EXERCISE 8-5 Variable Costing Unit Product Cost and Income Statement; Break-Even

Question

EXERCISE 8-5 Variable Costing Unit Product Cost and Income Statement; Break-Even [L01, LO2] Exercise 8-5: Help Me Solve It Tutorial Click here to view a transcript of this video Waterloo Storage Products makes a four-drawer plastic storage cabinet on casters meant for use in garages and workshops. Each cabinet sells for $35. Data for last year's operations follow: Units in beginning inventory 25000 21500 3500 Units in ending inventory. ariable costs per unt Direct materials Variable manufacturing overhead.. . . ariable selling and administrative $ 24 Total variable cost per unit .. Fixed costs Fxed manufacturing overhead5000 Fixed selling and administrative $185000 otal fixed costs. Required 1. Assume that the company uses variable costing. Compute the unit product cost for one storage cabinet. 2. Assume that the company uses variable costing. Prepare a contribution format income statement for the year 3. What is the company's break-even point in terms of units sold? EXERCISE 8-6 Absorption Costing Unit Product Cost; Income Statement [LO1, LO2) Refer to the data in Exercise 8-5 for Waterloo Storage Products. Assume in this exercise that the company uses absorption costing. Required: uct cost for one storage cabir

Explanation / Answer

Variable costing: 1 Direct materials 8 Direct labour 10 Variable manufacturing overhead 2 Unit product cost 20 2 Sales 752500 =21500*35 Variable expenses: Variable cost of goods sold 430000 =21500*20 Variable selling and administrative expenses 86000 =21500*4 Total Variable expenses 516000 Contribution margin 236500 Fixed expenses: Fixed manufacturing overhead 75000 Fixed selling and administrative expenses 110000 Total Fixed expenses 185000 Net operating income(loss) 51500 3 Break even point = Fixed expenses/Unit contribution margin=185000/(35-24)= 16818 (rounded off)

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.