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Shanti, a leading firm in the semiconductor industry, produces digital integrated circuits (ICs) for the communications and defense markets. For the year ended December 31,
Shanti, a leading firm in the semiconductor industry, produces digital integrated circuits (ICs) for the communications and defense markets. For the year ended December 31, 2013, Shanti sold 205,600 ICs at an average selling price of $26 per unit. The following information also relates to 2013 (assume constant unit costs and no variances of any kind): (Click the icon to view the 2013 data.) Read the requirements. Requirement 1. How many integrated circuits did Shanti produce in 2013? Shanti produced units in 2013. Requirement 2. Calculate the breakeven point (number of ICs sold) in 2013 under: (a) Variable costing and (b) Absorption costing. a. Calculate the breakeven point in units under variable costing. Breakeven point under variable costing il Data Table X i uit 32,800 ICs 27,200 ICs ce $ 1,400,000 2 Inventory, January 1, 2013: Inventory, December 31, 2013: Fixed manufacturing costs: Fixed administrative costs: : Direct materials costs: Direct labor costs: : ia $ 821,700 $ 7 per IC $ 6 per IC ng Print Done b. Calculate the breakeven point in units under absorption costing. First, select the formula and enter the amounts. Then solve for Q in the next step. (Assume "Q" is the breakeven point in units. Abbreviations used: BEP = breakeven point, CM = contribution margin, and Mfg = manufacturing.) BEP under absorption Breakeven units + [ costing x( x( )]7 )]1 Q = Q Q (the breakeven point) under absorption costing is units. Requirement 3. Due to difficulties in obtaining high-quality silicon, Shanti expects that direct materials costs will increase to $10 per IC in 2014. Assuming all other data are the same, calculate the minimum number of ICs Shanti must sell in 2014 to break even under: (a) Variable costing and (b) Absorption costing. (Round your answers up to the nearest whole unit.) a. Variable costing. The minimum number of IVs Shanti must sell in 2014 to break even under variable costing is units. b. Absorption costing The minimum number of IVs Shanti must sell in 2014 to break even under absorption costing is units
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