1.ARTA Company manufactures sidewalk chalk, which it sells online by the box at $60 per unit. Arta uses an actual costing system, which means that the actual costs of direct material, direct labor, and manufacturing overhead are entered into work-in-process inventory. The actual application rate for manufacturing overhead is computed each year; actual manufacturing overhead is divided by actual production (in units) to compute the application rate. Information for Artas first two years of operation is as follows:

Required:

1. Compute the product cost under variable and absorption costing

2. Prepare income statements under variable and absorption costing

3. Prepare reconciliation and analyze it.

4. Compute break event point in unit under contribution margin approach and equations

5. Compute break event point in sales dollars under contribution margin approach.

6. Compute break event point in unit if Arta company could make a profit of $1,000,000 per month on its performances under contribution margin approach and equations

($) ($) 60 60 28 20 price direct material direct labor varible overhead fixed overhead production sales 8 7 1.400.000 200.000 180.000 10 10 1.400.000 250.000 270.000 200.000 fixed sales administration variable sales administration 200.000 5 5