Review Day Exercises SolutionsREVIEW DAY EXERCISESCVP RelationshipsXYZ Company’s break-even sales level for the year was $40,000. When the company incurs total variable costs of $50,000 and fixed costs of $30,000, what would the actual profit (loss) before taxes for the year be?Sales – VC = CM – FC = Profit before taxes$40,000 – VC = CM – $30,000 = $0 Therefore, CM = $30,000 and VC = $10,000>>>> Ratio of VC to Sales = 1:4 Therefore, $50,000 is Actual VC * 4 = $200,000 Sales$200,000 – $50,000 = $150,000 – $30,000 = $120,000 Profit before taxesCHAPTER 7. A company is releasing two new products. Financial details are as follows: Product A Product BSelling Price $200 $100Variable Costs: Marketing $25 $25 Manufacturing $65 $15 CM $110 $60The fixed costs combined are $15,000,000. The sales mix is 70% Product A and 30% Product B. The company’s tax rate is 30%. The company’s goal is to have an after-tax profit of $1,000,000.
Required:How many units of Product A need to be sold? 172,933 * 70% = 121,053How many units of Product B need to be sold? 172,933 * 30% = 51,880Weighted UCM = (110 * 70%) + (60 * 30%) = $95Combined Units = (15,000,000 + (1,000,000/.70)) / $95 = 172,933CHAPTER 2. A company has hired you to help complete the analysis below. The company allocates overhead to work-in-process as follows: $2.00 of overhead per direct labor dollar. Account$$AmountAccount$$AmountWork in process – Oct 31st $ 1,800Revenues – October$27,300Finished goods – Oct 1st $ 4,200Gross Profit – October$12,700October direct labor $ 3,100Direct materials used in Oct$ 8,000October purchases of raw materials $ 9,200Raw materials inventory – Oct 31st $ 3,300Work in process – Oct 1stZeroSelling & Admin expenses – October$ 2,000
Required:How many units of Product A need to be sold? 172,933 * 70% = 121,055How many units of Product B need to be sold? 172,933 * 30% = 51,880Weighted UCM = (110 * 70%) + (60 * 30%) = $95Combined Units = (15,000,000 + (1,000,000/.70)) / $95 = 172,933Chapter 3. An analysis. With the exception of this, we will treat all Direct Workers as a company and calculate their direct labor costs, just by going through the direct labor process. For that we need to have the following items, then the amount of direct labor needed to complete those steps: $2.00 of overhead per direct labor dollar. ***Total of 10,095 direct labor dollars. Total of 10,103,000 direct labor dollars. To find out the amount your company could pay the Direct Workers on their work and what an impact that would have, write down. $2.00 of overhead per direct labor dollar. This is simply the amount of $1.50 of overhead needed to get all the jobs done correctly, in the order provided using data from the Total Direct Current Cost Study. We used the estimate of the difference in indirect cost between the cost of raw materials and direct materials, from 2010 to 2010. In order to be accurate, we looked for the difference in cost between indirect and direct costs in each company on its sales page including those for direct materials.
$10.00 direct labor cost (Ink) $9.00 direct labor cost (Ink) . $10.00 direct labor cost % of total direct labor cost $20.00 of total direct labor cost % of total direct labor cost $31.50 of total direct labor cost % of total direct labor cost (Ink) $32.00 of total direct labor cost % of total direct labor cost $36.50 of total direct labor cost % of total direct labor cost ( Ink) $39.00 of total direct labor cost % of total direct labor cost (Ink) $42.00 of total direct labor cost % of total direct labor cost (Ink) $43.00 of total direct labor cost % of total direct labor cost (Ink) Add your direct labor costs to those percentages to form the estimated direct labor cost. Let’s add the amount of total direct labor cost that the Company could get from that. $10.00 direct labor cost. *Total Direct