Problem 1

King Co. is planning production for the coming year. The information to be used is based on a projection of cost information for the current year. Projections of the following costs are as follows:

Variable Cost Per Unit:

Direct Materials $21.20

Direct Labor 14.40

Factory Overhead 13.60

Selling Costs 10.80

Total $60.00

Fixed Cost Estimates:

Production Costs $285,600

Selling and Administrative Expenses 442,400

Total $728,000

King Co. sells it product for $140.00 per unit. Compute the following, showing your calculations:

1. The Breakeven Point in units:

2. Using the same approach and assuming that fixed costs are increased by $22,000, and sales price per unit is decreased by

$20.00, compute the Breakeven Point in sales dollars.

3. Using the original figures, how many units must be sold to produce a profit of $20,000.

Problem 2

The Wynn Company had the following transactions during the current year:

1. Purchased raw materials on account for $200,000.

2. $175,000 of raw materials were used in production, of which $110,000 was direct materials and $65,000 was indirect

materials.

3. Factory labor amounted to $300,000, of which $240,000 was direct labor and $60,000 was indirect labor.

4. Actual factory overhead, other that those items already recorded amounted to $24,000. Credit Accounts Payable.

5. Production was charged with factory overhead in the amount of $120,000.

6. The jobs completed during the year had a cost of $400,000.

7. One job, costing $330,000 was sold on account for $560,000.

Required: Record the transaction above in general journal form. Omit Explanations.

Problem 3

Millersville Corporation estimates the following revenue and expenses for the 20X3:

Sales of merchandise on account $1,000,000

Collection of Cash on Accounts Receivable 950,000

Proceeds from issuance of Bond Payable 700,000

Proceeds form sale of Common Stock 500,000

Merchandise purchased on account 950,000

Payments of cash on Accounts Payable 875,000

Cash payments of operating expenses 100,000

Cash purchase of Fixed (Plant) Assets 200,000

Depreciation on Fixed (Plant) Assets 20,000

Payment of cash on Bond Payable 40,000 (includes principal and interest)

Ending Cash Balance for 20X2 was $300,000.

Required: :Prepare a Cash budget for 20X3.