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1. Meriden Company has a unit selling price of $550, variable costs per unit of $330, and fixed costs of $154,220.

Compute the break-even point in units using the mathematical equation.

Break-even point ___________ units

2. For Turgo Company, variable costs are 60% of sales, and fixed costs are $184,800. Management?s net income goal is $88,600.

Compute the required sales in dollars needed to achieve management?s target net income of $88,600.

Required sales

$ _____

3. For Kozy Company, actual sales are $1,242,000 and break-even sales are $782,460.

Compute the margin of safety in dollars and the margin of safety ratio.

Margin of safety		$
Margin of safety ratio			%

4. Montana Company produces basketballs. It incurred the following costs during the year.

Direct materials		$14,835
Direct labor		$25,314
Fixed manufacturing overhead		$10,410
Variable manufacturing overhead		$31,705
Selling costs		$21,214

What are the total product costs for the company under variable costing?

Total product costs

$

5.

Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs.

Variable Cost per Unit
Direct materials		$8.25
Direct labor		$2.70
Variable manufacturing overhead		$6.33
Variable selling and administrative expenses		$4.29
Fixed Costs per Year
Fixed manufacturing overhead		$258,400
Fixed selling and administrative expenses		$264,110

Polk Company sells the fishing lures for $27.50. During 2012, the company sold 80,600 lures and produced 95,000 lures.

IE

(a)

Assuming the company uses variable costing, calculate Polk?s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g.10.50.)

Manufacturing cost per unit

$

b.

c.

d.

6. For the quarter ended March 31, 2012, Maris Company accumulates the following sales data for its product, Garden-Tools: $321,900 budget; $331,000 actual.

Prepare a static budget report for the quarter.

MARIS COMPANY Sales Budget Report For the Quarter Ended March 31, 2012
Product Line		Budget		Actual		Difference
Garden-Tools		$		$		$	FavorableUnfavorableNeither favorable nor unfavorable

IE

7. Gundy Company expects to produce 1,252,200 units of Product XX in 2012. Monthly production is expected to range from 74,070 to 114,290 units. Budgeted variable manufacturing costs per unit are: direct materials $5, direct labor $6, and overhead $11. Budgeted fixed manufacturing costs per unit for depreciation are $4 and for supervision are $2.

Prepare a flexible manufacturing budget for the relevant range value using 20,110 unit increments. (List variable costs before fixed costs.

GUNDY COMPANY Monthly Flexible Manufacturing Budget For the Year 2012
	$	$	$
	$	$	$
	$	$	$

1. Meriden Company has a unit selling price of $550, variable costs per unit of $330, and fixed costs of $154,220. Compute the break-even point in units using the mathematical equation. Break-even point ___________ units 2. For Turgo Company, variable costs are 60% of sales, and fixed costs are $184,800. Management's net income goal is $88,600. Compute the required sales in dollars needed to achieve management's target net income of $88,600. Required sales $ _____ 3. For Kozy Company, actual sales are $1,242,000 and break-even sales are $782,460. Compute the margin of safety in dollars and the margin of safety ratio. $ Margin of safety Margin of safety ratio % 4. Montana Company produces basketballs. It incurred the following costs during the year. Direct materials Direct labor Fixed manufacturing overhead Variable manufacturing overhead Selling costs $14,835 $25,314 $10,410 $31,705 $21,214 What are the total product costs for the company under variable costing? Total product costs $ 5. Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs. Variable Cost per Unit Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses $8.25 $2.70 $6.33 $4.29 Fixed Costs per Year Fixed manufacturing overhead Fixed selling and administrative expenses $258,400 $264,110 Polk Company sells the fishing lures for $27.50. During 2012, the company sold 80,600 lures and produced 95,000 lures. IE (a) Assuming the company uses variable costing, calculate Polk's manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g.10.50.) Manufacturing cost per unit b. $ c. d. 6. For the quarter ended March 31, 2012, Maris Company accumulates the following sales data for its product, Garden-Tools: $321,900 budget; $331,000 actual. Prepare a static budget report for the quarter. MARIS COMPANY Sales Budget Report For the Quarter Ended March 31, 2012 Product Line GardenTools IE Budget Actual Difference $ $ $ 7. Gundy Company expects to produce 1,252,200 units of Product XX in 2012. Monthly production is expected to range from 74,070 to 114,290 units. Budgeted variable manufacturing costs per unit are: direct materials $5, direct labor $6, and overhead $11. Budgeted fixed manufacturing costs per unit for depreciation are $4 and for supervision are $2. Prepare a flexible manufacturing budget for the relevant range value using 20,110 unit increments. (List variable costs before fixed costs. GUNDY COMPANY Monthly Flexible Manufacturing Budget For the Year 2012 $ $ $ $ $ $ Ans 1. Break Even Point in Units = Fixed Cost / Contribution Per Unit Contribution Per unit = Sales Price Per unit - Variable Cost Contribution Per Unit = 550 - 330 = $220 Break Even Point = 154,220 / 220 = 701 Units Ans 2. Required Sales = Fixed Cost + Target net income / Contribution Margin Contribution Margin = 100 - 60 (Variable Cost) =40% Required Sales = 184,800 + 88,600 / 40% Required Sales = $683,500 Ans 3. Calculation of Margin of Safety and Margin of Safety Ratio: Margin of Safety = Actual Sales - Break Even sales Margin of Safety = 1,242,000 - 782,460 = $459,540 Margin of Safety Ratio = 459,540 / 1,242,000 = 37% Ans 4. Calculation of Total Product Cost under Variable Costing: Direct Materials Direct Labor Variable Manufacturing Overheads Total Product Cost Amount($) 14,835 25,314 31,705 71,854 Ans 5. Calculation of Manufacturing Cost Per Unit under Variable Costing: Direct Materials Direct Labors Variable Manufacturing Overheads TOTAL Manufacturing Cost Per Unit = $17.28 Amount Per Unit ($) 8.25 2.70 6.33 17.28 5. B. Ans 6. Static Budget Report for MARIS COMPANY: Product Line Garden Tools Budget ($) 321,900 Actual ($) 331,000 Difference ($) -9,100 Unfavorable Ans 7. Gundy Company Monthly Flexible Manufacturing Budget: Direct Materials Direct Labor 74,070 Units 370,350 444,420 94,180 Units 470,900 565,080 114,290 Units 571,450 685,740 Overhead Fixed Cost: Depreciation Supervision Total 814,770 1,035,980 1,257,190 417,400 208,700 2,255,640 417,400 208,700 2,698,060 417,400 208,700 3,140,480 Working: Calculation of Depreciation: Annual Production 1,252,200 Units Depreciation Per unit = $4 Total Depreciation for the Year = 1,252,200 x 4 = $5,008,800 For one Month = 5,008,800 / 12 = $417,400 Calculation of Supervision: Annual Production 1,252,200 Units Supervision Per unit = $2 Total Supervision Per Unit for the Year = 1,252,200 x 2 = $2,504,400 For one Month = 2,504,400 / 12 = $208,700 Missing parts for Question 7 Ans 1. Break Even Point in Units = Fixed Cost / Contribution Per Unit Contribution Per unit = Sales Price Per unit - Variable Cost Contribution Per Unit = 550 - 330 = $220 Break Even Point = 154,220 / 220 = 701 Units Ans 2. Required Sales = Fixed Cost + Target net income / Contribution Margin Contribution Margin = 100 - 60 (Variable Cost) =40% Required Sales = 184,800 + 88,600 / 40% Required Sales = $683,500 Ans 3. Calculation of Margin of Safety and Margin of Safety Ratio: Margin of Safety = Actual Sales - Break Even sales Margin of Safety = 1,242,000 - 782,460 = $459,540 Margin of Safety Ratio = 459,540 / 1,242,000 = 37% Ans 4. Calculation of Total Product Cost under Variable Costing: Direct Materials Direct Labor Variable Manufacturing Overheads Total Product Cost Amount($) 14,835 25,314 31,705 71,854 Ans 5. Calculation of Manufacturing Cost Per Unit under Variable Costing: Direct Materials Direct Labors Variable Manufacturing Overheads TOTAL Manufacturing Cost Per Unit = $17.28 Amount Per Unit ($) 8.25 2.70 6.33 17.28 5. B. Ans 6. Static Budget Report for MARIS COMPANY: Product Line Garden Tools Budget ($) 321,900 Actual ($) 331,000 Difference ($) -9,100 Unfavorable Ans 7. Gundy Company Monthly Flexible Manufacturing Budget: Direct Materials Direct Labor 74,070 Units 370,350 444,420 94,180 Units 470,900 565,080 114,290 Units 571,450 685,740 Overhead Fixed Cost: Depreciation Supervision Total 814,770 1,035,980 1,257,190 417,400 208,700 2,255,640 417,400 208,700 2,698,060 417,400 208,700 3,140,480 Working: Calculation of Depreciation: Annual Production 1,252,200 Units Depreciation Per unit = $4 Total Depreciation for the Year = 1,252,200 x 4 = $5,008,800 For one Month = 5,008,800 / 12 = $417,400 Calculation of Supervision: Annual Production 1,252,200 Units Supervision Per unit = $2 Total Supervision Per Unit for the Year = 1,252,200 x 2 = $2,504,400 For one Month = 2,504,400 / 12 = $208,700 Missing parts for Question 7