Chapter 10- Cost Analysis for Management Decision Making 573 buy er no um- ore ase st per year. Standard variable manufacturing costs are $10 per unit. ved factory overhead is $360,000 per year. Variable selling expense is $5 per unit, and fixed selling expense is $252,000 per year. The unit sales price is $20. Similar to The operating results for the year are as follows: sales, 150,000 une year are as follows: sales, 150.000 V. Self-Study Problem 1 units; production, 160,000 units; beginning inventory, 10,000 units. All variances are written off as additions to (or deductions from the standard cost of sales. Required: 1. What is the break-even point expressed in dollar sales? 2 How many units must be sold to earn a net operating income of $100,000 per year? (Ignore income taxes.) 3. Prepare a formal income statement for the year ended Decem- ber 31, 2016, under the following: a. Absorption costing. (Hint: Don't forget to compute the over- or underapplied overhead.) b. Variable costing. MINI-CASE 1 that could any offered a pted, StopZM i costs would S Inc. has requested a DIU TU cialty c ensers for a purchase price of an empty can thi be used for the new product. The specialty company of price of $$ for a carton of cans. If the proposal is accepted.s Inc. estimates that direct labor and variable overhead costs be reduced by 10% and direct materials would be reduced h educed by 20%. int. First com- Required: Should StopZM make or buy the special cans? (Hint. Firs pute the costs that could be saved by buying the cans.) 2. What would be the maximum purchase price acceptable StopZM for the cans? P10-15R com Comprehensive Review Problem: Break-even point; absorption and variable cost analysis henandoah Manufacturing Company has a maximum productive Capacity of 210,000 units per year. Normal capacity is 180,000 units