1.

The following is Snow Corporation's contribution format income statement for last month:

Sales	$1,500,000
Less: variable expenses	800,000
Contribution margin	700,000
Less: fixed expenses	300,000
Operating income	$400,000

The company has no beginning or ending inventories and produced and sold 20,000 units during the month. Required:

1. What is the company's contribution margin ratio?
2. What is the company's break-even in units?
3. How many units would the company have to sell to attain target operating income of $125,000?
4. What is the company's margin of safety in dollars?

2.

Pearl Company reported the following actual cost data for the year:

Purchase of raw materials (all direct)	$300,000
Direct labour cost	200,000
Manufacturing overhead costs	269,000
Change in inventories:
Decrease in raw materials	$12,000
Decrease in work in process	10,000
Decrease in finished goods	20,000

Pearl Company used a 150% predetermined overhead rate based on direct labour cost. The rate was based on annual estimated overhead cost and direct labour cost of $252,000 and $168,000, respectively.

Required:

1. Calculate the cost of goods manufactured.
2. What was the cost of goods sold before adjusting for any under or overapplied overhead?
3. By how much was manufacturing overhead cost under or overapplied?
4. Make a summary journal entry to close any under or overapplied manufacturing overhead cost to cost of goods sold.

3.

The Raptor Company had the following results for its first two years of operation:

	Year 1	Year 2
Sales	$1,200,000	$1,200,000
Cost of goods sold	600,000	600,000
Gross margin	600,000	600,000
Selling and administrative expense	200,000	200,000
Operating income	$400,000	$400,000

In Year 1, the company produced and sold 40,000 units of its only product, in Year 2, the company again sold 40,000 units, but increased production to 60,000 units. The company's variable production cost is $5 per unit, and its fixed manufacturing overhead cost is $620,000 a year. Fixed manufacturing overhead costs is $150,000. Variable selling and administrative expenses are $2 per unit sold.

Required:

1. Compute the unit product cost for each year under absorption costing and under variable costing. (Round to the nearest whole number).
2. Make an income statement for each year, using the contribution format with variable costing.
3. Reconcile the variable costing and absorption costing income figures for each year.