Artesa, a leading firm in the semiconductor industry, produces digital integrated circuits (ICs) for the communications and defense markets. For the year ended December 31, 2017, Artesa sold 242,400 ICs at an average selling price of \($47\) per unit. The following information also relates to 2017 (assume constant unit costs and no variances of any kind):

1. How many integrated circuits did Artesa produce in 2017?
2. Calculate the breakeven point (number of ICs sold) in 2017 under:

a. Variable costing

b. Absorption costing 

3. Due to difficulties in obtaining high-quality silicon, Artesa expects that direct materials costs will increase to \($15\) per IC in 2018. Assuming all other data are the same, calculate the minimum number of ICs Artesa must sell in 2018 to break even under:

a. Variable costing

b. Absorption costing

Transcribed Image Text:

Inventory, January 1, 2017: Inventory, December 31, 2017: Fixed manufacturing costs: Fixed administrative costs: Direct materials costs: Direct labor costs: 32,600 ICs 24,800 ICs $1,876,800 $3,284,400 $ 13 per IC $ 11 per IC