III.

1 The following is An An Corporation's contribution format income statement for last

month:

The company has no beginning or ending inventories. A total of 20,000 units were produced and
sold last month.
Requirements: Answer the following questions and show your work.
1. What is the company's contribution margin ratio?
2. What is the company's break-even in units?
3. If sales increase by 100 units, by how much should net operating income increase?
4. How many units would the company have to sell to attain the target profit of $150,000?

III.2. Halong Corporation has four activities with the following costs:

- Machining $300,000
- Materials handling 225,000
- Assembling 150,000
- Inspection 150,000
Halong uses an activity-based costing system and has provided the following levels for the four
cost drivers:
- Machine hours 60,000
- Material moves 15,000
- Parts 18,750
- Quality inspections 30,000
The cost drivers for machining, materials handling, assembling, and inspection are, respectively;
machine hours, material moves, parts, and quality inspections. The company has been asked to
submit a bid for a proposed job. Estimates for the job are as follows:
- Direct materials $42,000
- Number of materials moves 22
- Number of inspections 42
- Number of machine hours 78
- Number of parts 60
Requirements:
1. Determine the total indirect costs for this job.
2. Determine the total manufacturing costs for this job.
3. The Coletti Cleaning Brigade Company provides housecleaning services to its clients.
The company uses an activity-based costing system for its overhead costs. The
company has provided the following data from its activity-based costing system.

The "Other" activity cost pool consists of the costs of idle capacity and organization-
sustaining costs.
One particular client, the Tubman family, requested 26 jobs during the year that
required a total of 104 hours of housecleaning. For this service, the client was
charged $1,420.

Required:

a. Using the activity-based costing system, compute the customer margin for the
Tubman family. Round off all calculations to the nearest whole cent.

b. Assume the company decides instead to use a traditional costing system in which
ALL costs are allocated to customers on the basis of cleaning hours. Compute the
margin for the Tubman family. Round off all calculations to the nearest whole cent.
4.