Question

Data Table Variable cost (per bowl) Direct materials Direct manufacturing labor $ 3.50 8.00 1.10 12.60 Variable overhead (manufacturing, marketing, distribution and customer service) $ Total variable cost per bowl Fixed costs Manufacturing $ 18,000 166,800 Marketing, distribution, and customer service $ 184,800 Total fixed costs Selling price Expected sales, 21,500 units Income tax rate $ $ 28.00 602,000 40% Print Print Done Done

Answer 1

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A.S. Marx and Company
Workings for Answer 1
Calculation of total variable costs
Particulars	Cost per unit	Amount $	Amount
Number of units	21,500.00
Direct Materials	3.50	75,250.00	This is $ 3.50* 21,500 units.
Direct manufacturing labor	8.00	172,000.00	This is $ 8* 21,500 units.
Variable overhead	1.10	23,650.00	This is $ 1.10* 21,500 units.
Total	12.60	270,900.00

Answer 1
Income Statement	Amount $
Sales	602,000.00
Less: Variable costs
Direct Materials	75,250.00
Direct manufacturing labor	172,000.00
Variable overhead	23,650.00
Total Variable costs	270,900.00
Total Contribution	331,100.00
Less: Fixed costs
Manufacturing	18,000.00
Marketing	166,800.00
Total Fixed costs	184,800.00
Net operating income	146,300.00
Less: Tax at 40%	58,520.00
Net income	87,780.00

Answer 2
Sell price	28.00
Less: Variable cost per unit	12.60
Contribution per unit	15.40
Total Fixed costs	184,800.00
Breakeven units	12,000.00	This is $ 184,800/ 15.40

Workings for Answer 3
Calculation of total variable costs
Particulars	Cost per unit	Amount $	Amount
Number of units	24,000.00
Direct Materials	3.50	84,000.00	This is $ 3.50* 24,000 units.
Direct manufacturing labor	8.00	192,000.00	This is $ 8* 24,000 units.
Variable overhead	1.10	26,400.00	This is $ 1.10* 24,000 units.
Total	12.60	302,400.00

Answer 3
Income Statement
Sales	672,000.00
Less: Variable costs
Direct Materials	84,000.00
Direct manufacturing labor	192,000.00
Variable overhead	26,400.00
Total Variable costs	302,400.00
Total Contribution	369,600.00
Less: Fixed costs
Manufacturing	18,000.00
Marketing	166,800.00
Advertising	33,880.00
Total Fixed costs	218,680.00
Net operating income	150,920.00
Less: Tax at 40%	60,368.00
Net income	90,552.00

Answer 4
Sell price	28.00
Less: Variable cost per unit	12.60
Contribution per unit	15.40
Total Fixed costs	218,680.00
Breakeven units	14,200.00	This is $ 218,680/ 15.40
Breakeven revenue	397,600.00	This is 14,200 units * $ 28.