1)Business Solutions sells upscale modular desk units and office chairs in the ratio of 4:2 (desk unit:chair). The selling prices are $1,290 per desk unit and $540 per chair. The variable costs are $790 per desk unit and $290 per chair. Fixed costs are $200,000.

Required:

A

Compute the selling price per composite unit.

Selling price per composite unit

B

Compute the variable costs per composite unit.

Variable costs per composite unit

C.

Compute the break-even point in composite units

Break-even point

composite units

D Compute the number of units of each product that would be sold at the break-even point.

	Desk	Chairs
Unit sales

2)

Santana Rey, owner of Business Solutions, decides to diversify her business by also manufacturing computer workstation furniture.

Required:

A.

Classify the following manufacturing costs of Business Solutions as (a) variable or fixed and (b) direct or indirect.

	Product Costs	Cost by Behavior	Cost by Traceability
1.	Monthly flat fee to clean workshop
2.	Laminate coverings for desktops
3.	Taxes on assembly workshop
4.	Glue to assemble workstation component parts
5.	Wages of desk assembler
6.	Electricity for workshop
7.	Depreciation on tools

B.

.	Prepare a schedule of cost of goods manufactured for the month ended January 31, 2016.
	Direct materials: $2,900
	Factory overhead: $500
	Direct labor: $800
	Beginning work in process: none (December 31, 2015)
	Ending work in process: $510 (January 31, 2016)
	Beginning finished goods inventory: none (December 31, 2015)
	Ending finished goods inventory: $360 (January 31, 2016)

C.

Prepare the cost of goods sold section of the income statement for Business Solutions for the month ended January 31, 2016.