1. Springer began business at the start of the current year. The company planned
ID: 2501438 • Letter: 1
Question
1. Springer began business at the start of the current year. The company planned to produce 40,000 units, and actual production conformed to expectations. Sales totaled 39,000 units at $46 each. Costs incurred were:
If there were no variances, the company's absorption-costing income would be:
$858,000.
$364,000.
$449,500.
$439,000.
None of these.
2. Quattro began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 20% are collected in the month of sale; 50% are collected in the first month after sale; and 30% are collected in the second month after sale. If sales for April, May, and June were $53,000, $73,000, and $63,000, respectively, what were the firm's budgeted collections for June?
$49,100.
$41,100.
$12,600.
Some other amount.
$65,000.
3.
If the company purchases 201,000 square feet of raw material during the month, the estimated raw-material inventory on June 30 would be:
None of the other answers are correct.
11,000 square feet.
25,000 square feet.
13,000 square feet.
23,000 square feet.
4.
6.
8.
7.
5.
4.
Fixed manufacturing overhead $240,000 Fixed selling and administrative cost 185,000 Variable manufacturing cost per unit 19 Variable selling and administrative cost per unit 5Explanation / Answer
1) Company's Absorption income
Sales (39000*$46) = $1794000
Cost of goods sold
Gross Profit = $813000
Variable seeling and administrative expenses (39000*$5) = ($195000)
Fixed Selling and manufacturing overheads = ($185000)
Net operating income = $433000
2) Firm's Budgeted Collection for june
Total Budgeted Collections for june = $65000
4) Edmonco's Operating leverage
Operating Leverage = [Quantity x (Price - Variable Cost per Unit)] / Quantity x (Price - Variable Cost per Unit) - Fixed Operating cost
[$1350000-($585000+$40500+$184500)] / [$1350000-($585000+$40500+$184500) - ($270000+$54000+$108000)]
= ($1350000-$810000) /[ ($1350000-$810000)-432000]
= $540000 / $108000
= 5
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