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problem: Downes Consolidated Industries International uses a standard cost system & records standards in the accounting records. The standard costs for one unit of one of its products are as follows;

Direct Materials, 3lbs.@$20 per lb.

$ 60.00

Direct labor, 2 hrs. @$15 per hr.

$ 30.00

Variable overhead, 4machine hrs. @$1 per hr

$ 4.00

Fixed overhead, 4 machine hrs.@$2.50 per hr

$ 10.00



Overhead is used on the basis of machine hours. The planned level of activity [denominator level] is 320,000 machine hours. The total budgeted fixed overhead is $800,000.

Other budgeted items are: 
Unit selling price, $170, 00 per unit
Variable selling and administrative expenses, dollar ($)5 per unit
Fixed selling and administrative expenses, $160,000.
Planned level of production and sales, 80,000.

Direct materials purchased, 250,000 lbs.@$22 per lb.
Fixed overhead, $810,000
Units produced, 82,000 Units
Direct materials used, 240,000
Direct labor, 150,000 hrs, total cost, $2,225,000
Variable overhead, $340,000
Units sold, 80,500
Selling price per unit,160,00
Variable selling and administrative expenses, $410,000.
Fixed selling and administrative, $175,000.
Actual machine hours,330,000.
Make an Income Statement of Actual Results using variable costing.
[A] Determine the breakeven point in dollars ($).
[B] Compute DOL

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M922799

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