Problem 1
Golemon Gadgets incurred the following production costs for two levels of production.
2,500 units 7,500 units
Total Cost Cost per unit Total Cost Cost per unit
Direct materials $ 7,750 $ 3.10 $ 23,250 $ 3.10
Direct labor 14,000 5.60 42,000 5.60
Utilities 1,275 0.51 3,025 0.40
Rent 6,000 2.40 6,000 0.80
Maintenance 4,350 1.74 11,850 1.58
Supervisory salaries 3,000 1.20 3,000 0.40
Which of the above costs are (a) variable, (b) fixed, and (c) mixed?
Problem 2
Tyler Technologies has been analyzing its operating costs. The practical capacity of the plant is 50,000 units. At this level of output, costs are as follows:
Total cost Per unit
Variable costs $ 850,000 $ 17.00
Fixed costs 300,000 6.00
If production were to exceed practical capacity, fixed costs would increase by $ 180,000.
(A) Assuming a production level of 44,000 units, what is the total fixed cost?
(B) Assuming a production level of 37,000 units, what is the total variable cost?
(C) Assuming a production level of 64,000 units, what is the total fixed cost per unit?
Problem 3
Berry's Budget Bungalows has compiled the following guest-days of occupancy and custodial supplies cost for the first seven months of the year:
Guest-days Custodial Supplies
January 5,100 $ 6,045
February 4,200 5,610
March 6,500 7,150
April 9,000 8,060
May 11,500 9,740
June 14,000 11,000
July 12,900 10,175
(A) Use the high-low method to estimate a cost formula for custodial supplies cost.
(B) HEstimate custodial supplies cost for 15,600 guest-days.
Problem 4
A firm has the following projections for 2017: sales of 13,000 units at a selling price of $ 42; variable manufacturing costs of $ 245,700; fixed manufacturing costs of $ 67,000; variable selling and administrative costs are 20% of sales; fixed selling and administrative costs are $ 47,660.
(A) What is the breakeven point in units and sales dollars?
(B) How many units must be sold to earn a target profit of $ 127,890?
(C) Presume a net income of $ 198,450. What is the total sales revenue?
Problem 5
For the second quarter of 2017, Gus's Gizmos predicts variable costs of $ 323,000, fixed costs of $ 125,000, profit of $ 96,000 and contribution margin of $ 13 per unit. Compute (a) total expected sales dollars, (b) expected number of units to be sold and (c) expected sales price per unit.
Problem 6
YOUR Firm, Inc. expects to sell 240,000 units next year, generating total sales of $ 15,600,000. Management predicts that profit will be $ 1,155,000 and the contribution margin will be $ 21 per unit.
(A) What is the total expected variable costs?
(B) What is next year's expected fixed costs?
(C) Compute the expected margin of safety in both units and sales dollars?
Problem 7
Presume a firm charges a price of $ 3.40. Total fixed costs are $ 193,600 per year and the breakeven point is 121,000 units.
(A) What is the variable cost per unit?
(B) If net income is $ 110,400, what is the total sales revenue?
Problem 8
Magical Creations Inc. has developed a new fantasy board game. In 2016, the firm sold 30,000 games at a sales price of $ 40. The associated fixed costs were $ 306,000 and variable costs were $ 12 per game.
(A) Compute the degree of operating leverage.
(B) Management is confident that they can sell an additional 6,000 games in 2017. Compute the expected percentage increase in net income for 2017.
***Any help is greatly appreciated***