Test i3 Managerial Acct Chapters &8 Name Write your answers on a separate sheet

Question

Test i3 Managerial Acct Chapters &8 Name Write your answers on a separate sheet of paper. CVP & Short Term Decisions Spring 2018 SHOW ALL YOUR WORK. TO BE COMPLETED BY YOURSELE 1) The following information for the past year for the Blaine Corporation has been provided Fixed costs 5125,00 23 Marketing Administrative Variable costs: Manufac Administrative 43,000 During the year, the company produced and sold 30,000 units of product at a selling price of $15.00 per unit There was no beginning inventory of product at the beginning of the year. (5 points) What is the operating income (loss) for the year? 2) Dakota Company provides the following information about its single product $40,0 g income unit Targeted Variable cost per unit Total 590 How many units must be sold to earn the targeted operating income? (5 points) 3) Woodson Corporation provided the following information regarding its only product S63.0 Sale price per unit Direct materials used Direct labor incurred Variable manufacturing overhead Variable selling and administrative expenses Fixed manufacturing overhead Fixed selling and administrative expenses Units produced and sold Assume no beginning inventory Assuming there is excess capacity, what would be the effect on operating income of accepting a special order for 1,200 units at a sale price of $60 per product assuming additional fixed manufacturing overhead costs of $5,000 is incurred? (NOTE: Assume regular sales are not affected by the special order) (5 points)

Explanation / Answer

Q1. Contribution margin Income Statement: Sales revenue (30000 units @15) 450000 Less: variable c cost manufacturing 115000 marketing 30000 administrative 43000 Contribution margin   262000 Less: Fixed cost Manufacturing 125000 Marketing 23000 administrative 21000 Net income 93000 Q2. Selling price per unit 3.5 Less: Variable cost per unit 1.05 Contribution margin per unit 2.45 Fixed cost 90000 Add: Dsired profits 40000 Desired Contribution 130000 target sales in units: Desired contribution / Contribution margin per unit 130,000 /2.45 = 53061 uniits Q3. Incremental profit analysis: Incremental revenue (1200 units @60) 72000 Less: Incremental cost Material (1200 units @16) 19200 labour (1200 units @18.50) 22200 Variable manufacturing oH (1200 units @ 12) 14400 Variable Selling expense (1200 units @7) 8400 Additional fixed manufacturing OH 5000 Incremental Income from Special order 2800 hence, the order must be accepted

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