1 Determining total variable cost LO 11-1

The following variable production costs apply to goods made by Raeburn Manufacturing Corporation:

Item

Cost Per Unit

Materials

$

8.00

Labor

3.50

Variable overhead

2.50

Total

$

14.00

Required

Determine the total variable production cost, assuming that Raeburn makes 5,000, 15,000 and 25,000 units.

UNITS PRODUCED 5,000 15,000 25,000

TOTAL VARIABLE COST ________ _________ __________

6 Break-even point LO 11-5

Agassi Corporation sells products for $36 each that have variable costs of $13 per unit. Agassis annual fixed cost is $526,700.

Required

Determine the break-even point in units and dollars.

BREAK EVEN POINTS IN UNITS ( )

BREAKEVEN POINTS IN DOLLARS ( )

8 Margin of safety LO 11-6

Information concerning a product produced by Ender Company appears here:

Sales price per unit

$

175

Variable cost per unit

$

84

Total annual fixed manufacturing and operating costs

$

637,000

Determine the following:

A, Contribution margin per unit.( ) B.Number of units that Ender must sell to break even. BREAK EVEN IN UNITS ( ) c. Sales level in units that Ender must reach to earn a profit of $127,400. SALES IN UNITS ( ) D. Determine the margin of safety in units, sales dollars, and as a percentage. (Round Percentage answer to 1 decimal place (i.e., 0.234 should be entered as 23.4).) UNITS SALES PERCENTAGE MARGIN OF SAFETY ________ ________ ______________ % 9 Allocating costs between divisions LO 12-2 Kaplan Services Company (KSC) has 62 employees, 23 of whom are assigned to Division A and 39 to Division B. KSC incurred $373,860 of fringe benefits cost during 2014. Required Determine the amount of the fringe benefits cost to be allocated to Division A and to Division B. DIVISION ALLOCATED COST 1 _________________ 2 _________________ 13 Allocating to smooth cost over varying levels of production LO 12-3 Production workers for Kennedy Manufacturing Company provided 320 hours of labor in January and 660 hours in February. Kennedy expects to use 4,000 hours of labor during the year. The rental fee for the manufacturing facility is $12,000 per month. Required Based on this information, how much of the rental cost should be allocated to the products made in January and to those made in February? MONTH ALLOCATED COSTS JANUARY ____________________ FEBRUARY ____________________