Handley Documents manufactures paper shredding equipment You are requested to \"
ID: 2488931 • Letter: H
Question
Handley Documents manufactures paper shredding equipment You are requested to "audif a sampling of computations made by Handley's internal accountants via your indepedent recalculation of the information. Instructions: Compute the requested information for each of the following independent situation. (present supporting calculations). (a) Handley uses a process costing system 900 units were in process at the process at the beginning of the period, 60% complete 16,400 units were started into production during the period; 700 were in process at the end of the period, 30% complete. Compute equivalent units for coneversion costs. (b) Handley sells each unit for $45. Variable costs per unit equal $20. total fixed costs equal $230,000. Handley is currently selling 12,000 units per period and would like to earm net income $40,000 compute: (1) break-even point in dollars, (2) sales units necessary to attain desired income; and (3) margin of safety ratio for current operations. (1) Break-even point = SExplanation / Answer
Answer a
Opening stock
No of units
% completion
Equivalent units
900
60%
360
Started and completed
No of units
% completion
Equivalent units
15700
100%
15700
Closing stock
No of units
% completion
Equivalent units
700
30%
210
Total equivalent units
16270
Answer B
per unit
Units
Total
Sales price
45
12000
540000
Variable cost per unit
20
12000
240000
Contribution
25
12000
300000
Fixed cost
230000
net income
70000
BEP = (230000/25)*45 = $414000
Desired sales = (40000+230000)/25 = 10800 units
Margin of safety = (540000-414000)/540000 = 23.33%
Opening stock
No of units
% completion
Equivalent units
900
60%
360
Started and completed
No of units
% completion
Equivalent units
15700
100%
15700
Closing stock
No of units
% completion
Equivalent units
700
30%
210
Total equivalent units
16270
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