Sales volume (units) Revenue Variable costs Direct materials Direct labor Contribution margin Fixed costs Profit $30,000 O $2.00 $45,000 Use direct labor dollars as the cost driver. Compute allocated fixed costs for Product X: $20,000 Product X 400 $60,000 $50,000 $25,000 $15,000 $20,000 Product Y 600 $60,000 $15,000 $10,000 $35,000 Total 1,000 $120,000 $40,000 $25,000 $55,000 $50,000 $5,000

Sales volume (units) Revenue Variable costs Direct materials Direct labor Contribution margin Fixed costs Profit $30,000 O $2.00 $45,000 Use direct labor dollars as the cost driver. Compute allocated fixed costs for Product X: $20,000 Product X 400 $60,000 $50,000 $25,000 $15,000 $20,000 Product Y 600 $60,000 $15,000 $10,000 $35,000 Total 1,000 $120,000 $40,000 $25,000 $55,000 $50,000 $5,000

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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Total Amount Units Sales Variable Costs: 31,250 Per Unit $ 445,313 $ 14.25 Direct Materials $ 125,000 4.00 = Direct Labor $ 28,000 0.90 = Variable Manufacturing Overhead $ 66,250 2.12 = Sales Commissions $ 15,625 0.50 = Shipping Variable Billing Total Variable Costs $ 3,125 0.10 $ 313 0.01 $ 238,313 7.63 Contribution Margin $ 207,000 6.62 Fixed Costs: Fixed Manufacturing Overhead Advertising Sales and Admin. Salaries Fixed Billing Total Fixed Costs Net Operating Income (Loss) 40,000 16,800 87,300 10,000 154,100 $ 52,900 F. Using the budgeted contribution margin income statement in part E. above, calculate the following: a. Breakeven in units: b. Operating Leverage Multiplier: Given a sales volume increase of 8%, operating income will increase by: c. Percent: d. Dollars: #N/A #N/A #N/A #N/A
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