Campbell Boat Company makes inexpensive aluminum fishing boats. Production is seasonal, with considerable activity occurring inthe spring and summer. Sales and production tend to decline in the fall and winter months. During year 2, the high point in activityoccurred in June when it produced 200 boats at a total cost of $157,470. The low point in production occurred in January when itproduced 37 boats at a total cost of $45,000.Requireda. Use the high-low method to estimate the amount of fixed cost incurred each month by Campbell Boat Company.b. Determine the total estimated cost if 140 boats are made.a. Fixed costb. Total estimated cost

VARIABLE COST Variable Cost is a cost that varies with the level of output. variable costs include…

Answered: Campbell Boat Company makes inexpensive…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Wet Pets Inc. makes 100-gallon plexiglass aquariums. They reported the following financial information for last year: Direct labor: 7,200 hours @ $20 per hr. Production manager salary: $60,000 Factory rent: $28,800 Equipment maintenance: $12,000 (considered a variable expense) Equipment depreciation: $12,000 Production for the year: 12,000 units Total Revenue: $1,200,000 Total aquariums sold during the period: 10,000 units Operating Income under absorption costing (after non-production expenses): $244,800 Assume that the fixed costs were the same on a per-unit basis during the prior period. What would Operating Income be under variable costing? (Round per-unit costs to the nearest cent.) Select one: O a. $228,000 b. $226,000 c. $261,600 d. $263,592 e. None of these options are correct.
Patrick’s Water Pets Inc. makes 100-gallon plexiglass aquariums. They reported the following financial information for last year: Direct labor: 4,200 hours @ $20 per hr. Production manager salary: $35,000 Factory rent: $16,800 Equipment maintenance: $7,000 (considered a variable expense) Equipment depreciation: $7,000 Production for the year: 12,000 units Total Revenue: $700,000 Total aquariums sold during the period: 10,000 units Operating Income under absorption costing (after non-production expenses): $142,800 Assume that the fixed costs were the same on a per-unit basis during the prior period.What would Operating Income be under absorption costing? (Round per-unit costs to the nearest cent.) Select one: a. $133,000 b. $153,760 c. None of these options are correct. d. $131,840 e. $152,600
Materials (pounds) 5. Clark, Inc., sells one of its products for $150 each. Sales volume averages 800 units per year. Recently, its main competitor reduced the price of its product to $130. Clark expects sales to drop dramatically unless it matches the competitor's price. In addition, the current profit per unit must be maintained. Information about the product (for production of 800) is as follows: Labor (hours) Setups (hours) Material handling (moves) Warranties (number repaired) Total Required: a. C. SQ 14,400 2,000 O O 0 O b. Calculate the non-value-added cost per unit. AQ 15,000 2.400 1,400 600 400 Actual Cost $30,000 18,000 8,000 4,000 20,000 80000 Calculate the target cost for maintaining current market share and profitability. If non-value-added costs can be reduced to zero, can the target cost be achieved?
Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows: Thalassines Kataskeves, S.A.Income Statement—Bilge PumpFor the Quarter Ended March 31 Sales $ 470,000 Variable expenses: Variable manufacturing expenses $ 124,000 Sales commissions 41,000 Shipping 19,000 Total variable expenses 184,000 Contribution margin 286,000 Fixed expenses: Advertising (for the bilge pump product line) 23,000 Depreciation of equipment (no resale value) 118,000 General factory overhead 40,000* Salary of product-line manager 125,000 Insurance on inventories 10,000 Purchasing department 44,000† Total fixed expenses 360,000 Net operating loss $ (74,000) *Common costs allocated on the basis of machine-hours. †Common costs allocated on the…
Required information [The following information applies to the questions displayed below.] Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company produced 6,850 rackets and sold 5,330. Each racket was sold at a price of $90. Fixed overhead costs are $89,050 per year, and fixed selling and administrative costs are $67,000 per year. The company also reports the following per unit variable costs for the year. Direct materials Direct labor Variable overhead Variable selling and administrative expenses Prepare an income statement under variable costing. ACES INCORPORATED Income Statement (Variable Costing) Sales Less: Variable expenses Variable cost of goods sold Vanable selling and administrative expenses Contribution margin Fixed overhead Fixed selling and administrative expenses 333 X x X > $ 89,050✔ 67,000 $479,700 335,790 $12 8 5 2 156,050 Income $ 179,740 "Red text indicates no response was expected in a cell or a formula-based calculation is…
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Astro Company sold 22,000 units of its only product and reported income of $70,200 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 46% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $154,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($54 per unit) Variable costs ($48 per unit) Contribution margin Fixed costs Income Sales level required in dollars Numerator: 3. Compute the sales level required in both dollars and units to earn $240,000 of target income for next year with the machine installed. (Do not round intermediate calculations. Round your answers to 2 decimal places. Round "Contribution margin ratio" to nearest whole percentage) Sales level required in units Numerator: $ 1,188,000 1,056,000 1…
Alberta Gauge Company, Limited, a small manufacturing company In Calgary, Alberta, manufactures three types of electrical gauges used in a variety of machinery. For many years the company has been profitable and has operated at capacity. However, In the last two years, prices on all gauges were reduced and selling expenses increased to meet competition and keep the plant operating at capacity. Second-quarter results for the current year, which follow, typify recent experience. ALBERTA GAUGE COMPANY, LIMITED Income Statement Second Quarter Req 2A Req 2B1 Req 282 Req 2C1 Req 2C2 Calculate the net impact on income before taxes for each of the three suggestions. E-Gauge Q-Gauge R-Gauge Sales Cost of goods sold Gross margin Selling and administrative expenses Income before taxes (in thousands) Q-Gauge $ 1,800 1,088 E-Gauge $ 1,150 820 R-Gauge $ 1,100 1,150 $ 712 380 $ 330 445 $ 332 $ (115) $ (285) $ (50) 235 Total $ 4,050 3,058 $ 992 1,060 $ (68) Alice Carlo, the company's president, is…
A corporation makes several products. Because of a recent lack of skilled workers, the corporation has had a shortage of available labor hours. The following per unit data pertains to the related products: Selling price Variable cost Labor hours required Multiple Choice $12,000 The company only has 1,800 labor hours available next month. The company can only sell 800 units of each product a month. What is the maximum amount of contribution margin that it can generate next month? $19,000 $19,600 LO $30 $20 1 $19,800 ES $80 $40 6 CH $42 $20 2
Vernon Boat Company makes inexpensive aluminum fishing boats. Production is seasonal, with considerable activity occurring in the spring and summer. Sales and production tend to decline in the fall and winter months. During year 2, the high point in activity occurred in June when it produced 205 boats at a total cost of $163,890. The low point in production occurred in January when it produced 38 boats at a total cost of $52,000. Required a. Use the high-low method to estimate the amount of fixed cost incurred each month by Vernon Boat Company. b. Determine the total estimated cost if 110 boats are made. a. Fixed cost b. Total estimated cost
I. O'Toole Glassworks, Co. in Dublin, Ireland, is a manufacturer of glass bottles. The company has been affected by competition from plastic bottles and is currently operating at between 65 and 70 percent of maximum capacity. The company at present reports profits on an absorption costing basis but with the high fixed costs associated with the glass container industry and a substantial difference between sales volumes and production in some months, the accountant has been criticized for reporting widely different profits from month to month. To counteract this criticism, he is proposing in future to report profits based on marginal costing and in his proposal to management lists the following reasons for wishing to change (currency in Euro, €): A. Marginal costing provides for the complete segregation of fixed costs, thus facilitating closer control of production costs." B. It eliminates the distortion of interim profit statements which occur when there are seasonal fluctuations in…
Andy’s Water Pets Inc. makes 100-gallon plexiglass aquariums. They reported the following financial information for last year: Direct labor: 9,000 hours @ $20 per hr. Production manager salary: $75,000 Factory rent: $36,000 Equipment maintenance: $15,000 (considered a variable expense) Equipment depreciation: $15,000 Production for the year: 12,000 units Total Revenue: $1,500,000 Total aquariums sold during the period: 15,000 units Operating Income under variable costing (after non-production expenses): $306,000 Assume that the fixed costs were the same on a per-unit basis during the prior period.What would Operating Income be under absorption costing? (Round per-unit costs to the nearest cent.) Select one: a. $341,235 b. None of these options are correct. c. $270,765 d. $337,500 e. $274,500

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