Question

Page 4 of 12 Finished Goods 25 . 258 217 66 5 Below is the information (incomplete) for Forster Corporation: Work in Process bb 10 bb DM DL 55 OH 153 eb 20 Note: bb is the beginning balance and e/b is the ending balance. Calculate the missing number (?) in the Work-in-process account. WIP S 198 B В C S 21 D s 60 E. None of the above А. 6 Gardiner Corporation's break-even point in quantity is 60,000 units. Their unit contribution margin is $4.00. Last quarter, Gardiner reported a loss of $20,000. How many units did they sell? А. 55.000 units В. 60.000 units С 80.000 units D. 50,000 units E None of the above

Answer 1

Answer 5.

D. $60.

Explanation:

Cost of goods manufactured (COGM) = Debit entry in Finished goods A/c = $258

Wook in Process A/c

b/b	10
DM	60	COGM	258
DL	55
OH	153
c/b	20

DM = c/b + COGM - b/b - DL - OH

= 20 + 258 - 10 - 55 - 153 = 60

Answer 6.

A. 55,000 units.

Explanation:

Total contribution margin at break even level = 60,000 units * $4 = $240,000

At break even level total contribution margin = Fixed costs = $240,000.

Loss reported for the quarter (given) = $20,000

Total contribution margin for the quarter = Fixed costs - Loss reported for the quarter

= $240,000 - $20,000 = $220,000

Units sold = Total contribution margin for the quarter / Contribution margin per unit

= $220,000 / $4 = 55,000 units

Answer 9.

C. $60,000

Explanation:

Total contribution = (Selling price - Variable cost per unit) * Units sold

= ($40 - $24) * 6,000 units

= $96,000

Degree of operating leverage = Total contribution / Net operating income

or , Net operating income = Total contribution / Degree of operating leverage

= $96,000 / 4 = $24,000

Fixed cost = Total contribution - Net operating income

=  $96,000 - $24,000 = $72,000

Break even point in units = Fixed cost / Contribution margin per unit

= $72,000 / ($40 - $24)

= 4,500 units

Margin of safety = (Actual units sold - Break even point in units) * Selling price

= (6,000 units - 4,500 units) * $40 = $60,000