1) Company's most recent income statement is given below. Sales (8,000 units) $160,000 Less variable expenses (68,000) Contribution margin 92,000 Less fixed expenses (50,000) Net income $42,000 Required: a. Contribution margin per unit is $ ________ per unit b. If sales are doubled total variable costs will equal $ ________ c. If sales are doubled total fixed costs will equal $ ________ d. If 20 more units are sold, profits will increase by $ ________ e. Compute how many units must be sold to break even. # ________ f. Compute how many units must be sold to achieve operating income of $60,000. # ________ g. Compute the revenue needed to achieve an after tax income of $35,000 given a tax rate of 30%. $ ________ h. What is the margin of safety percentage at 7000 units sold? ________%

2) The Company uses a normal job-costing system at its Florida plant. The

plant has a machining department and an assembly department. Its job-costing system has two direct- cost categories (direct materials and direct manufacturing labor) and two manufacturing overhead cost

pools (the machining department overhead, allocated to jobs based on actual machine-hours, and the assembly department overhead, allocated to jobs based on actual direct manufacturing labor costs). The 2020 budget for the plant is as follows:

Machine Department Assembly Department Manufacturing overhead $1,800,000 $4,000,000 Direct manufacturing labor costs $1,400,000 $2,000,000 Direct manufacturing labor-hours 180,000 250,000 Machine-hours 50,000 250,000 Requirements 1. Compute the overhead rates per department. During February, the job-cost record for Job 494 contained the following:

Machine Department Assembly Department

Direct materials used $45,000 $74,000 Direct manufacturing labor costs $19,000 $20,000 Direct manufacturing labor-hours 1,400 1,800 Machine-hours 2,100 1,100 2. Compute the total manufacturing overhead costs allocated to Job 494 3. Compute the costs of producing Job 494 4. At the end of 2020, the actual manufacturing overhead costs were $2,000,000 in machining and $4,100,000 in assembly. Assume that 54,000 actual machine-hours were used in machining and

that actual direct manufacturing labor costs in assembly were $2,300,000. Compute the under- allocated or over-allocated manufacturing overhead for each department.

3) Company manufactures a specialized hoverboard. Company began 2017 with an inventory of 240 hoverboards. During the year, it produced 1,200 boards and sold 1,300 for $800 each. Fixed production costs were $319,000, and variable production costs were $375 per unit. Fixed advertising, marketing, and other general and administrative expenses were $150,000, and variable selling costs were $20 per board. Assume that the cost of each unit in beginning inventory is equal to 2017 production costs. Required: 1. Prepare an income statement assuming Mitchco uses variable costing. 2. Prepare an income statement assuming Mitchco uses absorption costing. Mitchco uses a denominator level of 1,100 units. Production-volume variances are written off to cost of goods sold.