Question
Little League, Inc. makes two kinds of baseball gloves - the Beginner and the Pro. Below is some relevant information for the past year (unit
Little League, Inc. makes two kinds of baseball gloves - the Beginner and the Pro. Below is some relevant information for the past year (unit means one baseball glove):
Beginner | Pro | |||
Number of units sold | 65,000 | 10,000 | ||
Sales price per unit | $65 | $100 | ||
Direct materials per unit | $10 | $20 | ||
Direct labor dollars per unit | $30 | $45 | ||
Cutting machine-hours per unit | 0.50 | 1.00 | ||
Direct labor-hours per unit | 2.00 | 3.00 |
Little League is considering the use of activity-based costing, although it currently uses traditional (simple) costing, (meaning it uses just one pool of overhead costs and one allocation base). Little League is doing some analysis at year-end to see which costing method is best. Little League incurred total overhead costs for the year of $615,000, with direct labor-hours as the only allocation base.
Using traditional costing, what are the total indirect costs allocated to each Beginner baseball glove?
a. | $16.40 | |
b. | $3.84 | |
c. | $7.68 | |
d. | $8.20 |
Lopez Corp started business operations in 2019 and the following information was collected:
units sales | 12,000 units |
selling price | $25 per unit |
contribution margin ratio | 40% |
Margin of Safety percentage | 30% |
Allen Inc produces a single product that sells for $100. Variable costs per unit equal $45. The companys total fixed costs are $78,000 at the sales level of 3,000 units. Suppose management believes that a $15,000 increase in the monthly advertising expense and a 14% reduction in the selling price will result in a 14% increase in sales. If this proposed reduction in selling price is implemented ________.
operating income will decrease by $39,780
| ||
operating income will decrease by $87,000 | ||
operating income will increase by $7,370
| ||
operating income will increase by $23,990
|
The break-even level in sales dollars is:
$180,000 | ||
$84,000 | ||
$120,000 | ||
$210,000 |
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