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

Resource: WileyPLUS
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. Cost 3,000 units 6,000 units Indirect labor $10,000 $20,000 Supervisory salaries 5,000 5,000 Maintenance 4,000 7,000
Indicate which costs are variable, fixed, and mixed.
Indirect labor Variable cost
Supervisory salaries Fixed cost
Maintenance Mixed 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. Variable Fixed Cost of goods sold $920,000 $440,000 Selling expenses 70,000 45,000 Administrative expenses 86,000 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 costs 1,076,000
Contribution Margin 1,124,000
Fixed costs 583,000
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 Margin 1,124,000
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