Unit 5 Exercises Weight 3% of the final grade Due no later than 11:00 p.m. on Sunday of Unit 5 Objectives [ULO 5.1, 5.2, 5.3, 5.4, 5.5] Evaluation and Feedback Unit 5 will be marked in its entirety out of 100. The following scale indicates the criteria students are to adhere to, and their relative weights to the assignment overall. Activity/Competencies Demonstrated % of Final Grade Question 1 Determine service department cost allocation /24 Question 2 Calculating break-even /20 Question 3 Identify unit costs using variable costing, absorption costing. Prepare Income Statements under each method and reconcile. /56 Total /100 Exercise Questions Question 5.1 (Total: 24 marks) Micro Brew Manufacturing Company has two Service Departments-Custodial Services and Maintenance-and three Production Departments-Brewing, Bottling, and Packaging. Micro Brew allocates the cost of Custodial Services on the basis of square metres and Maintenance on the basis of labour hours. Budgeted operating data for the year just completed follow: Service Departments Operating Departments Custodial Maintenance Brewing Bottling Packaging Budgeted costs before allocation $18,000 $8,000 $80,000 $50,000 $90,000 Square metres 1,000 10,000 5,000 22,000 13,000 Labour-hours - - 4,000 8,000 8,000 Required: 1. Prepare a schedule, which allocates Service Department costs to the Production Departments by the direct method. 2. Prepare a schedule, which allocates Service Department costs to the Production Departments by the step-down method, allocating Custodial Services first. Question 5.2 (Total: 20 marks) Thor Company manufactures one product that is sold for $80 per unit. The following information pertains to the companys first year of operations in which it produced 40,000 units and sold 35,000 units. Variable costs per unit: Manufacturing: Direct materials $24 Direct labour $14 Variable manufacturing overhead $2 Variable selling and administrative $4 Fixed costs per year: Fixed manufacturing overhead $800,000 Fixed selling and administrative expenses $496,000 Required: 1. What is the companys break-even point in unit sales? Is it above or below the actual sales volume? Question 5.3 (Total: 56 marks) Loki Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $95 Units in beginning inventory 100 Units produced 6,220 Units sold 5,720 Units in ending inventory 600 Variable costs per unit: Direct materials $42 Direct labour $27 Variable manufacturing overhead $1 Variable selling and administrative $6 Fixed costs: Fixed manufacturing overhead $62,220 Fixed selling and administrative $38,000 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. Required: 1. What is the unit product cost for the month under variable costing? 2. What is the unit product cost for the month under absorption costing? 3. Prepare an income statement for the month using the contribution format and the variable costing method. 4. Prepare an income statement for the month using the absorption costing method. 5. Reconcile the variable costing and absorption costing operating incomes for the month