Ans to Que 1 | ||
Values given in problem: | ||
Direct labour Cost | 138000 | |
Direct Material Cost | 87000 | |
Equipment Depreciation (Straight Line) | 22000 | |
Factory Insurance | 16000 | |
Factory Manager's Salary | 10800 | |
Janitor's Salary | 5000 | |
Packaging Costs | 19600 | |
Property Taxes | 16000 | |
Computation of Closet Link's Total Variable Cost | Amount in $ | |
Direct labour Cost | 138000 | |
Direct Material Cost | 87000 | |
Packaging Costs | 19600 | |
Total Variable Costs | 244600 | |
(A) $ 244600 | ||
Note: | ||
1. Variable Cost vs. Fixed Cost: Variable Cost do not remain constant when sales/ production level change, on the other hand, fixed costs are costs that remain constant regardless of the sales/ production such as equipment depreciation, factory insurance, factory manager's salary, janitor's salary and property taxes. Therefore, theses expenses shall not be considered while calculating variable cost, as these are fixed & do not change with sales level. | ||
Ans to Que 2 | ||
Assumptions of Cost-Volume-Profit(CVP) analysis. | ||
There are several assumptions which are made for doing CVP analysis, some of them are as follows: | ||
1. Total Fixed Costs are constant | ||
2. Variable Cost per unit is constant | ||
3. Sales Price per unit is constant | ||
4. Everything produced is sold | ||
5. Costs are only affected because activity changes | ||
6. If a company sells more than one product, they are sold in the same mix | ||
As per the assumptions given above only one assumption given in the problem is not the assumption of CVP analysis: | ||
(D) The price per unit does not change as volume changes | ||
As the fixed cost per unit vary as per the volume, however, the variable cost per unit remain constant, therefore, when the volume changes variable cost per unit will remain same but the fixed cost per unit will change as per the volume accordingly price will get affected with the change in fixed cost per unit as the volume change as the price is the composition of variable cost, fixed cost & profit/ loss. | ||
Ans to Que 3 | ||
(B) Senstivity Analysis | ||
is a 'What if' technique that estimates profit or loss results if sales price , cost, volume or underlying assumptions change. | ||
Ans to Que 4 | Amount in $ | |
Sale price per unit | 40 | |
Variable cost per unit | 15 | |
Contribution per unit | 25 | |
No. of units sold | 5000 | |
Total Contribution | 125000 | |
Less Fixed Cost | 10000 | |
(B) Operating Profit | 115000 |
Question 1a, 1b, 1c, 1d Closet Links Clothing Company provided the following manufacturing costs for the...
Closet Links Clothing Company provided the following manufacturing costs for the month of June Direct labor cost Direct materials cost $140,000 81,000 (straight-line) Factory insurance Factory manager's salary Janitor's salary Packaging costs Property taxes From the above information, calculate Closet Link's total variable costs. 22,000 12,000 11,400 5,000 19,000 16,000 OA. $221,000 OB. $66,400 O C. $306,400 O D. $240,000
Closet Links Clothing Company provided the following manufacturing costs for the month of June. Direct labor cost $ 132 comma 000$132,000 Direct materials cost 82 comma 00082,000 Equipment depreciation (straightminus−line) 21 comma 00021,000 Factory insurance 16 comma 00016,000 Factory manager's salary 12 comma 00012,000 Janitor's salary 5 comma 0005,000 Packaging costs 18 comma 40018,400 Property taxes 15 comma 00015,000 From the above information, calculate Closet Link's total variable costs.
18 Which of the following costs is a period cost for a manufacturing company? a. Controller's salary b. wages of machine operators c. insurance on factory equipment d. fringe benefits for factory employees Blazin-Boards Company plans to sell 10,000 snowboards at $400 each in the coming year. Product costs include: Direct Materials per snowboard $80 Direct Labor per snowboard $125 Variable overhead per snowboard $15 Total fixed factory overhead $800,000 Variable selling expense is a commission of 5% of sales...
QUESTION 3 Sales revenue is $7,000, total variable costs are 55.600, and total foxed costs are $1,000. How much sales revenue does a firm need to achieve tarpet profit of $2,500? A $17.500 B. $12.500 C. $5,000 D. Not enough information QUESTION 4 Which of the following is most likely to be a variable cost? A Rent for CEO's office B. Depreciation on production equipment Cost of merchandise D. Factory supervisor's salary QUESTIONS Gamma Company has a selling price of...
Question Completion Status: QUESTION 5 Beta Company provided the following information for June: Beginning inventory of finished goods Beginning inventory of work-in-process Ending inventory of finished goods Direct labor used $5,000 $18,000 $ 3,000 $13,000 $10,000 4,000 $5,500 Raw materials used Manufacturing overhead Cost of goods manufactured (COGM) The company's cost of goods sold (COGS) for June is OA $3,500 B. $2,500 OC.$7,500 D. $42,000 QUESTION 6 Compute cost of ending inventory using the following data: $32,000 Cost of beginning...
Question 4a. 4b. 4c. Question Help Awanita Enterprises sells computer flash drives for $4.34 per unit. Unit variable cost is $0.06. The breakeven point in units is 3,600, and expected sales in units are 4,500. What is the margin of safety in dollars? O A. $15,624 lo B. $3,906 OC. $3,852 O D. $54 WUDOLU Which of the following costs change in total in direct proportion to a change in volume? O A. fixed costs O B. period costs O...
which of the following is most likely to be variable cost QUESTION 4 Which of the following is most likely to be a variable cost? O A. Rent for CEO's office OB. Depreciation on production equipment O C. Cost of merchandise O D. Factory supervisor's salary 2.5 p QUESTION 8 Gamma Company has a selling price of $3/unit, unit variable costs of $2/unit and total fixed costs of $1,000. Current sales revenue is $12,000. What is the margin of safety...
O Variable costs per unit remain the same regardless of the volume. Question 7 2.5 pts Which of the following costs are most likely to be classified as variable? Factory rent Manager salaries Insurance Direct materials Straight-line depreciation 2.5 pts Question 8 Which of the following costs are most likely to be classified as fixed? Differential cost Question 6 2.5 pts Which one of the following statements is not true? Total fixed costs remain the same regardless of volume within...
Match the following terms with the correct definitions 1. Costs that do not change in total over wide ranges of volume. Technique that estimates profit or loss results when conditions 2. change a. Breakeven b. Contribution margin c. Cost behavior d. Margin of safety e. Relevant range 3. The sales level at which operating income is zero. Drop in sales a company can absorb without incurring an operating . Cos loss. 5. Combination of products that make up total sales....
Business Decision Case The following total cost data are for Ralston Manufacturing Company, which has a normal capacity per period of 400,000 units of product that sell for $18 each. For the foreseeable future, regular sales volume should continue at normal capacity of production Solution 6.1 y-intercept 5 Total fixed costs of $5.000 Slope 5 Variable cost per unit of approximately $0.50 per water bottle cage Total cost 5 ($0.50 3 # of water bottle cages) 1 $5,000 $25,000 5...