Nature's Own makes three types of wood flooring: Oak, Hickory, and Cherry. The company's tax rate is 40 percent. The following costs are expected for the year:Oak Hickory CherryVariable cost (on a per-square-yard basis)Direct materialDirect laborProduction overheadSelling expenseAdministrative expenseFixed overhead$304,00096,00080,000$10.403.602.001.000.40Fixed selling expenseFixed administrative expensePer-square-yard expected selling prices are as follows: Oak, $32.80; Hickory, $16.00; and Cherry, $50.00. The expected sales mix is as follows:Oak Hickory CherrySquare yards 3,600 28,800 2,400a. Calculate the break-even point for the year.Note: Round to the next highest whole unit.0* "bags"Oak:Hickory:Cherry:x square yardsx square yardsx square yards$6.50 $17.600.80 12.800.30 3.500.50 4.000.20 0.60b. How many square yards of each product are expected to be sold at the break-even point?Note: Round CM% to the nearest tenth of a percent. c. If the company wants to earn pre-tax profit of $320,000, how many square yards of each type of flooring would it need to sell? How much total revenue would be required?Note: Round your answer to the next highest whole unit.UnitsRevenueOak:Hickory:Cherry:Total0x square yards $0x square yards $0x square yards $$d. If the company wants to earn an after-tax profit of $272,000, determine the revenue needed using the contribution margin percentage approach.Note: Round CM% to the nearest tenth of a percent and your final answer to the nearest whole dollar.$0Xe. If the company achieves the revenue determined in (d), what is the (1) breakeven point in dollars, and the margin of safety (2) in dollars and (3) as a percentage?• Note: In your breakeven point in dollars calculation, round CM% to the nearest tenth of a percent; round your final answer to the nearest whole dollar.• Note: Round margin of safety in dollars to the nearest whole dollar.• Note: Round the margin of safety percentage to the nearest tenth of a percent (for example, round 5.6666% to 5.7%.)Breakeven in dollars: $ 2,752,2940 x0 x0 x0 xMargin of safety in dollars: $ 0Margin of safety percentage: 0XX* %

Break even point is the point at which there is no profit nor loss. In-order to calculate the break…

Answered: Fixed selling expense Fixed…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 1PB: Classify costs Cromwell Furniture Company manufactures sofas for distribution to several major...

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Brody Company makes industrial cleaning solvents. Various chemicals, detergent, and water are mixed together and then bottled in 10-gallon drums. Brody provided the following information for last year: Last year, Brody completed 100,000 units. Sales revenue equaled 1,200,000, and Brody paid a sales commission of 5 percent of sales. Required: 1. Calculate the direct materials used in production for last year. 2. Calculate total prime cost. 3. Calculate total conversion cost. 4. Prepare a cost of goods manufactured statement for last year. Calculate the unit product cost. 5. Prepare a cost of goods sold statement for last year. 6. Prepare an income statement for last year. Show the percentage of sales that each line item represents.
SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = 543,000 + 1.34X, where X equals number of smokers. Last year, SmokeCity produced 20,000 smokers. Actual overhead costs for the year were as expected. Required: 1. What is the driver for the overhead activity? 2. What is the total overhead cost incurred by SmokeCity last year? 3. What is the total fixed overhead cost incurred by SmokeCity last year? 4. What is the total variable overhead cost incurred by SmokeCity last year? 5. What is the overhead cost per unit produced? 6. What is the fixed overhead cost per unit? 7. What is the variable overhead cost per unit? 8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 19,500 units and (b) 21,600 units. (Round your answers to the nearest cent.) Explain this outcome.
Natur-Gro, Inc., manufactures composters. Based on past experience, Natur-Gro has found that its total annual overhead costs can be represented by the following formula: Overhead cost = 264,000 + 1.42X, where X equals number of composters. Last year, Natur-Gro produced 30,000 composters. Actual overhead costs for the year were as expected. Total overhead for per unit was a. 1.42 b. 8.80 c. 11.63 d. 10.22
Han Products manufactures 21,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials$ 3.50Direct labor9.00Variable manufacturing overhead2.50Fixed manufacturing overhead9.00Total cost per part$ 24.00 An outside supplier has offered to sell 21,000 units of part S-6 each year to Han Products for $20 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $71,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier’s offer?
Your Company has the capacity to produce 80,000 units. It produces and sells 70,000 units of a product each year. At this level of activity, Clark Company incurs the following unit costs:Direct materials $18Direct labor 25Variable overhead 9Fixed overhead 10Variable S&A 7Fixed S&A 12A special order for 9,000 units under consideration would require the one-time rental of a special machine. The rental is for $36,000. If the order is accepted, $5 of the variable S&A can be avoided. What is the least amount the company can charge per unit in this special pricing decision? (Think breakeven.) a) $61 b) $56 c) $58 d) $59 e) $57
Product A is produced with the following costs: 1) Paper material P20 per unit 2) Plastic P15 per unit 3) Rubber P27000 per 12000 units. 4) Labor P4 per unit 5) Indirect material costs P2.5 per unit The company pays P60,000 for rent per month for factory. It depreciates a P300,000 vehicle used for delivery and a P210,000-machine used for manufacturing, both have a life of 5 years. a. How much should be the total overhead costs if in a month, 1000 units were produced? b. How much should be the direct material costs if in a month, 1,500 units were produced? c. How much is the total conversion cost if 3,000 units are produced? d.How much is the total product cost per unit if in a month of production 4,750 units were produced? e. How many units should be sold in a month to break even?
Your Company uses a total of 13,000 units of a part that are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials. $2.90 Direct labor... $7.50 Variable manufacturing overhead... $8.00 Supervisor's salary. $3.40 Depreciation of special equipment.. $1.80 Other fixed costs... $7.00 An outside supplier has offered to make the part and sell it to the company for $29.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs can be avoided. If the part were purchased instead of produced, $2 of the other overhead could be avoided. In addition, the space used to make the part could be used to make more of one of the company's other products, generating an additional segment margin of $25,000 per year for that product. What would be the impact on the company's overall net operating income of buying the part? O A. Decrease by $79,000 per year. O B.…
Edge Manufacturing produces two types of entry doors: Deluxe and Standard. The assignment basis for support costs has been direct labor dollars. For 2009, Edge Manufacturing compiled the following data for the two products: Deluxe Standard Sales units $50,000 $400,000 Sales price per unit $650.00 $475.00 Direct material and labor costs per $180.00 $130.00 unit Manufacturing support costs per unit $ 80.00 $120.00 Last year, Edge Manufacturing purchased an expensive robotics system to allow for more decorative door products in the deluxe product line. The CFO suggested that an ABC analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign. She obtained the following ABC information for 20X5: Cost Driver Activity Setups Machine- # of machine Cost Total Deluxe Standard # of setups $ 500,000 $44,000,000 | 600,000 300,000 |300,000 500 400 100 related hours Packing # of shipments $ 5,000,000 | 250,000 |50,000 200,000 N.B.: # = number Required:…
Selma Corporation uses Part PB7 in one of its products. The company's Accounting Department reports the following costs to produce 7,000 units of the PB7 that are needed every year. Direct materials $7.00 per unit Direct labour $6.00 per unit Variable overhead $5.60 per unit Supervisor's salary $4.70 per unit Depreciation of special equipment $1.50 per unit Allocated general overhead $5.40 per unit An outside supplier has offered to make the part and sell it to the company for $28.30 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $9,000 of these allocated general overhead costs would be avoided. Required: Should Selma Corporation buy PB7 from the supplier or continue…
ABC Corporation has the following estimated cost information for the upcoming year: a. Direct materials $100,000. b. Indirect Materials: $20,000. c. Direct labor: $150,000. d. Indirect labor: $70,000. e. Other MOH: $50,000. f. Sales commissions: $25,000. g. Advertising expense: $51,000. h. Rent on factory building: $35,000. i. Rent on office building: $40,000. The company estimated that 10,500 machine hours and 20,000 direct labor hours will be worked during the upcoming year. The company uses direct labor hours as the allocation base. What is the POHR rate for the company?
Trippett Industries manufactures cleaning products. During the year, the company spent $600,000 on chemicals and $728,000 on conversion costs. Overhead is allocated at a rate of 180% of direct labor costs. How much did the company spend on manufacturing overhead during the year? Multiple Choice $260,000. $404,444. $468,000. $128,000.
Ho Cabinet Company has developed the following overhead cost formulas: Overhead Cost Cost Formula Depreciation $600 Lubrication $150 plus $0.70 per machine hour Utilities $0.50 per machine hour Based on these cost formulas, the total overhead cost expected for Ho Cabinet Company if 1,200 machine hours are worked is:

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