Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 10, Problem 15P
1.
To determine
Calculate the break-even point in dollars.
2.
To determine
Calculate the number of units that company S should sold to earn the net operating income of $100,000 per year.
3.
To determine
Prepare a formal income statement for the year ended December 31, 2016 under (a) absorption costing and (b) variable costing.
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Jordan Inc. manufactures Product B, incurring variable product costs of $15.00 per unit and fixed product costs of $70,000. Total Selling and Administrative Expenses for the year are expected to be $15,700. Jordan desires a profit equal to a 10% rate of return on assets, $785,000 of assets are devoted to producing Product B, and 100,000 units are expected to be produced and sold.
(a)
Compute the markup percentage, using the product cost concept.
(b)
Compute the normal selling price of Product B.
(a)
(b)
Explorer Company has an annual plant capacity of 3,000 units. Data concerning this product are given below:
Direct Materials cost per unit
$ 20.00
Direct Labor cost per unit
$ 8.00
Variable manufacturing overhead cost per unit
$ 5.00
Variable sales commissions per unit
$ 6.00
Fixed selling and administration expenses per unit
$ 9.00
$ 48.00
Currently, the sales volume at the regular selling price of $75 is 2,500 units per year. The company has received a special order for 500 units at a selling price of $45 each. Regular sales would not be affected, and sales commissions on the 500 units would only be 2/3 of the regular sales commission per unit for this special order. This special order would have no impact on total fixed costs.
Required:
a. Determine whether the company should accept the special order. Explain in your own words your decision and show all computations.
Explorer Company has an annual plant capacity of 3,000 units. Data concerning this product are given below:
Direct Materials cost per unit
$ 20.00
Direct Labor cost per unit
$ 8.00
Variable manufacturing overhead cost per unit
$ 5.00
Variable sales commissions per unit
$ 6.00
Fixed selling and administration expenses per unit
$ 9.00
$ 48.00
Currently, the sales volume at the regular selling price of $75 is 2,500 units per year. The company has received a special order for 500 units at a selling price of $45 each. Regular sales would not be affected, and sales commissions on the 500 units would only be 2/3 of the regular sales commission per unit for this special order. This special order would have no impact on total fixed costs.
Would your answer change if the current sales volume was 3,000 units per year and you could not accept the special order without reducing production of normal units…
Chapter 10 Solutions
Principles of Cost Accounting
Ch. 10 - What is the difference between absorption costing...Ch. 10 - Distinguish between product costs and period...Ch. 10 - What effect will applying variable costing have on...Ch. 10 - What are the advantages and disadvantages of using...Ch. 10 - Prob. 5QCh. 10 - What is the difference between gross margin and...Ch. 10 - Why are there objections to using absorption...Ch. 10 - What are common costs?Ch. 10 - How is a contribution margin determined, and why...Ch. 10 - What are considered direct costs in segment...
Ch. 10 - What is cost-volume-profit analysis?Ch. 10 - Prob. 12QCh. 10 - What steps are required in constructing a...Ch. 10 - What is the difference between the contribution...Ch. 10 - What impact does income tax have on the break-even...Ch. 10 - Define differential analysis, differential...Ch. 10 - Prob. 17QCh. 10 - Prob. 18QCh. 10 - What are distribution costs?Ch. 10 - What is the purpose of the analysis of...Ch. 10 - In cost analysis, what determines which costs...Ch. 10 - Yellowstone Fabricators uses a process cost system...Ch. 10 - Using the information presented in E10-1, prepare...Ch. 10 - The chief executive officer of Acadia, Inc....Ch. 10 - The following production data came from the...Ch. 10 - A company had income of 50,000, using variable...Ch. 10 - The fixed overhead budgeted for Ranier Industries...Ch. 10 - Columbia Products Inc. has two divisions, Salem...Ch. 10 - The sales price per unit is 13 for the Voyageur...Ch. 10 - Teton, Inc. sells its only product for 50 per...Ch. 10 - A new product is expected to have sales of...Ch. 10 - Augusta Industries manufactures and sells two...Ch. 10 - A company has sales of 1,000,000, variable costs...Ch. 10 - Prob. 13ECh. 10 - A company has prepared the following statistics...Ch. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Redwood Industries needs 20,000 units of a certain...Ch. 10 - Prob. 18ECh. 10 - Biscayne Industries has determined the cost of...Ch. 10 - Roosevelt Enterprises has determined the cost of...Ch. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Arctic Software Inc. has two product lines. The...Ch. 10 - Prob. 7PCh. 10 - The production of a new product required Zion...Ch. 10 - Grand Canyon Manufacturing Inc. produces and sells...Ch. 10 - Prob. 10PCh. 10 - Emerald Island Company is considering building a...Ch. 10 - Royale Aluminum desires an after-tax income of...Ch. 10 - Deuce Sporting Goods manufactures a high-end model...Ch. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 1MCCh. 10 - Denali Company manufactures household products...
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