Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin Fixed expenses Net operating income 3. What is the variable expense ratio? $ 65,000 45,500 19,500 14,040 $5,460
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- Some commonly known costs associated with manufacturing operations arelisted below:(a) Paint shop superintendent's salary(b) Labor costs in assembling a product(c) Rent on a factory building(d) Radio-frequency identification (RFID) units embedded in the final productduring shipping ( e) Depreciation on machinery(f) Lubricants used for machines(g) CPU chips used in notebook production(h) Paint used in automobile production(i) Janitorial and custodial salaries(j) Coffee beans used in packaging roasted coffee(k) Sugar used in icecream production(I) Electricity for operation of machines(m) Electricity for heating and cooling the factory building(n) Glue used in electronic board productionClassify each cost as being either variable or fixed with respect to volume or level of activity.Fanning Corp. incurs the following annual fixed costs: Depreciation $80,000 Officers' salaries $190,000 Long-term lease $42,000 Property taxes $48,000 Determine the total fixed cost per unit of production, assuming that Fanning produces 4,000, 4,500, or 5,000 units.Some commonly known costs associated with manufacturing operations arelisted below:(a) Paint shop superintendent's salary(b) Labor costs in assembling a product(c) Rent on a factory building(d) Radio-frequency identification (RFID) units embedded in the final productduring shipping ( e) Depreciation on machinery(f) Lubricants used for machines(g) CPU chips used in notebook production(h) The paint used in automobile production(i) Janitorial and custodial salaries(j) Coffee beans used in packaging roasted coffee(k) Sugar used in ice cream production(I) Electricity for the operation of machines(m) Electricity for heating and cooling the factory building(n) The glue used in electronic board productionClassify each cost as being either variable or fixed with respect to volume or level of activity.
- SINGLE-PRODUCT BREAK-EVEN ANALYSIS Stephens, Inc., wants to determine the minimum dollar volume and unit volume needed at its new facilityto break even.APPROACH c The firm first determines that it has fixed costs of $10,000 this period. Direct labor is$1.50 per unit, and material is $.75 per unit. The selling price is $4.00 per unit.Identify which of the following costs are fixed,which are variable, and which are mixed.• Maintenance costs of vehicles used in supplyinggoods.• Direct labor cost.• Wages paid to machine operators.• Depreciation of factory buildings.• Salaries paid to quality control inspectors.• Advertising expenses.• Costs of direct materials.• Employee fidelity insurance.• Cost of electric power.• Sales taxes.Consider the following costs: Direct materials......................................... P33,000 Depreciation on factory equipment........... P14,000 Factory janitor’s salary............................. P23,000 Direct labor............................................... P28,000 Utilities for factory.................................... $9,000 Selling expenses........................................ P16,000 Production supervisor’s salary.................. P34,000 Administrative expenses........................... P21,000 What is the total amount of manufacturing overhead included above?
- The Monty Corporation has a staff of sales people who are paid a monthly salary of $1,400.00 plus an incremental commission based on the table below. If Sally sells $25,700.00, what is her total gross pay for the month? Level Sales Volume CommissionRate 1 9,100–17,600 3.1% 2 Over 17,600 4% $2,269.60 $2,369.60 $2,469.60 $2,569.60Nderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 25% gross profit rate. The following data are available pertaining specifically to Philbin’s intra-entity purchases from Anderson. Anderson was acquired on January 1, 2020. 2020 2021 2022 Purchases by Philbin $ 8,000 $ 12,000 $ 15,000 Ending inventory on Philbin’s books 1,200 4,000 3,000 Assume the equity method is used. The following data are available pertaining to Anderson’s income and dividends. 2020 2021 2022 Anderson’s net income $ 70,000 $ 85,000 $ 94,000 Dividends paid by Anderson 10,000 10,000 15,000 Compute the equity in earnings of Anderson reported on Philbin’s books for 2020. Multiple Choice $63,000. $70,000. $62,700. $62,730. $63,270.Fletcher Company has three products with the following characteristics: Product A Product B Product C Monthly sales in dollars $60,000 $80,000 $100,000 Contribution margin ratio 20% 40% 16% If total units sold remain unchanged, but the sales mix shifts more heavily toward Product C, one would expect the overall contribution margin ratio to: a)Remain unchanged b)Decrease c)Increase d)None of these
- Paradise Pottery had the following costs in May when production is 800 ceramic pots: materials, $8,700; labor (variable), $2,900; depreciation, $1,100; rent, $900; and other fixed costs, $1,500. If production changes to 900 units, how much will the total variable costs and total fixed costs be, respectively?4.1REQUIREDStudy the information given below and calculate the following if the sales manager’s proposal is accepted:4.1.1 Break-even quantity.4.1.2 The number of units that must be sold to achieve the company’s profit objective. INFORMATIONSirloin Enterprises manufactures a product that sells for R9 each. The company presently produces and sells 90 000 units per year. Total variable manufacturing costs and selling costs are R405 000 and R81 000 (10% of sales) respectively. Fixed costs are R226 440 for manufacturing overheads and R97 200 for selling and administrative activities.The sales manager has proposed that the price be increased to R10.80 per unit. The company’s profit objective is 10% of sales. 4.2 ENO Ltd, a pharmaceutical company, is seeking finance for the development of a vaccine aimed at reducing the spread the Corona virus. The company is seeking funding only from the public in the form of equity as well as long-term borrowing.In light of the above, critically discuss…The Rocky Mountain Publishing Company isconsidering introducing a new morning newspaper inDenver. Its direct competitor charges $0.25 at retailwith $0.05 going to the retailer. For the level of newscoverage the company desires, it determines the fixedcost of editors, reporters, rent, pressroom expenses,and wire-service charges to be $300,000 per month.The variable cost of ink and paper is $0.10 per copy,but advertising revenues of $0.05 per paper will begenerated. To print the morning paper, the publisherhas to purchase a new printing press, which will cost$600,000. The press machine will be depreciatedaccording to a seven-year MACRS class. The pressmachine will be used for 10 years, at which time itssalvage value would be about $100,000. Assume 300issues per year, a 40% tax rate, and a 13% MARR.How many copies per day must be sold to break evenat a retail selling price of $0.25 per paper?