Cost Accounting

..... manufactures one product, cleverly named "Product A". The Income Statement below represents the operating results for the fiscal year just ended, December 31, 2017. NEW JERSEY produced and sold 1,800 tons of Product A during the current year. The manufacturing capacity of NEW JERSEY's facilities is 3,000 tons of Product A. NEW JERSEY CORP. INCOME STATEMENT For the year ended December 31, 2017 $ 900,000 Sales Variable costs Manufacturing Selling costs Total variable costs Contribution margin 315,000 180,000 $ 495,000 $ 405,000 Fixed costs Manufacturing Selling Administration Total fixed costs 90,000 112,500 45,000 $ 247,500 Net income before income taxes Income taxes (40%) 157,500 (63,000) Net income after income taxes $ 94,500 1. The contribution margin per unit is 2. The contribution margin ratio is 3. The breakeven volume for the year in tons is 4. The breakeven volume in sales revenues is $ 5. By how many tons can sales drop before NEW JERSEY starts to show a loss after taxes? 6. If sales revenue increases by 10% next year, by what percent will NEW JERSEY's pre-tax income rise? Why is this number greater than 10%? 7. If the sales volume is estimated to be 2,100 tons in the next year, and if the prices and costs stay at the same rates and amounts next year, the after-tax net income that NEW JERSEY can expect will be: 8. If the company wishes to earn $120,000 after tax, the amount of sales dollars needed will be $ 9. Prepare a CVP graph for NEW JERSEY. Indicate fixed costs, total costs, breakeven units and dollars, and show the company's 2017 results on the graph as well. Use only pre-tax figures for this graph. You may do this manually rather than Excel if you wish, and it need not be "to scale". 10. The financial statements shown above were prepared on a Variable Costing basis. What does that mean? 11. While the Variable costing statement is helpful for decision making, it is not permitted for GAAP or IFRS. Recast the December 31, 2017 statements (shown above) in a way that reflects absorption costing, consistent with GAAP. Assume that there were no changes in raw materials, work-in-process or finished-goods inventories during the year (beginning and ending finished goods inventory was zero). 12. NOW ASSUME that the company actually produced 2,000 units during the year, but only sold the 1,800 indicated above? (Assume beginning finished goods are 0 units, and ending finished goods are 200 units). Prepare income statements using both variable costing AND using full absorption costing. 13. Consider the pre-tax income shown on the two absorption-costing income statements prepared above. Was it the same or different? Why? Does it make economic sense? 14. Considering the pre-tax income shown on the variable-costing statement, how does it compare with the absorption- costing income statement for this same scenario (2,000 produced, 1,800 sold)? Why? How does this statement compare with the variable-costing statement originally given (1,800 produced and sold)? Why? Exactly HOW can we account for the difference