Acc/561 Wk 4 Wileyplus Be18-1, Be18-7, Be18-11, E19-2

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Brief Exercise BE18-1
Brief Exercise BE18-7
Brief Exercise BE18-11
Exercise E19-2

Question 1

Monthly production costs in Pesavento Company for two levels of production are as follows. Cost3,000 units6,000 units
Indirect labor$10,000 $20,000
Supervisory salaries5,000 5,000
Maintenance4,000 7,000
Indicate which costs are variable, fixed, and mixed.
Indirect laborVariable cost
Supervisory salariesFixed cost
MaintenanceMixed cost

Question 1 - Solution

Indirect labor is a variable cost because it increases in total directly and proportionately with the change in the activity level. Supervisory salaries is a fixed cost because it remains the same in total regardless of changes in the activity level. Maintenance is a mixed cost because it increases in total but not proportionately with changes in the activity level.

Question 2

Bruno Manufacturing Inc. has sales of $2,200,000 for the first quarter of 2010. In making the sales, the company incurred the following costs and expenses.
VariableFixed
Cost of goods sold$920,000 $440,000
Selling expenses70,000 45,000
Administrative expenses86,000 98,000
Complete the CVP income statement for the quarter ended March 31, 2010. BRUNO MANUFACTURING INC.
CVP Income Statement
For the Quarter Ended March 31, 2010
Sales$2,200,000
Variable costs1,076,000
Contribution Margin1,124,000
Fixed costs583,000
Net income$541,000

Question 2 - Solution

BRUNO MANUFACTURING INC.
CVP Income Statement
For the Quarter Ended March 31, 2010
Sales$2,200,000
Variable costs ($920,000 + $70,000 + $86,000)1,076,000
Contribution Margin1,124,000
Fixed costs ($440,000 + $45,000 + $98,000)583,000
Net income$541,000

Question 3

For Dousmann Company actual sales are $1,200,000 and break-even sales are $840,000. Compute the following (a) the margin of safety in dollars and (b) the margin of safety ratio. Margin of...
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