The following table depicts the budgeted sales volume and per unit costs and profits for an English manufacturer (Toys Ltd.) of two different children’s toys, both of which are produced in the same factory: Calculate the contribution per unit and total contribution for each of the two products. Since product B is unprofitable, calculate its break-even output i.e. sales quantity. Should management discontinue its production? Explain and justify your answer

The following table depicts the budgeted sales volume and per unit costs and profits for an English manufacturer (Toys Ltd.) of two different children’s toys, both of which are produced in the same factory: Calculate the contribution per unit and total contribution for each of the two products. Since product B is unprofitable, calculate its break-even output i.e. sales quantity. Should management discontinue its production? Explain and justify your answer

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.2E: Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each...

See similar textbooks

Similar questions

ParticularsAmountDirect materialR12Direct laborR50Variable manufacturing overheadR6.50Fixed manufacturing overhead (R81,000/2,550 units)R31.76Unit product cost for the month under absorption costingR100.26 Prepare an income statement for the month using the Marginal costing method
Unit costs associated with the sale of a product AA101: Direct Materials, P230 Direct labor, P120 Manufacturing support costs, P460 Sales staff salaries, P190Indirect costs per unit of AA101 area. P1000b. P650c. P540d. P580
Total product cost per unit under absorption costing = Units produced = 1000Direct Materials = $ 6Direct Labor = $10Fixed overhead =$ 6000Variable overhead = $ 6Fixed Selling & Admin = $ 2000Variable Selling & Admin $ 2
Subject: Cost management & accounting MCQs: 1) Grover Company has the following data for the production and sale of 2,000 units. Sales price per unit $ 800 per unitFixed costs: Marketing and administrative $ 400,000 per periodManufacturing overhead $ 200,000 per periodVariable costs: Marketing and administrative $ 50 per unitManufacturing overhead $ 80 per unitDirect labor $ 100 per unitDirect materials $ 200 per unitWhat is the total manufacturing cost per unit? a) $380 b) $480 c) $730 d) $430 2) Vegas Company has the following unit costs: Variable manufacturing overhead $ 25 Direct materials 20 Direct labor 19 Fixed manufacturing overhead 12 Variable marketing and administrative 7 Vegas produced and sold 10,000 units. If the product sells for $100, what is the gross margin?…
KPR manufactures deals in various products. Relevant details of the products are as under: AWAXAYAZ Estimated annual demand (units)5000100070008000 Sales price per unit (Rs.)150180154175 Material consumption: Q (Rs)2729.524.529.75 Labor hours (Rs)5056.2543.7562.5 Variable overheads (based on labor cost) 70%80%10%90% Fixed overheads per unit (Rs.)10201416 Machine hours required: Processing machine hours 56810 The capacity utilization is as under:Hours Processing machine 150,000 RequiredCompute the number of units of each product that the company should produce in order tomaximize the profit. (B) KPR manufactures is considering a special order for 20 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is Rs 184 and its unit product cost is Rs140.00 as shown below: Direct materials . . . . . . . . . . . . . . . . . . . . Rs 81.00Direct labor . . . . . . . . . . . . . . . . . . . . . . . 42.00Manufacturing…
ParticularsAmountDirect materialR12Direct laborR50Variable manufacturing overheadR6.50Unit product cost for the month under marginal costingR68.50 Prepare an income statement for the month using the Marginal costing method.
SM3 Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Standard Cost per UnitActual Cost per UnitDirect materials:Standard: 1.80 feet at $2.00 per foot$ 3.60Actual: 1.75 feet at $2.20 per foot$ 3.85Direct labor:Standard: 0.90 hours at $20.00 per hour18.00Actual: 0.95 hours at $19.40 per hour18.43Variable overhead:Standard: 0.90 hours at $6.40 per hour5.76Actual: 0.95 hours at $6.00 per hour5.70Total cost per unit$ 27.36$ 27.98Excess of actual cost over standard cost per unit$ 0.62 The production superintendent was pleased when he saw this report and commented: “This $0.62 excess cost is well within the 5 percent limit management has set for acceptable variances. It's obvious that there's not much to worry about with this product." Actual production for the month was 12,500 units. Variable overhead cost is assigned to products on the basis of direct labor-hours. There were no…
XYZ Inc. manufactures a component D12, and two main products F45 and P67. The following details relate to each of these items: D12 D45 P67 Selling price ? 146 159 Material cost 10 15 26 Component D12 (bought-in price) ? 25 25 Direct labour 5 10 15 Variable overheads 6 12 18 Total variable cost per unit 21 62 84 Fixed overhead costs: P per annum P per annum P per annum Avoidable* 9,000.00 18,000.00 40,000.00 Non-avoidable 36,000.00 72,000.00 160,000.00 Total 45,000.00 90,000.00 200,000.00 * The avoidable fixed costs are product-specific fixed costs that would be avoided if the product or component were to be discontinued. 1. Assuming that the annual demand for component D12 is 5,000 units and that XYZ Inc. has sufficient capacity to make the component itself, the maximum price that should be paid to an external supplier for 5,000 components per year is 2. Assuming that component D12 is bought from an external supplier for P25.00 per unit, the number of units…
The Friday company manufactures several different products. Unit costs associated with product ABC are as follows.Direct materials P60Direct manufacturing labor… P10VARIABLE MANUFACTURING OVERHEAD… 18FIXED MANUFACTURING OVERHEAD… 32SALES COMMISSIONS… 4ADMINISTRATIVE SALARIES… 16TOTAL… 140 1.HOW MUCH IS THE VARIABLE COST PER UNIT2.HOW MUCH IS THE FIXED COST PER UNIT3.HOW MUCH IS THE INVENTORIES COST PER UNIT4.HOW MUCH IS THE PERIOD COST PER UNIT
The total prime cost of a product 400. The variable manufacturing overhead is calculated based on the number of direct labor hours. The variable manufacturing overhead cost per hour is three times the direct labor cost per hour. The fixed manufacturing overhead was OMR5,500. Assuming that direct labor hours were 700 and that the direct labor cost was 40% of direct materials cost, how much is the total manufacturing cost? Select one a OMR83,600 b: OMR39,100 c. OMR17100 d. OMR13,900 e. OMR21,100
1)Learned Corporation has provided the following information:Cost perUnitCost per PeriodDirect materials $ 5.00Direct labor $ 4.25Variable manufacturing overhead $ 1.85Fixed manufacturing overhead $ 35,000Sales commissions $ 0.70Variable administrative expense $ 0.60Fixed selling and administrative expense $ 9100Required:a. For financial reporting purposes, what is the total amount of product costsincurred to make 7000 units?b. For financial reporting purposes, what is the total amount of period costsincurred to sell 7000 units?c. If the selling price is $23.80 per unit, what is the contribution margin per unitsold? (Round your answer to 2 decimal places.)d. If 8000 units are produced, what is the total amount of direct manufacturingcost incurred?e. If 8000 units are produced, what is the total amount of indirect manufacturingcosts incurred?a. Total product (manufacturing) costb. Total period (manufacturing) costc. Contribution margin per unitd. Total direct manufacturing coste. Total…
Average Cost per UnitDirect materials . . . . . . . . . . . . . . . . . . . . . . . . . $7.00Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4.00Variable manufacturing overhead . . . . . . . . . $1.50Fixed manufacturing overhead . . . . . . . . . . . $5.00Fixed selling expense . . . . . . . . . . . . . . . . . . . $3.50Fixed administrative expense . . . . . . . . . . . . . $2.50Sales commissions . . . . . . . . . . . . . . . . . . . . . . $1.00Variable administrative expense . . . . . . . . . . $0.50 Answer all questions independently.Required:1. For financial accounting purposes, what is the total amount of product costs incurred to make 20,000 units?2. For financial accounting purposes, what is the total amount of period costs incurred to sell 20,000 units?3. For financial accounting purposes, what is the total amount of product costs incurred to make 22,000 units?4. For financial accounting…