Variable expenses per unit: Direct Material $40 Direct Labour $32 Variable Manufacturing Overhead $18 Fixed expenses: Fixed Manufacturing Overhead $190,000 Fixed Selling Costs $115,000 Fixed Administrative Costs $135,000
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Valencia Manufacturing Company manufactures and sells musical gadgets. The business earned
Operating Income of $220,000 in 2018, when selling price per unit was $200, and the president of Valencia
is under pressure to increase operating income in 2019. Data for variable cost per unit and total fixed costs
were as follows:
Variable expenses per unit: Direct Material $40
Direct Labour $32
Variable Manufacturing
Fixed expenses: Fixed Manufacturing Overhead $190,000
Fixed Selling Costs $115,000
Fixed Administrative Costs $135,000
Required:
(e) The management of Valencia Manufacturing Company is desirous of increasing operating income by 20% in 2019. They expect per unit data and total fixed costs to remain the same in 2018. Determine the number of units that must be sold to earn this target operating profit. Is this a realistic
goal?
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- SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = 543,000 + 1.34X, where X equals number of smokers. Last year, SmokeCity produced 20,000 smokers. Actual overhead costs for the year were as expected. Required: 1. What is the driver for the overhead activity? 2. What is the total overhead cost incurred by SmokeCity last year? 3. What is the total fixed overhead cost incurred by SmokeCity last year? 4. What is the total variable overhead cost incurred by SmokeCity last year? 5. What is the overhead cost per unit produced? 6. What is the fixed overhead cost per unit? 7. What is the variable overhead cost per unit? 8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 19,500 units and (b) 21,600 units. (Round your answers to the nearest cent.) Explain this outcome.The cost data for Evencoat Paint for the year 2019 is as follows: Using the high-low method, express the companys maintenance costs as an equation where x represents the gallons of paint produced. Then estimate the fixed and variable costs. Predict the maintenance costs i190,000 gallons of paint are produced. Predict the maintenance costs if 81,000 gallons of paint are produced. Using Excel, create a scatter graph of the cost data and explain the relationship between gallons of paint produced and equipment maintenance expenses.Wellington, Inc., reports the following contribution margin income statement for the month of May. The company has the opportunity to purchase new machinery that will reduce its variable cost per unit by $10 but will increase fixed costs by 20%. Prepare a projected contribution margin income statement for Wellington, Inc., assuming it purchases the new equipment. Assume sales level remains unchanged.
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- Valencia Manufacturing Company manufactures and sells musical gadgets. The business earnedOperating Income of $220,000 in 2018, when selling price per unit was $200, and the president of Valenciais under pressure to increase operating income in 2019. Data for variable cost per unit and total fixed costswere as follows:Variable expenses per unit: Direct Material $40Direct Labour $32Variable Manufacturing Overhead $18Fixed expenses: Fixed Manufacturing Overhead $190,000Fixed Selling Costs $115,000Fixed Administrative Costs $135,000Required:(f) Assume that as a result of reorganizing the production process, Valencia Manufacturing Companywas able to reduce direct material cost per unit by $5 due to a change in the quality of raw materialused in the production process but the expected sales of 6,000 units would decrease by 5% andtotal fixed costs are expected to increase by $94,000. What must the new selling price per unit be ifthe company wishes to meet the target operating profit for…Valencia Manufacturing Company manufactures and sells musical gadgets. The business earned Operating Income of $220,000 in 2018, when selling price per unit was $200, and the president of Valencia is under pressure to increase operating income in 2019. Data for variable cost per unit and total fixed costs were as follows: Variable expenses per unit: Direct Material $40 $32 $18 Direct Labour Variable Manufacturing Overhead Fixed Manufacturing Overhead Fixed Selling Costs Fixed Administrative Costs Fixed expenses: $190,000 $115,000 $135,000 Required: (a) Using the equation method, calculate the number of units sold in 2018. (b) Given the sales units calculated in Part (a), prepare a contribution margin income statement for the year ended December 31, 2018, detailing the composition of total fixed costs and clearly showing contribution and net income. (c) Calculate Valencia's break-even point in units and in sales dollars. (d) Calculate the margin of safety in units and in sales dollars.…Valencia Manufacturing Company manufactures and sells musical gadgets. The business earned Operating Income of $220,000 in 2018, when selling price per unit was $200, and the president of Valencia is under pressure to increase operating income in 2019. Data for variable cost per unit and total fixed costs were as follows: Variable expenses per unit: Direct Material $40 Direct Labour $32 Variable Manufacturing Overhead $18 Fixed expenses: Fixed Manufacturing Overhead Fixed Selling Costs Fixed Administrative Costs $190,000 $115,000 $135,000 Required: (a) Using the equation method, calculate the number of units sold in 2018. (b) Given the sales units calculated in Part (a), prepare a contribution margin income statement for the year ended December 31, 2018, detailing the composition of total fixed costs and clearly showing contribution and net income. (c) Calculate Valencia's break-even point in units and in sales dollars.
- Samantha Manufacturing Company manufactures and sells musical gadgets. The business earned Operating Income of $220,000 in 2018, when selling price per unit was $200, and the president of Samantha is under pressure to increase operating income in 2019. Data for variable cost per unit and total fixed costs were as follows: Variable expenses per unit: Direct Material $40 Direct Labour $32 Variable Manufacturing Overhead $18 Fixed expenses: Fixed Manufacturing Overhead $190,000 Fixed Selling Costs $115,000 Fixed Administrative Costs $135,000 Required: (d) Calculate the margin of safety in units and in sales dollars. (e) The management of Samantha Manufacturing Company is desirous of increasing operating income by 20% in 2019. They expect per unit data and total fixed costs to remain the same in 2018. Determine the number of units that must be sold to…Samantha Manufacturing Company manufactures and sells musical gadgets. The business earned Operating Income of $220,000 in 2018, when selling price per unit was $200, and the president of Samantha is under pressure to increase operating income in 2019. Data for variable cost per unit and total fixed costs were as follows: Variable expenses per unit: Direct Material $40 Direct Labour $32 Variable Manufacturing Overhead $18 Fixed expenses: Fixed Manufacturing Overhead $190,000 Fixed Selling Costs $115,000 Fixed Administrative Costs $135,000 (g) You have just begun your summer internship at Samantha Manufacturing. To expand sales, the business is considering paying a commission to its sales team. You have been asked to compute 1) the new break-even sales figure, and 2) the operating profit if sales increase by 10% under the new sales commission plan.…Samantha Manufacturing Company manufactures and sells musical gadgets. The business earned Operating Income of $220,000 in 2018, when selling price per unit was $200, and the president of Samantha is under pressure to increase operating income in 2019. Data for variable cost per unit and total fixed costs were as follows: Variable expenses per unit: Direct Material $40 Direct Labour $32 Variable Manufacturing Overhead $18 Fixed expenses: Fixed Manufacturing Overhead $190,000 Fixed Selling Costs $115,000 Fixed Administrative Costs $135,000 Required: (a) Using the equation method, calculate the number of units sold in 2018. (b) Given the sales units calculated in Part (a), prepare a contribution margin income statement for the year ended December 31, 2018, detailing the composition of total fixed costs and clearly showing contribution and net income.…
