Q.

2-28
$
1 Direct material 220,000
Direct Labor 420,000
Total Manufacturing Overhead 202,000
Total manufacturing costs 842,000
Cost of goods manufactured 827,000

2 Cost of goods sold 832,000

3 Gross margin 378,000

Net income 177,450

Q.2.40

1 Product
2 Period
3 Product
4 Period
5 Product
6 Period
7 Product
8 Product
9 Product

Q. 2.45
Case A Case B Case C
Sales 1,600,000.00 1,500,000.00
Beginning inventory, raw material 120,000
Ending inventory, raw material 30,000
Purchases of raw material 35,000
Direct material used 27,500
Direct labor 400,000
Manufacturing overhead 450,000
Total manufacturing costs 1,040,000 1,035,000 170,000
Beginning inventory, work in process 7,500
Ending inventory, work in process 60,000
Cost of goods manufactured 990,000
Beginning inventory, finished goods 10,000
Cost of goods available for sale 1,150,000 1,110,000
Ending inventory, finished goods 60,000 120,000
Cost of goods sold 172,500
Gross margin 67,500
Selling and administrative expenses 210,000 22,500
Income before taxes 285,000
Income tax expense 17,500
Net income 220,000 150,000
Q. 3.33

1a per Machine Hour 32.5

b per direct-labor hour 26
c per direct-labor dollar 2/ 200% of Direct Labor cost

2a overapplied overhead 25,000

b underapplied overhead 14,000
c overapplied overhead 38,000

Q. 3.46

1 Predetermined overhead rate 52.50 per machine hour

3 Job 103 428,000

Job 104 100,100

4 Finished-goods inventory Increase-406000

5 underapplied 15,000

Q. 3.47

1 Machining Dept. overhead rate 10 per machine hour

Assembly Dept. overhead rate 55% of direct-labor cost

2 The ending work-in-process invento 76,765

3 underapplied 5,000

4 overapplied 64,500

5 Cost of Goods Sold account decrease

6 Work-in-Process account is charged 3,714,500

7 The firm’s selection of cost drivers (or application bases) seems appropriate

Q. 3.54

1 Predetermined overhead rate 6 per machine hour

2 Applied manufacturing overhead 36,000

 3 Underapplied overhead 2,000

Q.3.62

2 November 30 -overhead applied 2,190,000

3 December-overhead applied 180,000

4 Underapplied manufacturing overh 22,000

5 Total finished-goods inventory 172,000

6 Raw material used 1,898,000

Direct labor 1,850,000
Total actual manufacturing overhe 2,392,000
Total manufacturing costs 6,118,000
Cost of goods manufactured 5,937,600
Q. 4.26

1 Total units to account for 110,000

Direct Material Conversion

2 Equivalent units 110,000 90,000

3 Cost per equivalent unit 2 1.81

4 Direct material 60,000

Conversion 18,100
Cost of goods completed and transferred out 304,800

Q.4.28
Direct Material Conversion
1 Equivalent units 120,000 106,000

2 Costs per equivalent unit 1.15 10.28

3 Cost of goods completed and transferred ou 1,143,000

4 Cost remaining in August 31 work-in-process inventory

Direct Material 23,000
Conversion 61,680

Q.4.29

1
a Equivalents units 64,000 58,000
b Unit costs 5.45 49.05
c Cost of goods completed and transferred out 2,180,000
Direct material 130,800
Conversion 882,900

Q.4.31

Work in process, October 1 (in units 10,000

Units completed and transferred out during 75,000
Total equivalent units: conversion 78,500
Work in process, October 1: conversion 30,225
Costs incurred during October: direct materi 600,000
Cost per equivalent unit: conversion 11.85
Cost of goods completed and transferred ou 1,556,250
Cost remaining in ending work-in-process inv 44500
Q.4.33
1
a Equivalent units 1,100 1,100
b Costs per equivalent unit 85 50

2 Cost of returns in process on February 28 40,500

Q.4.37
Plastic Standard Deluxe Executive
Total unit cost 27.375 39.375 51.975 72.225
Total costs 273,750 472,500 311,850 288,900
Ch7

Q34 1 Break-even point in sales dollars 1890000

2 sales unit required 108000
3 Break-even point in sales dollars 2100000
the selling price that will yield the same contribution-margin
4 ratio 32

Q36 1 Break-even point in units, 300000

2 Net income 840000
3 Volume of sales dollars required 38400000
the selling price that will yield the same contribution-margin
4 ratio 30

Q37 1 Break-even point 88,000 units

Model B is more profitable when sales and production
2 average 184,000 units.
3 Required sales 180,000 units
4 volume level at which annual total costs are equal 160,000 units

Q38 1 Total decrease in operating income -32,400

2 Decrease in operating income -4,200
3 Decrease in operating income -3,600
4

Q39 1

a. Yes. Plan A sales are expected to total 65,000 units (19,500

+ 45,500), which
compares favorably against current sales of 60,000 units
(b) Yes. Sales personnel earn a commission based on gross
dollar sales c) (c) Yes. Commissions will total $267,800
($2,678,000 x 10%), which compares favorably against the
2 current flat salaries of $200,000.
No. The company would be less profitable under the new
2d plan. Net incom current
Net incom Plan A
 The total units sold under both plans are the same; however,
the sales mix has shifted under Plan B in favor of the more
profitable product as judged by the contribution margin. Cold
King has a contribution margin of $10.50 ($43.00 - $32.50),
and Mister Ice Cream has a contribution margin of $16.50
3a ($37.00 - $20.50).

Plan B is more attractive both to the sales force and to the

company. Salespeople earn more money under this
arrangement ($274,950 vs. $200,000), and the company is
3b more profitable ($641,550 vs. $556,000).

40 1 Net income 288,000

Required sales 46,000 sets, or $4,416,000 (46,000 sets x $
If operations are shifted to Mexico, the new unit contribution
2 margin will be $74.40 ($96.00 - $21.60)
Break-even point 32,000 units
CompTronics desires to have a 32,000-unit break-even point
3a with a $72 unit

contribution margin. Fixed costs must therefore drop by

$432,000 ($2,736,000 - $2,304,000),

CompTronics will have to generate a contribution margin of

$85.50 to produce a 32,000-unit break-even point. Based on
a $96.00 selling price, this means that the company can incur
variable costs of only $10.50 per unit. Given the current
variable cost of $24.00 ($96.00 - $72.00), a decrease of
3b $13.50 per unit ($24.00 - $10.50) is needed.

4
(a) Increase
(b) No effect

(c) Increase

(d) No effect

41

1 Standard model: 25000

Super model 27500
Giant model 40816
 2
3 37,500

42 2 Break-even point: 8000000

3 Margin of safety 8,000,000
4 Operating leverage factor 2
5 Dollar sales required to earn target net profit 20000000
6 Sales revenue 100
Variable expenses 25
Contribution margin 75
Fixed expenses 37.5
Net income 37.5

43 1 Plan A break-even point 1,000 units

2,200
Plan B break-even point units

2
Plan A:
3 Plan B has the higher degree of operating leverage 1.2 Plan B: 1.58

4 Net income Plan A 132,000

Net income Plan B 126,000
Plan A profitability decrease 20%
Plan B profitability decrease 26.30%

46 1 BEP 15000
2 Number of sales units required to earn target net profit 29000
3 New BEP 19125
4 Number of sales units required to earn target net profit 31625
5 P 56.67

47 2 BEP 17000
3 Sales (in units) required to show a profit of $280,000 27000
4 Its break-even point will be higher (17,000 units instead of 15,000 units).

The number of sales units required to show a profit of

$280,000 will be lower (27,000 units instead of 29,000 units).
48 1 BE in tons 1100
2 NI 450,000
3 NI 705,000

4 to break even on sales in the new territory 307.5 tons

5 BE tons 1224
BE sales 1224000

6 Required sales 2280000

49 1 Budgeted net income 1,080,000

2 BE 162500
3 Total sale to break even 200000

50 1 BE 70000
2 Number of units of sales required to earn target after-tax net 120000
3 BE 80500
4
5 Number of units of sales required to earn target after-tax net 130000

51 1 CMR 0.34
2 Number of units of sales required to earn target after-tax inco 13000
3 Break-even point (in units) for the touring model 10500 the variable cost per unit would
4 New BE 10729
5 Break-even point 11000

52 1a BE 18000000
1b BE 24000000

2 Required dollars sales 29538462

3 The volume in sales dollars 28800000

53 1a 500
1b 2500
 To achieve its annual after-tax profit objective, management
should select the first alternative, where the sales price is
reduced by $80 and 2,700 units are sold during the remainder
of the year. This alternative results in the highest profit and is
the only alternative that equals or exceeds the company’s
2 profit objective.

Alternative 1 After tax profit 482400

Alternative 2 After tax profit 478800
Alternative 3 After tax profit 408000
556,000
531,700
ts, or $4,416,000 (46,000 sets x $96)
Plan B: 1.58
the variable cost per unit would have to decrease by $4.46 ($79.20 – $74.74).