Grand Canyon Manufacturing Inc. produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity:Lower Limit Upper LimitProduction (units)4.0006,000Production costs:Direct materials$ 60,000$ 90,000Direct labor.80,000120,000Overhead:Indirect materials25,00037,500Indirect labor40,00050,000Depreciation20,00020,000Selling and administrative expenses:Sales salaries50,00065,000Office salaries30,00030,000Advertising.45,00045,000Other15,00020,000Total$365,000$477,500REQUIRED:2. Calculate the break-even point in units and dollars. (Hint: First use the high-low method illustrated in Chapter 4 to separate costs into their fixed and variable components.)3. Prepare a break-even chart. 2.Break-even sales volume (units)a. Total costs at upper production limitb. Total costs at lower production limitc. Change in total costsd. Total units at upper production limite. Total units at lower production limitf. Change in total unitsg. Variable cost per unit (c + f)56.25h. Units produced with lower production limiti. Variable costs (c x d)j. Fixed costs (b – i)k. Selling price per unit - Variable cost per unitI. Break-even sales volume in units (j + k)43.753,200Break-even sales volume (dollars)a. Total fixed costsb. 1- (Variable cost per unit + Sales price per unit)c. Break-even sales volume in dollars (a + b)140,000$320,0003.For each unit level of sales, enter the total sales dollars and total costs. The chart at right will be plotted as you enter the amounts.After all points are plotted, grab and move the labels provided at the left to identify each area.UnitsSales $Costs $1,000E2,0003,0004,0005,0006,0007,000

Name: Grand Canyon Manufacturing Inc. produces and sells a product with a p
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: Grand Canyon Manufacturing Inc. produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity:Lower Limit Upper LimitProduction (units)4.0006,000Production

Variable cost is the cost that changes with the change in production levels. It is directly proportional to the units produced. Fixed cost is the other indirect cost incurred by the business. These are fixed in nature and do not change with the change in production level. The high-low method involves taking the highest level of activity and the lowest level of activity and comparing the total costs at each level. Variable Cost per Unit = Highest Activity Cost – Lowest Activity Cost Highest units- Lowest units Break-even sales is the dollar amount of revenue at which a business earns a profit of zero i.e. No Profit No Loss. This sale amount exactly covers the underlying fixed costs of a business, plus all the variable costs associated with the sales. The Break-even point is the break-even quantity in units, where the business earns no profit no loss. The formula to compute break-even point: Break-even Sale in Units = Fixed Cost ÷ Contribution Margin per unit Break-even Sales = Fixed Cost ÷ Contribution Margin RatioComputation of Variable Cost and Fixed Cost Fixed Cost Computation: Computation of Break-even point

Business

Accounting

Grand Canyon Manufacturing Inc. produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity: Lower Limit Upper Limit Production (units) 4,000 6,000 Production costs: $ 60,000 $ 90,000 Direct materials Direct labor... 80,000 120,000 Overhead: Indirect materials 25,000 37,500 Indirect labor..... 40,000 50,000 20,000 ..... Selling and administrative expenses: Depreciation . 20,000 Sales salaries .. 50,000 65,000 Office salaries. 30,000 30,000 Advertising.. 45,000 45,000 Other ... 15,000 20,000 Total... $365,000 $477,500 ..... REQUIRED: 2. Calculate the break-even point in units and dollars. (Hint: First use the high-low method illustrated in Chapter 4 to separate costs into their fixed and variable components.)

Grand Canyon Manufacturing Inc. produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity: Lower Limit Upper Limit Production (units) 4,000 6,000 Production costs: $ 60,000 $ 90,000 Direct materials Direct labor... 80,000 120,000 Overhead: Indirect materials 25,000 37,500 Indirect labor..... 40,000 50,000 20,000 ..... Selling and administrative expenses: Depreciation . 20,000 Sales salaries .. 50,000 65,000 Office salaries. 30,000 30,000 Advertising.. 45,000 45,000 Other ... 15,000 20,000 Total... $365,000 $477,500 ..... REQUIRED: 2. Calculate the break-even point in units and dollars. (Hint: First use the high-low method illustrated in Chapter 4 to separate costs into their fixed and variable components.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Required information [The following information applies to the questions displayed below.] Kubin Company's relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost per Unit $ 7.00 $ 4.00 $ 1.50 $ 5.00 $ 3.50 $ 2.50 $ 1.00 $ 0.50 Required: 1. For financial accounting purposes, what is the total product cost incurred to make 20,000 units? 2. For financial accounting purposes, what is the total period cost incurred to sell 20,000 units? 3. For financial accounting purposes, what is the total product cost incurred to make 22,000 units? 4. For financial accounting purposes, what is the total period cost incurred to sell 18,000 units? 1. Total product cost 2. Total period cost 3. Total product cost 4. Total…
Accounting.
! Required information [The following information applies to the questions displayed below.] Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: Direct Labor- Hours per unit Rims Posts 0.20 0.70 Annual Production 21,000 units 79,000 units Additional information about the company follows: a. Rims require $19 in direct materials per unit, and Posts require $15. b. The direct labor wage rate is $15 per hour. c. Rims are more complex to manufacture than Posts and they require special equipment. d. The ABC system has the following activity cost pools: Estimated Activity Activity Cost Pool Machine setups Special processing General factory Activity Measure Number of setups Machine-hours Estimated Overhead Cost Rims $ 34,760 $ 136,670 Direct labor-hours $ 819,000 110 1,000 4,200 Posts 90 0 Total 200 55,300 1,000 59,500 2. Determine the unit product cost of each product according to the ABC system. (Do not round intermediate…
1. Aladdin's Gyrocery has two product segments: falafel and gyros. Data for each product segment is as follows: Gyros Falafel Units sold 9,500 6,300 Revenue $85,500 $37,800 Variable Costs $38,000 $19,900 Traceable Fixed Costs $19,000 $12,500 Allocated Fixed Costs $7,000 $6,500 Total $21,500 -$1,100 Aladdin's is considering dropping the falafel segment. If it is dropped, 28% of allocated fixed costs are avoidable and 100% of traceable fixed costs are avoidable. In addition, if the segment is dropped, Aladdin's can sell special equipment used to make falafel for $710. If the Falafel segment is dropped, what will the new net operating income be? Round your answer to the nearest dollar. 2. Should Aladdin's Gyrocery drop the Falafel segment? No, Net Operating Income would decrease Yes, Net Operating Income would increase Yes, Net Operating Income would decrease No, Net Operating Income would increase
Rollins Company manufactures two products—S500 and T750. The company provided the following information with respect to these products: S500 T750 Estimated customer demand (in units) 5,600 4,000 Selling price per unit $ 2,400 $ 4,200 Variable expense per unit $ 1,400 $ 2,400 The company has four manufacturing departments—Fabrication, Molding, Machining, and Assemble & Pack. The capacity available in each department (in hours) and the demands that one unit of each of the company’s products makes on those departments is as follows: S500 (hours per unit) T750 (hours per unit) Capacity (in hours) Fabrication 1 2 4,000 Molding 2 2 6,000 Machining 2 0 5,000 Assemble & Pack 0 3 4,500 The company is trying to decide what product mix will maximize profits. Given that its fixed costs will not change regardless of the chosen mix, the company plans to identify the product mix that maximizes its total contribution margin. Assume the company focuses solely…
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 123,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 40 Beta Direct materials $ 15 Direct labor 34 28 Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses 22 20 30 33 27 23 Common fixed expenses 30 25 Total cost per unit $183 $ 144 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 3. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives has found a new…
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Alpha $ 30 Beta $ 12 20 Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 15 5 16 18 12 8 15 10 Total cost per unit $ 100 $ 68 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 5. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives has found a new customer…
Required information [The following information applies to the questions displayed below.] Kubin Company's relevant range of production is 12,000 to 16,000 units. When it produces and sells 14,000 units, its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost per Unit $7.30 $ 4.30 $ 1.80 $5.30 $ 3.80 $ 2.80 $ 1.30 $ 0.80 Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 14,000 units? 2. For financial accounting purposes, what is the total amount of period costs incurred to sell 14,000 units? 3. For financial accounting purposes, what is the total amount of product costs incurred to make 16,000 units? 4. For financial accounting purposes, what is the total amount of period costs incurred to sell 12,000 units? (For all requirements, do not…
! Required information [The following information applies to the questions displayed below.] Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Average Cost Per Unit Direct materials $ 5.10 Direct labor $ 2.60 $ Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense 1.60 $ 4.00 $ 2.10 $ 2.10 Sales commissions $ 1.10 Variable administrative expense $ 0.55 Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units? (Do not round intermediate calculations.) Answer is complete but not entirely correct. Total product cost $ 150,000 X
Required information [The following information applies to the questions displayed below.] Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: Direct Labor-Hours per unit 0.40 0.80 Annual Production 18,000 units 76,000 units Rims Posts Additional information about the company follows: a. Rims require $10 in direct materials per unit, and Posts require $7. b. The direct labor wage rate is $17 per hour. c. Rims are more complex to manufacture than Posts and they require special equipment. d. The ABC system has the following activity cost pools: Estimated Activity Activity Cost Pool Mach ine setups Special process ing General factory Activity Measure Number of setups Mach ine-hours Direct labor-hours Estimated Overhead Cost $ 25,080 $ 122,360 $ 702,000 Rims 80 2,000 7,200 Total 300 2,000 68,000 Posts 220 60,800 2. Determine the unit product cost of each product according to the ABC system. (Do not round intermediate…
please answer withim 30 minutes...
Lillibridge & Friends, Incorporated provides you with the following data for its single product: Sales price per unit Fixed costs (per quarter): Selling, general, and administrative (SG&A) Manufacturing overhead Variable costs (per unit): Direct labor Direct materials Manufacturing overhead SG&A Number of units produced per quarter Required: $ 60 1,500,000 4,500,000 9 12 10 6 500,000 units Compute the amounts for each of the following assuming that the production levels are within the relevant range if the number of units is 500,000 per quarter. Also calculate if the number of units increases to 600,000 per quarter. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. a. Prime cost per unit b. Contribution margin per unit c. Gross margin per unit d. Conversion cost per unit e. Variable cost per unit f. Full absorption cost per unit g. Variable production cost per unit h. Full cost per unit 500,000 units 600,000 units