MANAGERIAL ACCOUNTING

MGRL A/C

 

1. Production in 2010 for YFZ Bikes was at its highest point in the month of June when 40 units were produced at a total cost of $600,000. The low point in production was in January when only 15 units were produced at a cost of $340,000. The company is preparing a budget for 2008 and needs to project expected fixed cost for the budget year. 

 

Required:

 

1. Using the high/low method, the projected variable rate per unit  is:

 

1.      b) Using the high/low method, the projected amount of fixed cost is:

2.  During its first year of operations, ACC Company paid $4,000 for direct materials and $8,500 for production workers’ wages. Indirect manufacturing costs on the production facilities amounted to $7,500 while general, selling, and administrative expenses totaled $3,000. The company produced 5,000 units and sold 4,000 units at a price of $7.50 a unit.

 

What is the amount of Cost of Goods Sold for the first year? 

 

3. During its first year of operations, CAC Company paid $23,000 for direct materials and $18,500 for production workers’ wages. Indirect manufacturing costs on the production facilities amounted to $16,500 while general, selling, and administrative expenses totaled $3,000. The company produced 16,000 units and sold 14,000 units at a price of $8.50 a unit. 

 

What is the average cost per unit manufactured? 

 

4.Grandle Corporation sells products for $65 each that have variable costs of $40 per unit. Grandle’s fixed cost is $350,000.

Required: Calculate the contribution margin per unit, then use the per unit contribution margin approach
to find the break-even point in units and dollars.

 5. The following information is for a product of Lazarus Company:
Last year, the variable cost per unit was $22. Total fixed costs were $800,000. At a volume of 170,000 units, the company achieved a profit of $50,000.
Required: What was the unit sales price for the product last year? 
   6. The following information is for a product manufactured and sold by Rivera Corporation: 
 Sales price per unit, $35 Variable cost per unit, $20 Total fixed costs, $300,000 Last year, Rivera earned a profit of $30,000.
Required: (a) How many units did Rivera sell last year? (b) Rivera’s managers are considering decreasing the sales price to $30 in an effort to increase market share. Also, the company wants a profit of $80,000. How many units would it have to sell at the lower selling price to achieve this target? 
7.  Chan Company incurs annual fixed costs of $80,000. Variable costs are $6.00 per unit, and the sales price is $10 per unit. Chan desires to earn an annual profit of $40,000. Required: Use the contribution margin ratio approach to determine the sales volume in dollars needed to earn the desired profit.   

 8.  Bristol Company produces a product that sells for $80 per unit and has variable costs of $50 per unit. Bristol’s annual fixed costs are $240,000, and the company wishes to earn a profit of $60,000. 

Required: Use the equation method
to determine the sales volume in units and dollars required to earn the desired profit. 

 9.Luxlawn, Inc. produces and sells electric lawn mowers for $220 each. The variable costs of each mower total $160 while total monthly fixed costs are $24,000. Current monthly sales are $99,000. The company is considering a proposal that will increase the selling price by 10%, increase total fixed costs by 10% and increase unit sales to 500 units per month. Required: 1) Compute the company’s current break-even point in units and dollars. 2) What is the company’s current margin of safety in units, dollars, and percentage?
 10.
The Pargo Company makes and sells two products, as follows:  
  The Pargo Company expects to incur annual fixed costs of $175,000. The relative sales mix of the products is 75% of A and 25% of unit of B. Required:
1) Determine the total number of units of products (A and B combined) that Pargo must sell to break even. 2) What is the number of units of A and of B that Pargo would expect to sell at the break-even point?