Question
Handley Documents manufactures paper shredding equipment. You are requested to audit a sampling of computations made by Handley's internal accountants via your independent recalculation of
Handley Documents manufactures paper shredding equipment. You are requested to "audit" a sampling of computations made by Handley's internal accountants via your independent recalculation of the information. Instructions: Compute the requested information for each of the following independent situations (present supporting calculations). (a) Handley uses a process costing system. 900 units were in process at the beginning of the period, 60% complete. 16,400 units were started into production during the period; 700 were in process at the end of the period, 30% complete. Compute equivalent units for conversion costs. (b) Handley sells each unit for $45. Variable costs per unit equal $20. Total fixed costs equal $230,000. Handley is currently selling 12,000 units per period and would like to earn net income of $40,000. Compute: (1) break-even point in dollars; (2) sales units necessary to attain desired income; and (3) margin of safety ratio for current operations. (1) Break-even point = $ (2) Desired sales = (3) Margin of safety = % units
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