Question

1. Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income

   Werner Company produces and sells disposable foil baking pans to retailers for $2.75 per pan. The variable cost per pan is as follows:

   Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income Werner Company produces and sells disposable foil baking pans to retailers for $2.75 per pan. The variable cost per pan is as follows: Direct materials $0.30 Direct labor 0.58 Variable factory overhead 0.74 Variable selling expense 0.13 Fixed manufacturing cost totals $158,752 per year. Administrative cost (all fixed) totals $21,648. Required: 1. Compute the number of pans that must be sold for Werner to break even. pans 2. Conceptual Connection: What is the unit variable cost? What is the unit variable manufacturing cost? Round your answers to the nearest cent. Unit variable cost $ Unit variable manufacturing cost $ Which is used in cost-volume-profit analysis? 3. How many pans must be sold for Werner to earn operating income of $7,400? pans 4. How much sales revenue must Werner have to earn operating income of $7,400? $

   Fixed manufacturing cost totals $158,752 per year. Administrative cost (all fixed) totals $21,648.

   Required:

   1. Compute the number of pans that must be sold for Werner to break even.
   pans

   2. Conceptual Connection: What is the unit variable cost? What is the unit variable manufacturing cost? Round your answers to the nearest cent.

   Unit variable cost	$
   Unit variable manufacturing cost	$

   Which is used in cost-volume-profit analysis?
   

   3. How many pans must be sold for Werner to earn operating income of $7,400?
   pans

   4. How much sales revenue must Werner have to earn operating income of $7,400?
   $

Answer 1

Answer → I. Compute the number of pans that must be sold for Werney to break even 180400 Break even boint = Fixed costs (in units) contribution margin berunit Fixed costs = $(158752 +21648 = $ 180400 Contribution Selling price - Variable costs margin per unit - Iper unit perunit I Contribution = $(2.75-0.30-0.58 -0.74 -0.13) margin per unit → Break even point = $ 180400 (in pans) $1 = 180400 pans 2. What is the unit variable cost? What is the unit variable manufacturing Cost? 1 & 1.75 Unit variable cost Unit variable manufacturing Cost 1.62 → Unit variable cost : Direct materials Direct labor Variable factory overhead Variable sering Expense Unit variable cost $0.30 $0.58 $ 0.74 $ 0.13 $1.75

$ 0.58 → unit variable manufacturing cost 8 Direct Materials $ 0.30 Direct laber Variable factory overhead $ 0.74 Unit variable manufacturing, $ 1.62 Cost

→ Which is used in cost-Volume-profit analysis? Unit variable cost is used in cost Volume profit analysis because cost volume profit analysis helps to calculate Contribution margin by deducting all variable Expenses from Sales revenue in order to cover Fixed costs and If any balance surplus remains there will be a profit of the business. 3. How many bans must be sold for Werney to earn aberating Income of $7400? 3 D Pans (187800 7 Desired operating Income = $7.400 Total Fixed costs = $180400 ► No. of pans to be sold = Fixed costs + Desired aberating to earn desired operating profit Income Contribution margin per pan = $(180400 + 7400) $ 1 = 187800 pans

Therefore, = 187 800 fans I No. of pans must be sold for Werner to earn operating Income of $7400 4. How much sales revenue must weney have to earn operating income of $ 7400? & 516450 No. of pans to be sold for - 1878oo pans Werner to earn operating Income of $ 7400 Sales revenue must = 187800 pans $2.75 Werner have to earn operating income of $7400 - $ 0 516450