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  1. Stites Corporation will make $100,000 if it sells 8,000 bathtubs for $200 per unit. If the contribution margin is 30%, what will the fixed costs be?
  2. Bookmark question for laterA firm’s per-unit contribution margin is $30, its fixed costs are $67,500, and its daily production output is 18 units. How many days will it take to break even after it is in operation?
  3. Bookmark question for laterExhibit 21-5The following is a partial income statement for Duncan Corporation for 2011:
    Duncan Corporation
    Projected Income Statement
    For the Year Ended December 31, 2011
    Sales revenue (750 units at $20) $15,000
    Manufacturing cost of goods sold:
    Direct materials used $2,250
    Direct labor 2,100
    Variable manufacturing overhead 2,650
    Fixed manufacturing overhead 750 7,750
    Gross margin $ 7,250
    Selling expenses:
    Variable costs $1,100
    Fixed costs 950
    Administrative expenses:
    Variable costs 900
    Fixed costs 620
    Total selling and administrative expenses 3,570
    Operating income $ 3,680

    Refer to Exhibit 21-5. How many units of its product will Duncan Corporation have to sell to break even?

  4. Bookmark question for laterRefer to Exhibit 21-5. What will be Duncan Corporation’s operating income if sales volume increases by 40 percent?
  5. Bookmark question for laterAt a break-even point of 600 units sold, the variable costs were $600 and the fixed costs were $300. What will the sale of each additional unit contribute to profit before income taxes?
  6. Bookmark question for laterCollins Co. earned a profit of $2,000 in January. The company has estimated that sales will increase by $13,500 in February. Assume that fixed costs for January were $3,000 (and are not expected to change) and the variable cost ratio is 40%. What is the expected profit for the next month?
  7. Bookmark question for laterAfter the break-even point is reached, a firm that has a per-unit contribution margin of $20 will have a $500 increase in profits when sales increase by:
  8. Bookmark question for laterStanley Company manufactures and sells one product for $200 per unit. The variable costs per unit are $140, and monthly total fixed costs are $7,500. Last month Stanley sold 100 units and expects sales to remain the same for the current month. If fixed costs increase by $1,500, what is the break-even point for the current month?
  9. Bookmark question for laterEverclean Company cleans draperies. It charges $90 to clean a full-size drape, and its variable and fixed costs are $55 per drape and $10,000 per year, respectively. Given these data, if Everclean’s variable costs were reduced to $50 per drape, how many drapes would the firm have to clean to break even?
  10. Bookmark question for laterEverclean Company cleans draperies. It charges $90 to clean a full-size drape, and its variable and fixed costs are $55 per drape and $10,000 per year, respectively. Given these data, if Everclean’s fixed costs increased to $15,000, how many drapes must the firm clean to earn $60,000?

  1. Exhibit 18-4Playtime Toys began operations on January 1, 2011. During January it produced 2,000 toys and sold 1,850 toys. The following are needed to make 1 toy:
    Wood 2 board feet at $3 per foot
    Paint 1.5 quarts at $2 per quart
    Direct labor 3 hours at $6 per hour

    Manufacturing overhead is applied at a rate of $4 per direct labor hour.Refer to Exhibit 18-4. Given the information above, the cost of direct materials used in January would be:

  2. Bookmark question for laterCachet Inc. had a $93,000 balance in Accounts Receivable on July 1. In July, it expects to collect 55% of these receivables and 30% of the July credit sales, which are budgeted at $138,000. What is the budgeted accounts receivable at the end of July?
  3. Bookmark question for laterThe following resources are required to make 1 batch of ice cream:
    Milk 5 gallons at $2.50 per gallon
    Sugar 5 pounds at $0.30 per pound
    Direct labor 45 minutes at $12.00 per hour
    Manufacturing overhead 30 minutes at $6.00 per hour

    Given this information, what is the cost of making 1 batch of ice cream?

  4. Bookmark question for laterTheodore’s Musical Toys makes xylophones. Each xylophone takes 3 labor hours to make at a rate of $10.00 per hour. What is the budgeted production of xylophones if the budgeted direct labor cost for July is $16,200?
  5. Bookmark question for laterA department has a budgeted monthly manufacturing overhead cost of $160,000 plus $16 per direct labor hour. If a flexible budget reflects $388,000 for total manufacturing overhead cost for the month, the actual direct labor hours would be:
  6. Bookmark question for laterExhibit 18-6The July manufacturing overhead budget of Kyoto Corporation, shown below, was constructed assuming an activity level of 48,000 direct labor hours:
    Variable costs:
    Indirect labor $48,000
    Indirect materials 24,000
    Factory supplies 19,200 $ 91,200
    Fixed costs:
    Depreciation $38,400
    Supervision 69,600
    Property taxes 36,000 144,000
    Total overhead costs $235,200

    Refer to Exhibit 18-6. If management prepared a flexible budget for July using 54,000 direct labor hours, what amount would this flexible budget show for indirect labor?

  7. Bookmark question for laterRefer to Exhibit 18-6. If management prepared a flexible budget for July using 40,000 direct labor hours, what amount would this flexible budget show for total variable costs?
  8. Bookmark question for laterRefer to Exhibit 18-6. If management prepared a flexible budget for July using 52,000 direct labor hours, what amount would this flexible budget show for total overhead costs?
  9. Bookmark question for laterExhibit 18-7Cedar Corporation uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows:
    Indirect labor $12.00
    Indirect materials 6.00
    Maintenance 2.00
    Utilities 1.00

    Fixed overhead costs per month are:

    Supervision $8,000
    Insurance 1,600
    Factory rent 1,300
    Depreciation 1,900

    Refer to Exhibit 18-7. If Cedar prepares a flexible budget for 4,000 direct labor hours, what amount will this budget show for variable manufacturing overhead costs?

  10. Bookmark question for laterRefer to Exhibit 18-7. If Cedar prepares a flexible budget for 6,000 direct labor hours, what amount will this budget show for total manufacturing overhead costs?

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