit are: direct materials $4, direct labor $6, and overhead
$8. Budgeted fixed manufacturing costs per unit for depreciation are $2 and for supervision
are $1. Prepare a flexible manufacturing budget for the relevant range value using
20,000 unit increments.

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