QUESTION 1 Valencia Manufacturing Company manufactures and sells musical gadgets. The business earm Operating Income of $220,000 in 2018, when selling price per unit was $200, and the president of Valer is under pressure to increase operating income in 2019. Data for variable cost per unit and total fixed cc were as follows: Variable expenses per unit: Direct Material $40 $32 $18 90 Direct Labour Variable Manufacturing Overhead Fixed expenses: Fixed Manufacturing Overhead Fixed Selling Costs Fixed Administrative Costs $190,000 $115,000 $135,000 Required: (a) Using the equation method, calculate the number of units sold in 2018. Given the sales units calculated in Part (a), prepare a contribution margin income statement f year ended December 31, 2018, detailing the composition of total fixed costs and clearly sho contribution and net income. (b) (e) Calculate Valencia's break-even point in units and in sales dollars. (d) Calculate the margin of safety in units and in sales dollars.
QUESTION 1 Valencia Manufacturing Company manufactures and sells musical gadgets. The business earm Operating Income of $220,000 in 2018, when selling price per unit was $200, and the president of Valer is under pressure to increase operating income in 2019. Data for variable cost per unit and total fixed cc were as follows: Variable expenses per unit: Direct Material $40 $32 $18 90 Direct Labour Variable Manufacturing Overhead Fixed expenses: Fixed Manufacturing Overhead Fixed Selling Costs Fixed Administrative Costs $190,000 $115,000 $135,000 Required: (a) Using the equation method, calculate the number of units sold in 2018. Given the sales units calculated in Part (a), prepare a contribution margin income statement f year ended December 31, 2018, detailing the composition of total fixed costs and clearly sho contribution and net income. (b) (e) Calculate Valencia's break-even point in units and in sales dollars. (d) Calculate the margin of safety in units and in sales dollars.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:QUESTION 1
Valencia Manufacturing Company manufactures and sells musical gadgets. The business earm
Operating Income of $220,000 in 2018, when selling price per unit was $200, and the president of Valer
is under pressure to increase operating income in 2019. Data for variable cost per unit and total fixed cc
were as follows:
Variable expenses per unit:
Direct Material
$40
$32
$18 90
Direct Labour
Variable Manufacturing Overhead
Fixed expenses:
Fixed Manufacturing Overhead
Fixed Selling Costs
Fixed Administrative Costs
$190,000
$115,000
$135,000
Required:
(a)
Using the equation method, calculate the number of units sold in 2018.
Given the sales units calculated in Part (a), prepare a contribution margin income statement f
year ended December 31, 2018, detailing the composition of total fixed costs and clearly sho
contribution and net income.
(b)
(e) Calculate Valencia's break-even point in units and in sales dollars.
(d)
Calculate the margin of safety in units and in sales dollars.
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