Azkaban Recors is a new business in the industry. They are currently producing guitar and flutes and are planning to add violins in their instruments. Based on the study conducted, the following are cost data related to the creation of two types of violins. Type 1 ($) Type 2 ($)Direct Materials110 per unit170 per unitDirect Labor170 per unit40 per unitFixed factory overhead1,6004,797Variable factory overhead14 per unit62 per unitVariable selling expense7 per unit11 per unitCompute for the number of violins sales which would give Azkaban the same operating income when they choose either of the types detailed above.

Answered: Compute for the number of violins sales…

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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Azkaban Recors is a new business in the industry. They are currently producing guitar and flutes and are planning to add violins in their instruments. Based on the study conducted, the following are cost data related to the creation of two types of violins.

	Type 1 ($)	Type 2 ($)
Direct Materials	110 per unit	170 per unit
Direct Labor	170 per unit	40 per unit
Fixed factory overhead	1,600	4,797
Variable factory overhead	14 per unit	62 per unit
Variable selling expense	7 per unit	11 per unit

Compute for the number of violins sales which would give Azkaban the same operating income when they choose either of the types detailed above.

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Number of violins at which operating income of both the types will be same at the point at which cost of both the types is same.

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