T-Tunes, Inc. is considering the introduction of a new music player with the fol
ID: 2453885 • Letter: T
Question
T-Tunes, Inc. is considering the introduction of a new music player with the following price and cost characteristics:
Sales price per unit: $125
Variable cost per unit: $75
Annual fixed costs: $180,000
(a) How many units must T-Tunes sell to break even?
(b) How many units must T-Tunes sell to make an operating profit of $120,000 for the year?
(c) What will the operating profit be, assuming that the projected sales for the year are 7,500 units?
Consider requirements (b) and (c) independent of each other. (Points : 30)
Kramer Company has decided to use a predetermined rate to assign factory overhead to production. The following predictions have been made for 2010:
Total factory overhead costs
$180,000
Direct labor hours
50,000 hours
Direct labor costs
$250,000
Machine hours
60,000 hours
Compute the predetermined factory overhead rate under three different bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours.
(Points : 30)
The Moundsview Company provided you with the following information for the fiscal year ending on December 31:
Work-in-process inventory, 12/31
$115,800
Finished goods inventory, 1/1
614,800
Direct labor costs incurred
2,008,600
Manufacturing overhead costs
5,368,800
Direct materials inventory, 1/1
501,600
Finished goods inventory, 12/31
1,022,000
Direct materials purchased
3,500,400
Work-in-process inventory, 1/1
202,000
Direct materials inventory, 12/31
338,800
(a) Compute the total manufacturing costs incurred during the year.
(b) Compute the total work-in-process during the year.
(c) Compute the cost of goods manufactured during the year.
(d) Compute the cost of goods sold during the year.
Total factory overhead costs
$180,000
Direct labor hours
50,000 hours
Direct labor costs
$250,000
Machine hours
60,000 hours
Explanation / Answer
T-Tunes, Inc. is considering the introduction of a new music player with the fol
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