1. A business produces one product which requires the following inputs:

Sales in unit 5.000.000

Selling price $0.50

Var.cost $0.30

Fixed cost $900.000.00

a. What is the number of units that the company needs to produce and sell to break-even? (15 points)

2. A business produces one product which requires the following inputs:

Direct Materials 6 kg at $ 4,80 per kg

Direct labour 4 hour at $7 per hour

Building cost $18.000 per period

Leased machine $600 for every 600 units (each machine has a capacity of 600 units)

Store Cost $3.000 per period plus $3 per unit

a. What is the total cost of production and the cost per unit at each of the following production levels: (20 points) -1000 units -2000 units

b. Explain why the cost per unit is different at each level of production (10 points).

3. .Frase Corp is manufacturing marbles in two types TYPE1 and TYPE2. These two product and the company has the following cost structure. The company is using Activity Based Costing method.

Overhead Activities Activity Cost Cost driver

Machine Setup $180.000 1500 setup hours

Materials Handling $ 50.000 12500 pounds of mat. Hand.

Generating electric power for production $20.000 20000 kilowatt hours

TYPE1 TYPE2

Number of units produced 10.000 20.000

Direct materials cost $20.000 $ 25.000

Direct labor cost $ 12.000 $ 20.000

Number of setup hours 100 120

Pounds of materials used 500 1500

Kilowatt-hours used 1000 2000

a. What is the total cost for TYPE1 and TYPE2 (10 points)

b. WHat is the cost per unit for TYPE1 and TYPE2 (10 points)

7. "A small company that produces a single product has the following cost structure.

" Number of Units produced 6000

Number of Units sold 5000

Selling Price $20

Variable cost per unit:

Direct materials $2

Direct labor $4

Variable manufacturing overhead $1

Fixed costs per year:

Fixed manufacturing overhead $30.000

Fixed selling and administrative expenses $10.000

a. What is the production cost per unit under absorption costing (5 points)

b. What is the production cost per unit under variable costing (5 points)

c. What is the value of ending inventory under absorption (5 points)

d. What is the value of ending inventory under variable costing(5 points)

e. Explain why there is a difference on the value of ending inventory (15 points)