1.Felix & Co. reports the following information about its sales and cost of sales.

Period	Units Sold	Cost of Sales		Period	Units Sold	Cost of Sales
1	0	$	2,560	6	2,060	5,560
2	460		3,160	7	2,460	6,160
3	860		3,760	8	2,860	6,760
4	1,260		4,360	9	3,260	7,360
5	1,660		4,960	10	3,660	8,050

Hint: (Draw an estimated line of cost behavior using a scatter diagram offline.)

Complete the below table to calculate the fixed cost and variable cost of sales by using the high-low method.

High-Low method - Calculation of variable cost per unit
					0
High-Low method - Calculation of fixed costs
Total cost at the high point
Variable costs at the high point:
Volume at the high point:
Variable cost per unit
Total variable costs at the high point
Total fixed costs
Total cost at the low point
Variable costs at the low point:
Volume at the low point:
Variable cost per unit
Total variable costs at the low point
Total fixed costs

2.

Blanchard Company manufactures a single product that sells for $145 per unit and whose total variable costs are $87 per unit. The companys annual fixed costs are $916,400.

(A)	Prepare a contribution margin income statement for Blanchard Company at the break-even point.

(B)

Assume the companys fixed costs increase by $143,000. What amount of sales (in dollars) is needed to break even?

Break-Even Point in Dollars
Choose Numerator:	/	Choose Denominator:	=	Break-Even Point in Dollars
	/		=	Break-even point in dollars
				0

3.

Bloom Company management predicts that it will incur fixed costs of $257,000 and earn pretax income of $459,900 in the next period. Its expected contribution margin ratio is 67%.

(A).

Compute the amount of total dollar sales.

Dollar Sales
Choose Numerator:	/	Choose Denominator:	=	Total Dollar Sales
	/		=	Total dollar sales
	/		=

(B)

Compute the amount of total variable costs.

Sales
Fixed costs
Pretax income
Variable costs

4.

The following costs result from the production and sale of 5,000 drum sets manufactured by Tight Drums Company for the year ended December 31, 2015. The drum sets sell for $350 each. The company has a 25% income tax rate.

Variable production costs
Plastic for casing	$	185,000
Wages of assembly workers		510,000
Drum stands		230,000
Variable selling costs
Sales commissions		175,000
Fixed manufacturing costs
Taxes on factory		5,000
Factory maintenance		10,000
Factory machinery depreciation		70,000
Fixed selling and administrative costs
Lease of equipment for sales staff		10,000
Accounting staff salaries		60,000
Administrative management salaries		140,000

Required:

(A)

Prepare a contribution margin income statement for the company.

TIGHT DRUMS COMPANY
Contribution Margin Income Statement
For Year Ended December 31, 2015
Sales
Variable costs:
Total variable costs
Contribution margin
Fixed costs
Total fixed costs