Question

ete this question by entering your answers in the tabs below.

• Required 1
• Required 2

Calculate the following budgeted figures for 2022:

a. The total fixed cost.

b. The variable cost per unit sold.

c. The contribution margin per unit sold.

d. The break-even point in unit sales and dollar sales.

e. The margin of safety.

f. The degree of operating leverage.

Show less

	a. Total fixed cost per year b. Total variable cost per unit sold c. Contribution margin per unit sold d. Unit sales to break even Sales dollars to breakeven e. Margin of safety f Degree of operating leverage

2. Prepare a budgeted variable costing income statement for 2022. Stop your computations at net operating income.

	Budgeted Variable Costing Income Statement Variable expenses: Fixed expenses:

Nyna Comforter S... Reyna Light Filterin... + Riverbrook Home Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows: $ 46,280 260,000 11,250 32,250 $349,700 Endless Mountain Company Balance Sheet December 31, 2021 Assets Current assets: Cash Accounts receivable (net) Raw materials inventory (4,500 yards) Finished goods inventory (1,500 units) Total current assets plant and equipment: Buildings and equipment Accumulated depreciation Plant and equipment, net Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Stockholders' equity: Common stock 900,000 (292,000) 608,000 $957,700 $ 158,000 $ 419,800 < Prev 12 of 12 Next Scanned from Scanned from a xem Scanned from a xe pof Scanned from a Xeral - ü o

Answer 1

Working Notes: Sales А Sale units Selling price per unit Sales Quarter 1 (a) 12,000 $32 $384,000 Quarter 2 (b) 37,000 $32 $1,184,000 Quarter 3 (c) 15,000 $32 $480,000 Quarter 4 (d) 25,000 $32 $800,000 Year (a)+(b) + (c)+(d) 89,000 $32 $2,848,000 B C = AXB Direct Material Cost A B Sale units Material required per unit (yards) Total Material required Material cost per yard Direct Material Cost Quarter 1 (a) 12,000 3.50 42,000 $3 $126,000 Quarter 2 (b) 37,000 3.50 129,500 $3 $388,500 Quarter 3 (c) 15,000 3.50 52,500 $3 $157,500 Quarter 4 (d) 25,000 3.50 87,500 $3 $262,500 Year (a) +(b) + (c) + (d) 89,000 3.50 311,500 $3 $934,500 C=AXB D E = CXD Direct Labor Cost A Sale units Labor required per unit (hours) Total Labor hours required Labor cost per hour Direct Labor Cost B C= AXB D E = CXD Quarter 1 (a) 12,000 0.25 3,000 $18 $54,000 Quarter 2 (b) 37,000 0.25 9,250 $18 $ 166,500 Quarter 3 (c) 15,000 0.25 3,750 $18 $67,500 Quarter 4 (d) 25,000 0.25 6,250 $18 $112,500 Year (a)+(b)+(c) + (d) 89,000 0.25 22,250 $18 $400,500 Variable Manufacturing Cost Total Labor hours required (as find above) Variable Manufacturing cost per hour Variable Manufacturing Cost A B Quarter 1 (a) 3,000 $3 $9,000 Quarter 2 (b) 9,250 $3 $27,750 Quarter 3 (c) 3,750 $3 $11,250 Quarter 4 (d) 6,250 $3 $18,750 Year (a)+(b)+(c) + (d) 22,250 $3 $66,750 C = AXB Variable Selling and Administrative Expenses Sale units Variable Selling & Administrative expenses per unit Variable Selling & Administrative expenses A B C = AXB Quarter 1 (a) 12,000 $1.25 $15,000 Quarter 2 (b) 37,000 $1.25 $46,250 Quarter 3 (c) 15,000 $1.25 $18,750 Quarter 4 (d) 25,000 $1.25 $31,250 Year (a)+(b) + (c) + (d) 89,000 $1.25 $111,250 Fixed Manufacturing Cost Quarter 1 (a) $150,000 Quarter 2 (b) $150,000 Quarter 3 (c) $150,000 Quarter 4 (d) $150,000 Year (a)+(b) + (c) + (d) $600,000 Fixed Manufacturing Cost A Fixed Selling & Administrative Expenses A B Quarter 1 (a) $25,000 $64,000 $12,000 $8,000 $8,000 $117,000 Advertising Executive Salaries Insurance Property tax Depreciation Expense Fixed Selling & Administrative Expenses Quarter 2 (b) $25,000 $64,000 $12,000 $8,000 $8,000 $117,000 Quarter 3 (c) $25,000 $64,000 $12,000 $8,000 $8,000 $117,000 Quarter 4 (d) $25,000 $64,000 $12,000 $8,000 $8,000 $117,000 Year (a)+(b)+(c) + (d) $100,000 $256,000 $48,000 $32,000 $32,000 $468,000 с D E F=A+B+C+D+E 1a. Calculation of Total Fixed cost Total Fixed cost = Yearly Fixed Manufacturing Cost + Yearly Fixed Selling & Administrative Expenses Total Fixed cost = $ 600,000 + $ 468,000 Total Fixed cost = $ 1,068,000 1b. Calculation of Total Variable cost per unit sold Total Variable cost = Yearly Direct Material cost + Yearly Direct Labor Cost + Yearly Variable Manufacturing Cost + Yearly Variable Selling & Administrative Expenses Total Variable cost = $ 934,500 + $ 400,500 + $ 66,750 + $ 111,250 Total Variable cost = $ 1,513,000 Total Variable cost per unit sold = Total Variable cost = Yearly sale units Total Variable cost per unit sold = $ 1,513,000 = 89,000 units Total Variable cost per unit sold = $ 17.00 1c. Calculation of Contribution margin per unit sold Contribution margin per unit sold = Selling price per unit - Total Variable cost per unit sold Contribution margin per unit sold = $ 32.00 - $ 17.00 Contribution margin per unit sold = $ 15.00 1d. Calculation of Break even sale units and doollar sales Break even sale units = Total Fixed cost : Contribution margin per unit sold Break even sale units = $ 1,068,000 = $ 15.00 Break even sale units = 71,200 units Break even dollar sales - Break even sale units x Selling price per unit Break even dollar sales = 71,200 units x $ 32.00 Break even dollar sales = $2,278,400 le. Calculation of margin of safety Margin of safety = Yearly Total Sales - Break even dollar sales Margin of safety = $ 2,848,000 - $ 2,278,400 Margin of safety = $ 569,600 1f. Calculation of degree of operating leverage A B Total Sales Total Variable Cost Contribution margin Total Fixed Cost Net operating income $ $ $ Per unit For 89,000 units 32.00 $ 2,848,000 17.00 $ 1,513,000 15.00 $ 1,335,000 $ 1,068,000 267,000 C=A-B E F = C-E $ Contribution margin $ 1,335,000 Net Profit $ 267,000 Degree of Operating Leverage = Contribution margin/Net Profit = $ 1,335,000 / $ 267,000 = 5.0 times 5.00

Budgeted Variable Costing Income Statement Sales $2,848,000 Variable costs : Direct Material Cost Direct Labor Cost Variable Manufacturing Cost Variable Selling & Administrative expenses $934,500 $400,500 $66,750 $111,250 $1,513,000 Fixed costs : Fixed Manufacturing Cost Advertising Executive Salaries Insurance Property tax Depreciation Expense $600,000 $100,000 $256,000 $48,000 $32,000 $32,000 $1,068,000 $267,000 Net operating income = Sales - Variable costs - Fixed costs