1.

Vegas Company has the following unit costs:

Variable manufacturing overhead $ 25

Direct materials 20

Direct labor 19

Fixed manufacturing overhead 12

Variable marketing and administrative 7

Question A)

Vegas produced and sold 10,000 units. If the product sells for $100, what is the contribution margin?

Question B)

Vegas produced and sold 10,000 units. If the product sells for $100, what is the operating profit using a contribution margin income statement?

2.

Grover Company has the following data for the production and sale of 2,000 units.

Sales price per unit	$	800	per unit
Fixed costs:
Marketing and administrative	$	400,000	per period
Manufacturing overhead	$	200,000	per period
Variable costs:
Marketing and administrative	$	50	per unit
Manufacturing overhead	$	80	per unit
Direct labor	$	100	per unit
Direct Materials	$	200	per unit

What is the prime cost per unit?

$100

$280

$300

$480

3.

The estimated unit costs for a company to produce and sell a product at a level of 12,000 units per month are as follows:

Cost Item	Estimated Unit Cost
Direct material	$	32
Direct labor		20
Variable manufacturing overhead		15
Fixed manufacturing overhead		6
Variable selling expenses		3
Fixed selling expenses		4

What are the estimated prime costs per unit?

$73

$32

$67

$52

4.

Grover Company has the following data for the production and sale of 2,000 units.

Sales price per unit	$	800	per unit
Fixed costs:
Marketing and administrative	$	400,000	per period
Manufacturing overhead	$	200,000	per period
Variable costs:
Marketing and administrative	$	50	per unit
Manufacturing overhead	$	80	per unit
Direct labor	$	100	per unit
Direct materials	$	200	per unit

What is the full cost per unit of making and selling the product?

$430

$480

$530

$730

5.

Mountainburg Industries has developed two new products but has only enough plant capacity to introduce one product during the current year. The following data will assist management in deciding which product should be selected. Mountainburg's fixed overhead includes rent and utilities, equipment depreciation, and supervisory salaries. Selling and administrative expenses are not allocated to individual products.

	Product L				Product W
Direct materials	$	44			$	36
Machining labor ($12/hour)		18				15
Assembly labor ($10/hour)		30				10
Variable overhead ($8/hour)		36				18
Fixed overhead (4/hour)		18				9
Total Manufacturing Cost	$	146			$	88
Estimated selling price per unit	$	170			$	100
Actual research and development costs	$	240,000			$	175,000
Estimated advertising costs	$	500,000			$	350,000

The difference between the $100 estimated selling price for Mountainburg's Product W and its total cost of $88 represents

Contribution margin per unit.

Gross margin per unit.

Variable cost per unit.

Operating profit per unit.