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

Pages: 3 (492 words) Published: September 3, 2011
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. 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
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...