Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Greenhorn Company makes and sells busts of Paciolo, the famous monk who is credited with the introduction of the double entry system of accounting. The

Greenhorn Company makes and sells busts of Paciolo, the famous monk who is credited with the introduction of the double entry system of accounting. The normal selling price is $50. The company's costs for 2019, when it produced and sold 8,000 busts, were as follows: Production costs: Direct materials* $12.50 per unit Direct labor* $15.00 per unit Variable factory overhead* $ 2.50 per unit Fixed factory overhead $10.00 per unit Selling and administrative expenses: Sales commissions* $ 2.50 per unit Shipping* $ 0.50 per unit Fixed selling and adm exp $12.00 per unit *This cost changes in total in proportion to changes in the number of busts produced and sold. The variable costs per unit are likely to remain the same in 2020. Total fixed costs are expected to increase by 30 percent. If the selling price is kept at $50 in 2020, the sales volume is expected to stay at 8,000 units. There was no beginning inventory in 2020. The income tax rate is 40 percent. Questions:

1. What type of cost are direct materials and direct labor? (Please answer "fixed" or "variable") - Answer - Variable

2. What type of cost are sales commissions and shipping? (Please answer "fixed" or "variable") - Answer - Variable

3. What is combined variable cost per unit? - Answer - $33

4. What is total variable cost at 8000 units? - Answer - $264000

Looking for the following questions to be answered - Thanks in advance...

5. What is contribution margin per unit?

6. What is total fixed costs at 8000 units in 2019?

7. What is total fixed costs at 8000 units in 2020?

8. What is total contribution margin at 8000 units?

9. What is profit at breakeven volume?

10. What is total contribution margin at breakeven volume in 2020?

11. What is breakeven volume in 2020 (round up to the nearest whole number)?

12. What is target volume to generate $9200 in pretax profit in 2020 (round up to the nearest whole number)?

13. What is target volume to generate $15,720 in after tax profit in 2020 (round up to the nearest whole number)?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting The Impact On Decision Makers

Authors: Curtis L. Norton, Gary A. Porter

6th Edition

9781439037119, 1439037116

More Books

Students also viewed these Accounting questions