a) Determine the cost of producing a cap.

b) Compute the unit variable cost for a cap.

c) Compute the unit contribution margin and the contribution margin ratio.

d) Calculate the breakeven point in units and in sales dollars.

400 Cost Items and Account Balances Administrative salaries Advertising for caps Cash, December 1 Depreciation on factory building Depreciation on office equipment Insurance on factory building Miscellaneous expenses-factory Office supplies expense Professional fees Property taxes on factory building Raw materials used Rent on production equipment Research and development Sales commissions Utility costs-factory Wages-factory Work in process, December 1 Work in process, December 31 Raw materials inventory, December 1 Raw materials inventory, December 31 Raw material purchases Finished goods inventory, December 1 Production and Sales Data $15,500 11,000 Number of caps produced 10,000 -0- Expected sales in units for December 1,500 ($40 unit sales price) 8,000 800 Expected sales in units for January 10,000 1,500 Desired ending inventory 20% of next month's sales 1,000 Direct materials per finished unit 300 1 kilogram Direct materials cost 500 $7 per kilogram Direct labor hours per unit .35 70,000 Direct labor hourly rate $20 6,000 10,000 Cash Flow Data 40,000 Cash collections from customers: 75% in month of sale and 25% the following month. 900 Cash payments to suppliers: 75% in month of purchase and 25% the following month. 70,000 Income tax rate: 45%. -0- Cost of proposed production equipment: $720,000. Manufacturing overhead, selling, and administrative costs are paid as incurred. Desired ending cash balance: $30,000. 70,000 400 Cost Items and Account Balances Administrative salaries Advertising for caps Cash, December 1 Depreciation on factory building Depreciation on office equipment Insurance on factory building Miscellaneous expenses-factory Office supplies expense Professional fees Property taxes on factory building Raw materials used Rent on production equipment Research and development Sales commissions Utility costs-factory Wages-factory Work in process, December 1 Work in process, December 31 Raw materials inventory, December 1 Raw materials inventory, December 31 Raw material purchases Finished goods inventory, December 1 Production and Sales Data $15,500 11,000 Number of caps produced 10,000 -0- Expected sales in units for December 1,500 ($40 unit sales price) 8,000 800 Expected sales in units for January 10,000 1,500 Desired ending inventory 20% of next month's sales 1,000 Direct materials per finished unit 300 1 kilogram Direct materials cost 500 $7 per kilogram Direct labor hours per unit .35 70,000 Direct labor hourly rate $20 6,000 10,000 Cash Flow Data 40,000 Cash collections from customers: 75% in month of sale and 25% the following month. 900 Cash payments to suppliers: 75% in month of purchase and 25% the following month. 70,000 Income tax rate: 45%. -0- Cost of proposed production equipment: $720,000. Manufacturing overhead, selling, and administrative costs are paid as incurred. Desired ending cash balance: $30,000. 70,000