Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hixson Company manufactures and sells one product for $34 per unit. The company maintains no beginning or ending inventories and its relevant range of production

Hixson Company manufactures and sells one product for $34 per unit. The company maintains no beginning or ending inventories and its relevant range of production is 20,000 units to 30,000 units. When Hixson produces and sells 25,000 units, its unit costs are as follows:

Amount Per Unit
Direct materials $ 8.00
Direct labor $ 5.00
Variable manufacturing overhead $ 1.00
Fixed manufacturing overhead $ 6.00
Fixed selling expense $ 3.50
Fixed administrative expense $ 2.50
Sales commissions $ 4.00
Variable administrative expense $ 1.00

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 25,000 units? What is the total amount of period costs incurred to sell 25,000 units?

2. If 24,000 units are produced, what is the variable manufacturing cost per unit produced? What is the average fixed manufacturing cost per unit produced? (Round your answers to 2 decimal places.)

3. If 26,000 units are produced, what is the variable manufacturing cost per unit produced? What is the average fixed manufacturing cost per unit produced? (Round your answers to 2 decimal places.)

4. If 27,000 units are produced, what are the total amounts of direct and indirect manufacturing costs incurred to support this level of production?

5. What total incremental manufacturing cost will Hixson incur if it increases production from 25,000 to 25,001 units? (Round your answer to 2 decimal places.)

6. What is Hixsons contribution margin per unit? What is its contribution margin ratio? (Round "Contribution margin per unit" to 2 decimal places and "Contribution margin ratio" to 1 decimal place.)

7. What is Hixsons break-even point in unit sales? What is its break-even point in dollar sales? (Do not round your intermediate values.)

8. How much will Hixsons net operating income increase if it can grow production and sales from 25,000 units to 26,500 units?

9. What is Hixsons margin of safety at a sales volume of 25,000 units? (Do not round your intermediate values.)

10. What is Hixsons degree of operating leverage at a sales volume of 25,000 units? (Round your answer to 1 decimal places.)

image text in transcribed

Hixson Company manufactures and sells one product for $34 per unit. The company maintains no beginning or ending inventories and its relevant range of production is 20,000 units to 30,000 units. When Hixson produces and sells 25,000 units, its unit costs are as follows:

DLOUHOLUL Total product costs incurred Total period costs incurred Variable manufacturing cost per unit produced Average fixed manufacturing cost per unit produced 3. Variable manufacturing cost per unit produced Average fixed manufacturing cost per unit produced Total direct manufacturing costs incurred Total indirect manufacturing costs incurred 5. Total incremental manufacturing cost incurred 6. Contribution margin per unit Contribution margin ratio 7. Break-even point in unit sales Break-even point in dollar sales 8. Increase in net operating income 9. Margin of safety 10 Degree of operating leverage Units

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

Step: 3

blur-text-image

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

Principles Of Accounting Volume 2 Managerial Accounting

Authors: OpenStax

1st Edition

0357364805, 9780357364802

More Books

Students also viewed these Accounting questions

Question

Understand how HRM can support a sustainable competitive advantage.

Answered: 1 week ago

Question

Develop knowledge of the Italian entrepreneurial business context.

Answered: 1 week ago