1. Decko industries reported the following data. Units Produced 52,000 units Sal

Question

1.

Decko industries reported the following data.

Units Produced 52,000 units

Sales Price $33 per unit

Direct Materials $1.50 per unit

Direct Labor $2.50 per unit

Variable Overhead $3.50 per unit

Fixed Overhead $234,000 in total

What is the company's contribution margin for this month if 50,000 units were sold?

A) 1,716,000 ; B)1,275,000 ; C) 1,650,000 ; D) 1,326,000 ; E) 1,450,000

2.

Pact company had net income of $972,000 based on variable costing. Beginning and ending inventories were 7,800 units and 5,200 units, respectively. Assume the fixed overhead per unit was $3.61 for both the beginning and ending inventory. What is net income under absorption costing?

A) $962,614 ; B) $981,379 ; C) $1,018,923 ; D) $925,077 ; E) $969,400

3.

Shore company reports the following information regarding its production cost.

Units Produced 28,000 units

Direct Materials $24 per unit

Direct Labor $23 per unit

Variable Overhead $280,000 in total

Fixed Overhead $94,920 in total

Compute production cost per unit under absorption costing

A) $60.39 B)$24.00 C)$23.00 D)$57.00 E)$47.00

4.

Advanced company reports the following information for the current year. All beginning inventory amouns equaled $0 this year.

Units Produced this year 25,000 units

Units sold this year 15,000 units

Direct Materials $9 per unit

Direct Labor $11 per unit

Variable Overhead $75,000 in total

Fixed Overhead $137,500 in total

Given advanced company's data, and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000 compute the net income under variable costing.

A) $55,000 B) $80,500 C) $122,500 D) $67,500 E) $205,000

Explanation / Answer

Hi,

Please find the answers as follows:

Part A:

Contribution Margin = 50000*(33 -1.5 - 2.5 -3.5) = 1275000 (Option B is correct)

Part B:

Net Income under Absorption Costing = 972000 - 3.61*(7800 -5200) = 962614 (Option A is Correct)

Part C:

Product Cost per Unit = 24 + 23 + 280000/28000 + 94920/28000 = 60.39 (Option A is Correct)

Part D:

Amount Sales 750000 Variable Manufacturing Costs
Direct Material 225000 Direct Labor 275000 Variable Overheads 75000 Cost of Goods Available for Sale 575000 Less Closing Inventory = 575000/25000*10000 230000 Cost of Goods Sold 345000 Contribution 405000 Fixed Overheads 137500 Operating Expenses 200000 Net Income (Contribution - Fixed Overheads - Operating Expenses) 67500

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