COMMERCE 2AB3 Chapter Notes - Chapter 3: Fixed Cost
This preview shows half of the first page. to view the full 1 pages of the document.
Tembo Inc. produces3productlines(L’s,M’s&N’s)inayearwiththefollowingsellingprices
and manufacturing costs per unit based on the volumes given for each product line:
Sales Mix in Units 2 units 1 unit 3 units
Selling Price $20.00 per unit $10.00 per unit $30.00 per unit
Direct Materials $4.00 per unit $2.00 per unit $2.00 per unit
Direct Labour $2.00 per unit $1.00 per unit $2.00 per unit
Variable MOH $1.00 per unit $1.00 per unit $2.00 per unit
Total Fixed Costs $115,200
1. How many units of each product line would the company have to sell in the year if they
desire net income after taxes of $12,000? Income taxes are expected to be 40%?
2. What is the total sales revenues ($) to breakeven?
Jim's Computer Products manufactures keyboards for computers. In June, the two production
departments had budgeted allocation bases of 10,000 machine hours in Department 1 and 5,000
direct manufacturing labour hours in Department 2. The budgeted manufacturing overheads for
the month were $34,500 and $37,500, respectively. For Job 501, the actual costs incurred in the
Department 1 Department 2
Direct materials purchased on account
Direct materials used
Direct manufacturing labour
Indirect manufacturing labour
Indirect materials used
Lease on equipment
Job 501 incurred 1,000 machine hours in Department 1 and 300 manufacturing labour hours in
Department 2. The company uses a budgeted departmental overhead rate for applying overhead
What is the total cost of Job 501?
You're Reading a Preview
Unlock to view full version