Question
The Rosen Company makes deluxe bookcases to special order. The Controller has given you, her newly hired assistant the task of computing various types of
The Rosen Company makes deluxe bookcases to special order. The Controller has given you, her newly hired assistant the task of computing various types of costs for the year ending December 31, 2019. You are troubled because all the data produced by the routine accounting system do not distinguish between variable and fixed costs.
After talking to various managers and laboring with statistical regressions, you have identified various cost behavior patterns to your satisfaction. You have determined a breakeven point of $360,000. Your computations were relatively easy because Rosen's policy is not to carry inventories. Instead, the company finishes pending orders sometime in December and gives all employees vacations that end in early January.
The income statement included a gross margin of $130,000, sales of $600,000, direct labor of $170,000, and direct materials used of $220,000. The contribution margin was $150,000, and the variable manufacturing overhead was $20,000. REQUIRED: Compute the following. You need not work these in sequence.
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Fixed manufacturing overhead.
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Variable marketing and administrative costs.
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Fixed marketing and administrative costs.
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