Rock Inc. has three divisions, Granite, Lime and Nina. All fixed costs are unavo

Question

Rock Inc. has three divisions, Granite, Lime and Nina. All fixed costs are unavoidable Following is the income statement for the previous year:

   

     

What would Rocks profit margin be if the Lime division was dropped?

      

What would Rocks profit margin be if the Nina division was dropped?

During July, Blossom actually sold 36,000 units. Prepare a flexible budget for Blossom based on actual sales. (Do not round your intermediate calculations.)

Rock Inc. has three divisions, Granite, Lime and Nina. All fixed costs are unavoidable Following is the income statement for the previous year:

Explanation / Answer

a).

total profit margin = 36000+8550+33400 = $77950

b).

Profit margin = 36000-11150+33400 = $58250

During July, Blossom actually sold 36,000 units. Prepare a flexible budget for Blossom based on actual sales. (Do not round your intermediate calculations.)

Direct materia cost for 36,000 unit =Direct material cost per unit*total unit produced

= (30,000/30,000)*36,000 = $36,000

Direct labor cost for 36,000 unit = Direct labor cost per unit*total unit produced

= (72,000/30,000)*36,000 = $86,400

variable Manufacturing overhead = (75,000/30,000)*36,000 = $90,000

Fixed Manufacturing cost = $160,000

Production and Sales 36,000 Units Variable Manufacturing Costs: Direct Materials 36000 Direct Labor 86400 Variable Manufacturing Overhead 90000 Fixed Manufacturing Costs 160,000 Total Manufacturing Costs 372400

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