EXERCISE #5-Variable Cost A company operates at 100% of capacity during its firs

Question

EXERCISE #5-Variable Cost A company operates at 100% of capacity during its first month and incurred the following costs Production costs (14,300 units) Direct materials Direct labor Variable factory overhead Fixed factory overbead $155,000 235,050 250,600 100000 $740,650 Operating expenses: Variable operating expenses Fixed operating expenses $140,000 53,000 193,000 Instructions: If 1,350 units remain unsold at the end of the month, what is the amount of inventory that is informed in variable cost balance? EXERCISE #6-Manufacturing margin/ Contribution Margin/ Income from Operations Baxter Company has the following information for March Sales Variable cost of goods sold Fixed manufacturing costs Variable selling and administrative expenses Fixed selling and administrative expenses S350,110 225,000 65,050 55,000 1,000 lnstructions: Determine (a) (manufacturing margin) (b) (contribution margin) (c) (income from operations for Baxter Company)

Explanation / Answer

5) Calculate value of ending inventory under variable cost balance :

So answer is $60480

6) Manufacturing margin = 350110-225000-65050 = $60060

Contribution margin = 350110-225000-55000 = $70110

Income from operation = 70110-65050-1000 = $4060

Direct material 155000 Direct labour 235050 Variable factory overhead 250600 Total variable product cost 640650 Ending inventory value (640650/14300*1350) $60480

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