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Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The
Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit Production (# of boxes) 4,000 6,000 Production Costs: Direct Materials $60,000 $90,000 Direct Labour 80,000 120,000 Overhead: Indirect Materials.. Indirect Labour 25,000 40,000 20,000 37,500 50,000 20,000 Depreciation Selling & Administrative Expenses: Sales Salaries 50,000 30,000 Office Salaries Advertising 45,000 65,000 30,000 45,000 20,000 $477,500 Other 15,000 $365,000 Total Required: b) Calculate: i) the variable production cost per unit and the total fixed production overhead. ii) The total variable cost per unit and the total fixed costs Hint: Use the high-low method to separate mixed costs into their fixed and variable components. c) Assuming sales of 5,000 units, prepare a contribution margin income statement for the year ended December 31, 2020, detailing the components of total variable costs and total fixed costs, and clearly showing contribution and net income. Assuming sales of 5,000 units, calculate Buggs-Off break-even point and margin of safety in units and sales dollars. d)
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