Question 3

(a)PolaroidCorp. has prepared its Income Statement for the recent quarter ended March 31, 2020 as follows:-

$$

Sales (46,000 units)920,000

Less: Variable costs598,000

Fixed costs180,000778,000

Net income142,000

The company is regularly analyzing its cost data and finding ways to optimize its profits.

Required:

Calculate the following in planning for the next quarter:-

(i)Break-even point ( BEP ) in sales dollars(2 marks)

(ii)The level of sales ($) required to achieve target profit of $180,000(2 marks)

(iii)The profit or loss if the normal sales level is expected to be $750,000 per quarter

(2 marks)

(b)BerjayaCorporationestimates that annual manufacturing overhead costs will

be$ 4,800,000for2020.The actual overhead costs at the end of 2020 are

$ 5,000,000.Activitybaseinformationfor2020are as follows:

Activity BaseEstimated Actual

Direct Labor Cost$3,200,000$3,400,000

Direct Labor Hours240,000262,000

Required :

(i)Calculate the predetermined overhead rate for each activity base.

( 2 marks )

(ii)Calculatethe amount of overhead applied in 2020 for each activity base.

( 2 marks )

(Total 10 marks)