Schturman Industries Inc. expects to maintain the same inventories at the end of 2020 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: It is expected that 20,575 units will be sold at a price of $160 a unit. Maximum sales within the relevant range are 27,000 units. Categories Estimated Fixed Cost Estimated Variable Cost per Unit Sold Production Costs: Direct Materials - 45 Direct Labor - 39 Factory Overhead 200,000 19 Selling Expenses: Sales Salaries and Commissions 110,000 9 Advertising 40,000 - Travel 12,000 - Miscellaneous Selling Expenses 7,600 1 Administrative Expenses: Office and Officers' Salaries 132,000 - Supplies 10,000 3 Misc. Administrative Expenses 13,400 1 Total 525,000 117 Construct a cost-volume-profit chart indicating the break-even sales.
Schturman Industries Inc. expects to maintain the same inventories at the end of 2020 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows:
It is expected that 20,575 units will be sold at a price of $160 a unit. Maximum sales within the relevant range are 27,000 units.
|
Categories |
Estimated Fixed Cost |
Estimated Variable Cost per Unit Sold |
|
Production Costs: |
||
|
Direct Materials |
- |
45 |
|
Direct Labor |
- |
39 |
|
Factory |
200,000 |
19 |
|
Selling Expenses: |
||
|
Sales Salaries and Commissions |
110,000 |
9 |
|
Advertising |
40,000 |
- |
|
Travel |
12,000 |
- |
|
Miscellaneous Selling Expenses |
7,600 |
1 |
|
Administrative Expenses: |
||
|
Office and Officers' Salaries |
132,000 |
- |
|
Supplies |
10,000 |
3 |
|
Misc. Administrative Expenses |
13,400 |
1 |
|
Total |
525,000 |
117 |
- Construct a cost-volume-profit chart indicating the break-even sales.
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