Spanish Manufacturing Company produces and sells a line of products that are sold usually all year round. The The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the The business earned an Operating Income of $600,000 in 2020. The following cost data has been prepared for the The year ended December 31, 2020. Selling price per unit……………………………………… $50.00 Production Costs: Direct Materials …………………………………. $10.00 Direct Labor ……………………………………. $8.00 Variable Manufacturing Overhead ……………. $7.00 Fixed Manufacturing Overhead…………....................... $450,000 Fixed Selling & Administrative Expenses……………… $300,000 Variable selling expense per unit ………………………. $10.00 Required: a) Using the equation method, calculate the normal capacity of the business. b) Calculate: i) the variable production cost per unit ii) the total production cost per unit

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Spanish Manufacturing Company produces and sells a line of products that are sold usually all year round. The

The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the

The business earned an Operating Income of $600,000 in 2020. The following cost data has been prepared for the

The year ended December 31, 2020.

Selling price per unit……………………………………… $50.00

Production Costs:

Direct Materials …………………………………. $10.00

Direct Labor ……………………………………. $8.00

Variable Manufacturing Overhead ……………. $7.00

Fixed Manufacturing Overhead…………....................... $450,000

Fixed Selling & Administrative Expenses……………… $300,000

Variable selling expense per unit ………………………. $10.00

Required:

a) Using the equation method, calculate the normal capacity of the business.

b) Calculate:

i) the variable production cost per unit

ii) the total production cost per unit

iii) The total variable cost per unit

iv) Total Fixed Costs

c) Calculate Greek’s break-even point in units and in sales dollars.

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