Question # 1 (4 marks)
Reardon Inc. publishes accounting textbooks and expects to sell 6,000 during the coming year. The average selling price per textbook is $75. Projected costs for 6,000 textbooks are as follows:
Variable Manufacturing Overhead
Fixed Manufacturing Overhead
Fixed Selling and Administrative
Variable Selling and Administrative
Total Fixed Manufacturing Overhead increases to $128,000 for production levels over 7500 textbooks
1) Determine total variable manufacturing costs to produce one textbook. 2) Determine total manufacturing costs to produce 7,000 textbooks. 3) What is the total fixed manufacturing costs to produce 6,000 textbooks. 4) What is the total manufacturing costs to produce 9,000 textbooks.
Question # 2 (8 marks)
Horizon Products Incorporated produces and sells yoga related training products, how to videotapes, a basic equipment set, and an advanced yoga handbook.
Last year Horizon sold 10,000 videos, 5,000 equipment sets, and 2,000 handbooks.
Information on the three products is as follows:
Price (per unit)
Variable cost (unit)
6.50 Total fixed cost
1) What is the sales mix of videotapes, equipment sets, and handbooks? What is the package contribution margin?
2) Compute the breakeven quantity of each product.
3) Prepare an Income Statement for Horizon for the previous year. 4) What is the overall contribution margin ratio? What is the overall breakeven sales revenue? 5) Compute the Margin of Safety for the previous year.
Question # 3 (9 marks)
Part # 1 (4 marks)
Kyle Fricker Inc. has set the following standards for one unit of beer production.
$9 per pound
$21 per hour
Actual costs incurred in the production of 2,000 units were as follows:
$72,540 (9.30 per pound)
$115,206 (21.10 per hour)
All material used were purchased during the period.
Compute the following variances and indicate whether each is favorable or unfavorable: Direct Material Price Variance, Direct Material Quantity Variance, Direct Labour Rate Variance, Direct Labour Efficiency Variance.
Part # 2 (5 marks)
The following data pertain to Terrific Taffy Ltd.
Standard Variable Overhead Rate
$9.00 per machine hour.
Standard Quantity of machine hours
4 hours per case of taffy. Budgeted Fixed Overhead
Actual results were as follows:
Actual variable overhead
Actual fixed overhead
Actual machine time
40,500 machine hours
Calculate the following variances and state if favorable or unfavorable: Variable Manufacturing Overhead Spending Variance, Variable Manufacturing Overhead Efficiency Variance, Fixed Manufacturing Overhead Spending Variance, Fixed Manufacturing Overhead Denominator (Volume) Variance.
Question # 4 (3 marks)
Maureen owns and operates a café and her fixed costs are $10,500 per month. Luncheons and dinners are served. The average total bill excluding tax and tips is $9.00 per customer. Maureen’s present variable costs average $4.80 per meal.
a) How many meals must be served to attain a profit before taxes of $4,200 per month? b) Maureen’s rent and other fixed costs rise to a total of $14,700 per month. Assume that variable costs also rise to $5.75 per meal. If Maureen increases her average price to $11.00, how many meals must she now serve to make $4,200 profit per month? c) Maureen’s...
Please join StudyMode to read the full document