Axle and Wheel Manufacturing currently produces and sells 1000axles per month. Its revenue is $125,000 permonth. The following per unit data apply for sales toregular customers
Directmaterials $30
Direct manufacturing labor $5
Variable manufacturing overhead $10
Fixed manufacturing overhead $40
Total manufacturing costs $85
1. What is the breakeven level in units and indollars for Axle and Wheel?
2. The plant has capacity for 2,000 axles and isconsidering expanding production to 1,500 axles. What isthe total monthly cost and operating income of producing 1500axles?
3. What is the per-unit cost when producing 1500axles?
4. If Axle and Wheel wants an operating profit ofapproximately $104,000, how many axles would it have to manufactureand sell?
Please show your work
Axle and Wheel Manufacturing currently produces and sells 1000axles per month. Its revenue is $125,000 permonth. The following per unit data apply for sales toregular customers
Directmaterials $30
Direct manufacturing labor $5
Variable manufacturing overhead $10
Fixed manufacturing overhead $40
Total manufacturing costs $85
1. What is the breakeven level in units and indollars for Axle and Wheel?
2. The plant has capacity for 2,000 axles and isconsidering expanding production to 1,500 axles. What isthe total monthly cost and operating income of producing 1500axles?
3. What is the per-unit cost when producing 1500axles?
4. If Axle and Wheel wants an operating profit ofapproximately $104,000, how many axles would it have to manufactureand sell?
Please show your work
Related questions
1) All of the following are examples of product costs except:
depreciation on the company's administrative offices.
salary of the plant manager.
insurance on the factory equipment.
rental costs of the factory facility.
2) Period costs:
are treated as expenses in the period they are incurred
are directly traceable to products
include direct labor
are also referred to as manufacturing overhead costs
.
3) Axle and Wheel Manufacturing currently produces 1,000 axles per month. The following per unit data apply for sales to regular customers:
Direct materials $30
Direct manufacturing labor 5
Variable manufacturing overhead 10
Fixed manufacturing overhead 40
Total manufacturing costs $85
The plant has capacity for 2,000 axles and is considering expanding production to 1,500 axles. What is the total cost of producing 1,500 axles?
a. $85,000
b. $170,000
c. $107,500
d. $102,500
4) In the preparation of the schedule of Cost of Goods Manufactured, the accountant incorrectly included as part of manufacturing overhead the rental expense on the firm's retail facilities. This inclusion would:
overstate period expenses on the income statement.
overstate the cost of goods sold on the income statement.
understate the cost of goods manufactured.
have no effect on the cost of goods manufactured.
5) In CVP analysis, focusing on target net income rather than operating income:
a. will increase the breakeven point
b. will decrease the breakeven point
c. will not change the breakeven point
d. does not allow calculation of breakeven point
6) A variable cost is constant if expressed on a per unit basis but the total dollar amount changes as the number of units increases or decreases.
a. True
b. False
7) As activity increases within the relevant range, fixed costs remain constant on a per unit basis.
a. True
b. False
8) Which of the following statements is correct with regard to a CVP graph?
A CVP graph shows the maximum possible profit.
A CVP graph shows the break-even point as the intersection of the total sales revenue line and the total expense line.
A CVP graph assumes that total expense varies in direct proportion to unit sales.
A CVP graph shows the operating leverage as the gap between total sales revenue and total expense at the actual level of sales.
9) How would the following costs be classified (product or period) under variable costing at a retail clothing store?
| Cost of purchasing clothing | Sales commissions | |
| a. | Product | Product |
| b. | Product | Period |
| c. | Period | Product |
| d. | Period | Period |
10) The principal difference between variable costing and absorption costing centers on:
whether variable manufacturing costs should be included as product costs.
whether fixed manufacturing costs should be included as product costs.
whether fixed manufacturing costs and fixed selling and administrative costs should be included as product costs.
none of these.
11) Joe has a hot dog cart that he parks on the NY sidewalk and sells hotdogs during the day. The variable cost of a hot dog is $.90. The selling price of the hot dog is $2.00. The fixed cost is $3,000 per month which covers the loan for the cart and the salary Joe needs to make to live. How many hotdogs must Joe sell in one month in order to break even?
3,300 hot dogs
3,000 hot dogs
2,727.27 hot dogs
2,728 hot dogs
12) Shun Corporation manufactures and sells a hand held calculator. The following information relates to Shun's operations for last year:
| Unit product cost under variable costing.......................... | $5.20 per unit | |
| Fixed manufacturing overhead cost for the year.............. | $260,000 | |
| Fixed selling and administrative cost for the year............ | $180,000 | |
| Units (calculators) produced and sold.............................. | 400,000 |
What is Shun's unit product cost under absorption costing for last year?
$4.10
$4.55
$5.85
$6.30.
Use the following information to answer questions 13 to 15:
Barnett Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in Department M. Conversion costs were 75% complete with respect to the 4,000 units in work in process at May 1 and 50% complete with respect to the 6,000 units in work in process at May 31. During May, 14,000 units were started, 12,000 units were completed and transferred to the next department.
13) Calculate the number of equivalent units for materials.
10,000 units
12,000 units
14,000 units
15,000 units
18,000 units
14) Calculate the number of equivalent units for conversion?
10,000 units
12,000 units
14,000 units
15,000 units
18,000 units
15) An analysis of the costs relating to work in process at May 1 and to production activity for May follows:
| Materials | Conversion | ||
| Work in process 5/1....................... | $13,800 | $3,740 | |
| Costs added during May................ | $42,000 | $26,260 |
The total cost per equivalent unit for May was:
$5.02
$5.10
$5.12
$5.25
9. The followingare from the accounting records of Y ltd.:
Sale price per unit | 80 $ |
DM used | 120 000 $ |
DL | 180 000 $ |
MO variable | 112 000 $ |
MO fixed | 168 000 $ |
S&A variable | 48 000 $ |
S&A fixed | 32 000 $ |
Production and sales (units) | 10 000 |
An order has been received from anoverseas customer for 2,000 units at a price of $64 per unit to bedelivered this month.
By how much would this special order increase (decrease) thecompany's operating income for the month?
a) ($32 000)
b) $46,600
c) $12,000
d) $36,000
e) None of the above
10. ZZ co. produces a singleproduct. The cost of producing and selling a single unit of thisproduct at the company's normal activity level of 20,000 units permonth (80% of capacity) is as follows:
Sale price per unit | $300 |
| Total variable cost per unit Manufacturing S&A | $110 $50 |
| Total fixed cost Manufacturing S&A | $1,280,000 $560 000 |
A special order has been received from a local customer for 5,000units at a price of $200 per unit to be delivered this month. Byhow much would this special order increase (decrease) the company'soperating income for the month?
a) $200,000 $
b) $136,000
c) ($500,000)
d) ($260,000)
e) None of the above
11. AA Company produces andsells three products:
A | B | C | |
Sales | $20,000 | $30,000 | $8,000 |
TVC | 12,000 | $16,000 | $5,000 |
Contribution margin | 8,000 | $14,000 | $3,000 |
Traceable fixed cost | 3,000 | $6,000 | $2,000 |
Common fixed cost | 2,000 | $3,000 | $1,800 |
Operating income | $3,000 | $5,000 | ($800) |
A decision by AA Co. to discontinueProduct C would result in what monthly increase (decrease) in AACo.'s
operating income?
a) $800
b) $1,000
c) ($1,000)
d) ($1,800)
e) None of the above
12. The following data are for Division B of Ovechkin Inc.:
Sales $4,000,000
Totalasset 1,250,000
ROI 10 %
The asset turnover ratio is:
a) 3.20
b) 0.10
c) 0.3125
d) None of the above
13. Refer to question 12.The operating income of Division B is:
a) $2,750,000
b) 1,250,000
c) 125,000
d) 400,000
