High-Low Method

The manufacturing costs of Fuld Industries for three months of the year are provided below.

	Total Costs		Production
January	$213,840		1,485	units
February	322,420		2,950
March	332,640		4,785

Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost. Round all answers to the nearest whole dollar.

a. Variable cost per unit	$
b. Total fixed cost	$

Contribution Margin

Willie Company sells 23,000 units at $36 per unit. Variable costs are $25.20 per unit, and fixed costs are $126,700.

Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations.

a. Contribution margin ratio (Enter as a whole number.)		%
b. Unit contribution margin (Round to the nearest cent.)	$	per unit
c. Income from operations	$

Break-Even Point

Radison Enterprises sells a product for $89 per unit. The variable cost is $61 per unit, while fixed costs are $164,640.

Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $96 per unit.

a. Break-even point in sales units	units
b. Break-even point if the selling price were increased to $96 per unit	units

Contribution Margin and Contribution Margin Ratio

For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions):

Sales	$39,400
Food and packaging	$10,278
Payroll	9,900
Occupancy (rent, depreciation, etc.)	12,342
General, selling, and administrative expenses	5,700
	$38,220
Income from operations	$1,180

Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.

a. What is McDonald's contribution margin? Round to the nearest million. (Give answer in millions of dollars.) $ million

b. What is McDonald's contribution margin ratio? %

c. How much would income from operations increase if same-store sales increased by $2,400 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. $ million

Variable Costing

Norwood Company has the following information for September:

Sales	$620,000
Variable cost of goods sold	291,400
Fixed manufacturing costs	99,200
Variable selling and administrative expenses	62,000
Fixed selling and administrative expenses	37,200

Determine the following for Norwood Company for the month of September:

a. Manufacturing margin	$
b. Contribution margin	$
c. Income from operations	$

Variable CostingProduction Exceeds Sales

Fixed manufacturing costs are $50 per unit, and variable manufacturing costs are $150 per unit. Production was 111,000 units, while sales were 106,560 units.

a. Determine whether variable costing income from operations is less than or greater than absorption costing income from operations. Variable costing income from operations is less than absorption costing.

b. Determine the difference in variable costing and absorption costing income from operations. $

Flexible Budgeting

At the beginning of the period, the Fabricating Department budgeted direct labor of $36,800 and equipment depreciation of $26,000 for 2,300 hours of production. The department actually completed 2,900 hours of production.

Determine the budget for the department, assuming that it uses flexible budgeting. $

Production Budget

Pasadena Candle Inc. projected sales of 44,000 candles for the year. The estimated January 1 inventory is 3,100 units, and the desired December 31 inventory is 5,000 units.

Prepare a production budget report in units for Pasadena Candle Inc. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Pasadena Candle Inc.
Production Budget
For the Year Ending December 31
Expected units to be sold
Desired ending inventory, December 31
Total units available
Estimated beginning inventory, January 1
Total units to be produced

Direct Materials Purchases Budget

Pasadena Candle Inc. budgeted production of 750,000 candles for the year. Wax is required to produce a candle. Assume 14 ounces of wax is required for each candle. The estimated January 1 wax inventory is 17,600 pounds. The desired December 31 wax inventory is 13,400 pounds. If candle wax costs $1.90 per pound, determine the direct materials purchases budget for the year. (One pound = 16 ounces.) Round all computed answers to the nearest whole dollar. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Pasadena Candle Inc.
Direct Materials Purchases Budget
For the Year Ending December 31
Pounds of wax required for production:
Candles
Desired ending inventory, December 31
Total units available
Estimated beginning inventory, January 1
Total pounds to be purchased
Unit price	$
Total direct materials to be purchased	$

Direct Labor Cost Budget

Pasadena Candle Inc. budgeted production of 48,000 candles for the year. Each candle requires molding. Assume that two minutes are required to mold each candle. If molding labor costs $11.25 per hour, determine the direct labor cost budget for the year.

Round hourly rate to nearest cent, if required.

Pasadena Candle Inc. Direct Labor Cost Budget For the Year Ending December 31
Hours required for assembly:
Candles				min.
Convert minutes to hours				min.
Molding hours				hrs.
Hourly rate			$
Total direct labor cost			$

Direct Materials Variances

Bellingham Company produces a product that requires 10 standard pounds per unit. The standard price is $10 per pound. If 5,000 units used 49,000 pounds, which were purchased at $10.4 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct materials price variance	$	Unfavorable
b. Direct materials quantity variance	$	Favorable
c. Direct materials cost variance	$	Unfavorable

Direct Labor Variances

Bellingham Company produces a product that requires 9 standard direct labor hours per unit at a standard hourly rate of $20.00 per hour. If 3,800 units used 34,900 hours at an hourly rate of $19.00 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct labor rate variance	$	Favorable
b. Direct labor time variance	$	Unfavorable
c. Direct labor cost variance	$	Favorable

Factory Overhead Controllable Variance

Bellingham Company produced 2,500 units of product that required 3.5 standard direct labor hours per unit. The standard variable overhead cost per unit is $4.40 per direct labor hour. The actual variable factory overhead was $39,890. Determine the variable factory overhead controllable variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. $ Unfavorable