Laro Corporation produces and sells a single product with the following characte
ID: 2455619 • Letter: L
Question
Laro Corporation produces and sells a single product with the following characteristics:
175
50%
$ 175
50%
The company is currently selling 7,000 units per month. Fixed expenses are $362,000 per month.
The marketing manager believes that a $9,000 increase in the monthly advertising budget would result in a 310 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
increase of $45,250
decrease of $9,000
decrease of $45,250
increase of $54,250
Madengrad Company manufactures a single product called a densimeter. This product is a density monitoring device attached to large industrial mixing machines used in flour, rubber, petroleum, and chemical manufacturing. A densimeter sells for $2,520 per unit. The following variable expenses are incurred to produce and sell each densimeter:
Madengrad's annual fixed expenses are $7,080,000.
If Madengrad Company achieves a sales and production volume of 8,100 units, the annual net operating income (loss) is expected to be:
$ -276,000
$ 6,804,000
$ -7,144,200
$ -27,600
Parmentier Company uses the weighted-average method in its process costing system. The Molding Department is the second department in its production process. The data below summarize the department's operations in January.
$2.024
$1.828
$1.671
$2.527
Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,800 units and of Product B is 1,050 units. There are three activity cost pools, with estimated costs and expected activity as follows:
The activity rate for Activity 3 is closest to:
$139.12
$68.28
$32.88
$58.10
The following partially completed T-accounts summarize the transactions of Belson Company for last year:
At the end of the year, the company closes out the balance in the Manufacturing Overhead account to Cost of Goods Sold.
The indirect labor cost is:
$28,900
$5,300
$15,300
$12,300
Schmeider Corporation uses the following activity rates from its activity-based costing system to assign overhead costs to products.
Data concerning two products appear below:
Required:
How much overhead cost would be assigned to each of the two products using the company's activity-based costing system? (Do not round your intermediate calculations. Round your final answer to two decimal places.)
Per unit Percent of sales Selling price $ 350 100% Variable expenses175
50%
Contribution margin$ 175
50%
Explanation / Answer
Solution 1:
contribution / unit = $175
total units sold in the month = 7000 units
Total contribution = $175 * 7000 = $1225000
$9,000 increase in the monthly advertising budget would result in a 310 unit increase in monthly sales.
So, Revised Total contribution =$ 1225000 - $9000 = $1216000
There being no change in fixed cost, so Change in Total Contribution is the overall effect on the company's monthly net operating income.
=> $1216000 - $ 1225000 = - $9000 i.e. OPTION B - DECREASE BY $9000
Solution 2:
The product densimeter sells for Selling Price $2,520 per unit. The following variable expenses are incurred to produce and sell each densimeter:
Total Variable cost per unit = $1680, Selling Price $2,520 per unit , so Contribution = $840. Also, sales and production volume of 8,100 units and Madengrad's annual fixed expenses are $7,080,000
Total Contribution = $840 * 8100 = $ 6804000
the annual net operating income (loss) is expected to be: Total Contribution - Annual Fixed Expenses
= $ 6,804,000 - $7,080,000 = $ 276000 LOSS i.e. OPTION 1
Solution 3:
The conversion cost = work in progress at the beginning + conversion cost made during Jan
= $11,696 + $107468 = $119164 ----A
Number of finished units during moulding = 56700 + 7300 * 30% = 58890 units ----B
the cost per equivalent unit for conversion costs for January in the Molding Department =A / B
=$119164 / 58890 = $2.024 per unit OPTION 1
Solution 4:
Activity rate for Activity 3 is closest to = $82502/1420 = $58.10 OPTION 4
Solution 5:
The indirect labor cost incurred during the year is the Wages and Salaries Payable balance =$28900 OPTION 1
Solution 6:
Overhead cost would be assigned to each of the two products using the company's activity-based costing system=
Product C00R = 72.02*67 + 29.08*47 + 13.51*420 = $11866.3
Product A61E = 72.02*54 + 29.08*32 + 13.51*163 =$7021.77
Direct labor $ 504 Direct materials $ 672 Variable factory overhead $ 294 Variable marketing expenses $ 210Related Questions
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