Tempura Company produces 2,000 parts each year that are used in one of its products. The unit cost of producing this part is Variable cost P 7.50 Fixed cost 6.00 Total cost P 13.50
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The effect on operating income from making the part would be a
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- Gelbart Company manufactures gas grills. Fixed costs amount to 16,335,000 per year. Variable costs per gas grill are 225, and the average price per gas grill is 600. Required: 1. How many gas grills must Gelbart Company sell to break even? 2. If Gelbart Company sells 46,775 gas grills in a year, what is the operating income? 3. If Gelbart Companys variable costs increase to 240 per grill while the price and fixed costs remain unchanged, what is the new break-even point?Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows: Their sales mix s reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $25,000 per year. What are total variable costs for Morris with their current product mix? Calculate the number of units of each product that will need to be sold in order for Morris to break even. What is their break-even point in sales dollars? Using an income statement format, prove that this is the break-even point.Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals 146,000. Each door handle sells for 12 and has variable cost of 9; each trim kit sells for 8 and has variable cost of 5. Required: 1. What are the contribution margin per unit and the contribution margin ratio for door handles and for trim kits? 2. If Polaris sells 20,000 door handles and 40,000 trim kits, what is the operating income? 3. How many door handles and how many trim kits must be sold for Polaris to break even? 4. CONCEPTUAL CONNECTION Assume that Polaris has the opportunity to rearrange its plant to produce only trim kits. If this is done, fixed costs will decrease by 35,000, and 70,000 trim kits can be produced and sold. Is this a good idea? Explain.
- Abilene Industries manufactures and sells three products (XX, W, and ZZ). The sales price and unit variable cost for the three products are as follows: Their sales mix is reflected as a ratio of 4:2:1. Annual fixed costs shared by the three products are $345.000 per year. What are total variable costs for Abilene with their current product mix? Calculate the number of units of each product that will need to be sold in order for Abilene to break even. What is their break-even point in sales dollars? Using an income statement format, prove that this is the break-even point.1. Party Co. produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts are: Variable manufacturing cost, P12.00; fixed manufacturing cost, P9.00. The part can be purchased from an outside supplier at P20.00. If the part is purchased from the outside supplier, two thirds of the fixed manufacturing costs can be eliminated. What would be the annual impact on the company’s net operating income as a result of buying the part from the outside supplier? 2.Division A produces a part that it sells to outside customers. Data concerning this part follows: Selling price to outside customers, P60; Variable cost per unit, P40; Total fixed costs, P100,000; Capacity in units, 20,000 units. Division B of the same company purchases 5,000 units of similar part from an outside supplier at a price of P58 per unit. If Division B wants to purchase 5,000 units from Division A instead, and Division A has no idle capacity, what should be the…Noblesya Co. produces 1,000 parts per year, which are used in the assembly of one ofits products. The unit product cost of these parts are: Variable manufacturing cost,P12.00; fixed manufacturing cost, P9.00. The part can be purchased from an outsidesupplier at P20.00. If the part is purchased from the outside supplier, two thirds of thefixed manufacturing costs can be eliminated. What would be the annual impact on thecompany’s net operating income as a result of buying the part from the outside supplier? provide solution
- Lucille Inc manufactures a product that gives rise to a by product called "Robon". The only cost associated with Robon are additional processing cost of P1.00 for each unit. Lucille accounts for Robon sales first by deducting its separable costs from such sales and then by deducting this net amount from the cost of sales of the major product. For the past year, 2,000 units of Robon were produced which were sold for P3.00 each. Sales revenue and cost of goods sold from the main product were P500,000 and P400,00 respectively. Required: If Lucille changes its method of accounting for Roblon sales by showing the net amount as "other income", the effect on gross margin would be (increase of decrease of what amount?) The gross martin after considering the by product sales and costs would be1 Green Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these part is: Variable manufacturing cost Fixed manufacturing cost Unit product cost S12 9 S21 The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, two thirds of the fixed manufacturing costs can be eliminated. The annual impact on the company's net operating income as a result of buying from the outside supplier would be: (a) (b) (c) (d) S1,000 increase $2,000 increase $2,000 decrease None of the above. 2 If sales increase from $80,000 per year to $120,000 per year, and if the operating leverage is 5, then net operating income should increase by: (a) (b) (c) 250% 300% 334% (d) None of the above. 3. Dunklin Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,620 patient-visits and the actual level of activity was 1,540…Damon Industries manufactures 15,000 components per year. The manufacturing costs of the components were determined as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead An outside supplier has offered to sell the component for $16. If Damon purchases the component from the outside supplier, the manufacturing facilities would be unused and could be rented out for $11,600. If Damon purchases the component from the supplier instead of manufacturing it, the effect on operating profits would be a: Multiple Choice O O $78,900 increase. $42,100 increase. $37,900 decrease. $ 129,000 20,500 60,000 80,000 $18,900 decrease.
- KLM Company produces a single product. The selling price is OMR 40 a unit and the variable costs is OMR 25 a unit. The annual fixed costs of the business are OMR 5000. The business aims to make OMR 23500 profit during the forthcoming year. How much sales (OMR) required to achieve this target profit? Select one: a. OMR 58000 b. OMR 68700 c. OMR 76000 d. OMR 69000Shalom Company manufactures Peace Products and sells it at P500 per unit. Variable manufacturing costs to manufacture is P200 per unit, while it incurs P150 per unit to sell. The fixed costs to manufacture and sell are P150,000 and P120,000, respectively. (1) How many units should Shalom Company sell to break-even? (2) If the company targets to earn profit of P300,000, how many units should Company sell?Solemnity Company produces a product that sells for P60. The variablemanufacturing costs are P30 per unit. The fixed manufacturing cost is P10 perunit based on the current level of activity, and fixed selling and administrativecosts are P8 per unit. A selling commission of 10% of the selling price is paid on each unit sold. The contribution margin per unit is: A. P24.B. P36.C. P30.D. P54