Colen Corporation produces and sells a single product. In January, the company sold 2,000 units. Its total sales were $151,000, its total variable expenses were $79,700, and its total fixed expenses were $56,600.
a. Compute the company’s Net operating income for January. (Do not round intermediate calculations. Omit the “$” sign in your response.)
Net operating income $
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b. Compute the company’s Net operating income assuming that the company sells 1,900 units. (Do not round intermediate calculations. Omit the “$” sign in your response.)
Net operating income $
Calderon Corporation produces and sells a single product. Data concerning that product appear below:
Per Unit Percent of Sales
Selling price $ 280 100%
Variable expenses 42 15%
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Contribution margin $ 238 85%
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Fixed expenses are $200,000 per month. The company is currently selling 1,900 units per month.
Management is considering using a new component that would increase the unit variable cost by $58. Since the new component would improve the company’s product, the marketing manager predicts that monthly sales would increase by 600 units.
What should be the overall effect on the company’s monthly net operating income of this change if fixed expenses are unaffected? (Negative amount should be indicated by a minus sign. Omit the “$” sign in your response.)
Change in net operating income $
Note: Its negative 2200.
Cuffee Inc., which produces a single product, has provided the following data for its most recent month of operation:
Number of units produced 12,600
Variable cost per unit:
Direct materials $ 115
Direct labor $ 78
Variable manufacturing overhead $ 8
Variable selling and administrative $ 17
Fixed manufacturing overhead $ 718,200
Fixed selling and administrative expenses $ 289,800
The company had no beginning or ending inventories.
a. Compute the unit product cost under absorption costing.
Unit product cost
Absorption costing $
b. Compute the unit product cost under variable costing.
Unit product cost
Variable costing $
Camren Corporation has two major business segments-Apparel and Accessories. Data concerning those segments for December appear below:
Sales revenues, Apparel $ 775,000
Variable expenses, Apparel $ 304,000
Traceable fixed expenses, Apparel $ 183,000
Sales revenues, Accessories $ 821,000
Variable expenses, Accessories $ 510,000
Traceable fixed expenses, Accessories $ 195,000
Common fixed expenses totaled $282,000 and were allocated as follows: $96,000 to the Apparel business segment and $186,000 to the Accessories business segment.
Prepare a segmented income statement in the contribution format for the company. (Input all amounts as positive values except losses which should be indicated by a minus sign.)
Yoke Corporation has provided the following data from its activity-based costing accounting system:
Supervisory wages $ 82,100
Factory Utilities $ 284,000
Distribution of Resource Consumption across Activity Cost Pools:
Activity Cost Pools Batch
Processing Other Total
Supervisory wages 62 % 34 % 4 % 100 %
Factory Utilities 34 % 61 % 5 % 100 %
The “Other” activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.
a. Determine the total amount of supervisory wages and factory utilities costs that would be allocated to the unit Processing activity cost pool. (Omit the “$” sign in your response.)
Total amount $
b. Determine the total amount of supervisory wages and factory utilities costs that would NOT be assigned to products. (Omit the “$” sign in your response.)
Total amount $
Daba Company manufactures two products, Product F and Product G. The company expects to produce and sell 1,810 units of Product F and 2,280 units of Product G during the current year. The company uses activity-based costing to compute unit product costs for external reports. Data relating to the company’s three activity cost pools are given below for the current year:
Activity Cost Pool Total Cost Product F Product G Total
Machine setups $ 35,056 140 setups 173 setups 313 setups
Purchase orders $ 363,580 1,460 orders 1,970 orders 3,430 orders
General factory $ 121,210 2,850 hours 4,280 hours 7,130 hours
Using the activity-based costing approach, determine the overhead cost per unit for each product. (Round your final answers to 2 decimal point.)
Product F Product G
Overhead cost $ $
Masse Corporation uses part G18 in one of its products. The company’s Accounting Department reports the following costs of producing the 17,200 units of the part that are needed every year.
Direct materials $4.40
Direct labor $5.10
Variable overhead $8.10
Supervisor’s salary $8.80
Depreciation of special equipment $9.40
Allocated general overhead $6.40
An outside supplier has offered to make the part and sell it to the company for $31.00 each. If this offer is accepted, the supervisor’s salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier’s offer were accepted, only $23,200 of these allocated general overhead costs would be avoided. In addition, the space used to produce part G18 could be used to make more of one of the company’s other products, generating an additional segment margin of $34,000 per year for that product.
a. Calculate the effect on the company’s total net operating income of buying part G18 from the supplier rather than continuing to make it inside the company. (Input the amount as a positive value. Omit the “$” sign in your response.)
Net operating income would be by $ .
Net operating income would be
b. Which alternative should the company choose?
Holtrop Corporation has received a request for a special order of 8,800 units of product Z74 for $45.70 each. The normal selling price of this product is $50.80 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product Z74 is computed as follows:
Direct materials $16.50
Direct labor 5.80
Variable manufacturing overhead 3.00
Fixed manufacturing overhead 5.90
Unit product cost $31.20
Direct labor is a variable cost. The special order would have no effect on the company’s total fixed manufacturing overhead costs. The customer would like some modifications made to product Z74 that would increase the variable costs by $5.40 per unit and that would require a one-time investment of $45,200 in special molds that would have no salvage value. This special order would have no effect on the company’s other sales. The company has ample spare capacity for producing the special order.
Calculate the incremental net operating income of accepting the special order. (Omit the “$” sign in your response.)
Incremental net operating income $
Iadanza Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $195.70 per unit.
The best estimate of the total contribution margin when 6,300 units are sold is:
Management of Modugno Corporation is considering whether to purchase a new model 370 machine costing $441,000 or a new model 240 machine costing $387,000 to replace a machine that was purchased 7 years ago for $429,000. The old machine was used to make product M25A until it broke down last week. Unfortunately, the old machine cannot be repaired.
Management has decided to buy the new model 240 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product M25A.
Management also considered, but rejected, the alternative of simply dropping product M25A. If that were done, instead of investing $387,000 in the new machine, the money could be invested in a project that would return a total of $430,000.
In making the decision to buy the model 240 machine rather than the model 370 machine, the sunk cost was:
Haar Inc. is a merchandising company. Last month the company’s cost of goods sold was $61,000. The company’s beginning merchandise inventory was $11,000 and its ending merchandise inventory was $21,000. What was the total amount of the company’s merchandise purchases for the month?
The following data pertains to activity and costs for two months:
Assuming that these activity levels are within the relevant range, the mixed cost for July was:
At an activity level of 5,300 machine-hours in a month, Clyburn Corporation’s total variable maintenance cost is $114,268 and its total fixed maintenance cost is $154,336.
What would be the total variable maintenance cost at an activity level of 5,600 machine-hours in a month? Assume that this level of activity is within the relevant range.
Evergreen Corp. has provided the following data:
The number of units needed to achieve a target net operating income of $49,500 would be:
Laro Corporation produces and sells a single product with the following characteristics:
The company is currently selling 5,000 units per month. Fixed expenses are $302,000 per month. Consider each of the following questions independently.
This question is to be considered independently of all other questions relating to Laro Corporation. Refer to the original data when answering this question.
The marketing manager would like to cut the selling price by $13 and increase the advertising budget by $17,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,200 units. What should be the overall effect on the company’s monthly net operating income of this change?
decrease of $57,400
decrease of $7,600
increase of $57,400
increase of $147,400
Budget data for the Bidwell Company are as follows:
The number of units Bidwell would have to sell to earn a net operating income of $150,000 is:
East Company has the following budgeted cost and revenue data:
A 10% increase in fixed expense would result in:
a 10% decrease in net operating income.
a $14,000 increase in total contribution margin.
an increase in the margin of safety.
an increase in the break-even point.
Acitelli Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations.
The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company’s predetermined overhead rate for the year.
The overhead for the year was:
Carter Corporation applies manufacturing overhead on the basis of machine-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $135,850. Actual manufacturing overhead for the year amounted to $145,000 and actual machine-hours were 5,660. The company’s predetermined overhead rate for the year was $24.70 per machine-hour.
The applied manufacturing overhead for the year was closest to:
Currey Inc., which uses job-order costing, has provided the following data for August:
The unadjusted cost of goods sold (in other words, cost of goods sold before adjusting for any underapplied or overapplied overhead) for August is closest to: