Project 3 is due by Tuesday, April 30. Send via the assignment area and make sure you save your file with first initial of first name and last name. You will be graded on the accuracy of your answer and usage of cell referencing in the DATA area. This problem covers material in chapters 7 and 8, and there are demonstrations of this material in both chapter folders in Course Documents.

DATA

ABC, Inc. is a newly organized manufacturing business this year.

The following company's costs and expenses are:

Required:
Use the information in the DATA field above using cell referencing to answer the following requirements.
1. Calculate the unit cost for variable costing. Review Exhibit 8-2 on page 328.
2. Calculate the unit cost for absorption costing. Review Exhibit 8-2 on page 328.
3. Prepare an absorption-costing income statement. Review Exhibit 8-3 on page 329.
4. Prepare a variable-costing income statement. Review Exhibit 8-3 on page 329.
5. Reconcile the differences in income that you calculated in #3 and #4 using exhibit 8-4 on page 330 as your guide or use the shortcut reconciliation on page 330-331.
6. Calculate the breakeven point in units. Reference page 279.
7. Calculate the breakeven point in sales dollars.
8. Calculate the safety margin and explain what the margin of safety means for this ABC Inc. Reference page 285.
9. Calculate the operating leverage . Reference page 296.
10. What if sales volume increases by 5% how much will income increase in percentage terms? Make sure you have read over the DOL discussion and understand the multiplier impact of changes in sales volume that occurs based on DOL. See the bottom of page 296.
11. What if the direct material cost per unit decreases from $10 a unit to $8, what will be the new breakeven in units? Explain why it changed.
You should only have to change the direct material cost in the data area and actually all your answers should be updated. Please put the direct material cost back to the original number once you have answered the question.
12. What if the manufacturing overhead cost increases from 122,850 to 128,700, what will be the new breakeven in units? Explain why it changed.
You should only have to change the fixed MOH in the data area and actually all your answers should be updated. Please put the fixed MOH cost back to the original number once you have answered thequestion.

Transcribed Image Text:

Sales price per unit Manufacturing costs: S80 Fixed Costs Variable Costs $10 Direct materials Direct labor Variable Manufacturing overhead Fixed Manufacturing overhead S122,850 Period expenses Variable Selling and administrative expenses Fixed Selling and Administrative expenses 9,000 S131,850 Totals S32 Units produced Units soltd 5,850 units 5.650 units