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
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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