Inventory, January 1, 2017: O basketballs Inventory, December 31, 2017: Fixed manufacturing costs: 20,000 basketballs $380,000 $660,000 Fixed administrative costs: 3 per basketball 4 per basketball Direct materials costs: Direct labor costs: 2$ 1. Calculate the breakeven point (in basketballs sold) in 2017 under: a. Variable costing b. Absorption costing Required 2. Suppose direct materials costs were $4 per basketball instead. Assuming all other data are the same, calculate the minimum number of basketballs Camino must have sold in 2017 to attain a target operating income of $120,000 under: a. Variable costing b. Absorption costing
Inventory, January 1, 2017: O basketballs Inventory, December 31, 2017: Fixed manufacturing costs: 20,000 basketballs $380,000 $660,000 Fixed administrative costs: 3 per basketball 4 per basketball Direct materials costs: Direct labor costs: 2$ 1. Calculate the breakeven point (in basketballs sold) in 2017 under: a. Variable costing b. Absorption costing Required 2. Suppose direct materials costs were $4 per basketball instead. Assuming all other data are the same, calculate the minimum number of basketballs Camino must have sold in 2017 to attain a target operating income of $120,000 under: a. Variable costing b. Absorption costing
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Variable and absorption costing and breakeven points. Camino, a leading firm in the sports industry, produces basketballs for the consumer market. For the year ended December 31, 2017, Camino sold 400,000 basketballs at an average selling price of $12 per unit. The following information also relates to 2017 (assume constant unit costs and no variances of any kind):
Transcribed Image Text:Inventory, January 1, 2017:
O basketballs
Inventory, December 31, 2017:
Fixed manufacturing costs:
20,000 basketballs
$380,000
$660,000
Fixed administrative costs:
3 per basketball
4 per basketball
Direct materials costs:
Direct labor costs:
2$
1. Calculate the breakeven point (in basketballs sold) in 2017 under:
a. Variable costing
b. Absorption costing
Required
Transcribed Image Text:2. Suppose direct materials costs were $4 per basketball instead. Assuming all other data are the same,
calculate the minimum number of basketballs Camino must have sold in 2017 to attain a target operating
income of $120,000 under:
a. Variable costing
b. Absorption costing
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