Question

Question 14 3.5 points Save Answer Lance Armstrong was a professional cyclist until cancer left him unable to ride. After long months of chemotherapy, he decided to begin producing his own line of bicycles. The bikes sell for $900, and the fixed monthly operating costs are as follows: Rent and utilities $800 Wages and benefits to employees 2000 Other expenses 474 Lance Armstrong's accountant explained contribution margin ratios, and Lance Armstrong understood clearly that for every dollar of sales, 50.65 went to cover his fixed costs, and anything above that point was profit. Lance Armstrong wishes to earn $4000 of operating profit each month. Calculate the number of bicycles Lance Armstrong will need to sell to achieve the target profit. 4 bicycles 12 bicycles 13 bicycles 3 bicycles

Answer 1

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Answer 14	Amount $
Sell price	900.00
Share of fixed costs	0.65
Fixed costs per unit	585.00
Profit per unit	315.00
Desired operating profit	4,000.00
Units to be sold	13
So 13 bicycle needed to be sold.
Answer is option 3.
Answer 15	Amount $
Direct materials used	269,000.00
Direct labor	150,000.00
Manufacturing overhead	135,000.00
Beginning work in process inventory	63,000.00
Less: Ending work in process inventory	52,900.00
Cost of goods manufactured	564,100.00
Units produced	71,220.00
Unit product cost	7.92
Answer is option 1.
Answer 17
Production Budget	Quarter
Budgeted Sales units	40,000.00
Add: Closing inventory	1,000.00
Less: Opening inventory	10,000.00
Production Budget	31,000.00
Answer is option 4.