Question

Threads Unlimited operates a chain of shirt stores that carry many styles of shirts that are all sold at the same price. To encourage sales personnel to be aggressive in their sales efforts, the company pays a substantial sales commission on each shirt sold. Sales personnel also receive a small basic salary.

The following worksheet contains cost and revenue data for Store 45. These data are typical of the company's many outlets:

Roberts Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead AAAA 26 18 6 3 390.000 150,000 Fixed selling and administrative expenses During its first year of operations Roberts produced 60,000 units and sold 60,000 units. During its second year of operations it produced 75,000 units and sold 50,000 units. In its third year, Roberts produced 40.000 units and sold 65.000 units. The selling price of the company's product is $62 per unit Required: < Prev 3 or 3

Answer 1

Ans Company's Break Even Point in units sold 60,000 Units Unit Product Cost for Year 1,Q & 3 Year 1 Year2 & so Year3 $50 $50

3 Variable Costing Income Statement Yeart Year 2 Year 3 40,30,000 37,20,000 31,00,000 Sales Variable Expenses Variable COGS Variable selling & Distribution & 30,00,000 37,50,000 39,50,000 1,80,000 2,95,000 1,95,ovo 34,45,000 31,80,000 39,75,000 5,40,000 (9,75,000) 5, 85,000 Total Variable Exp. Contribution Margin fixed Expenses fixed Manufacturing 011 390,000 3,90,000 390,033 fixed selling 1.50,000 150,000 150,000 540,000 5.49000 540,000 Adm. Exp. Total Fixed Gxp. Net Operating Income Closs) (14,15,000) 45000