Woody’s Widget Shop has the following information: The average widgethas a sales price of $18; raw materials for the widget are $4; it takes30 minutes to assemble one widget; and production labor is paid $8 perhour. Operating expenses are as follows: salaries, $2,500 per week; insurance,$1,200 per quarter; rent, $3,000 per month; and utilities, $1,000 per month.a. How many widgets must be sold each month in order to break even?b. How many dollars in sales does this represent?c. What is the contribution margin for each widget sold?d. If the goal is to make $100,000 profit per month, how many widgets mustbe sold?

Woody’s Widget Shop has the following information: The average widgethas a sales price of $18; raw materials for the widget are $4; it takes30 minutes to assemble one widget; and production labor is paid $8 perhour. Operating expenses are as follows: salaries, $2,500 per week; insurance,$1,200 per quarter; rent, $3,000 per month; and utilities, $1,000 per month.a. How many widgets must be sold each month in order to break even?b. How many dollars in sales does this represent?c. What is the contribution margin for each widget sold?d. If the goal is to make $100,000 profit per month, how many widgets mustbe sold?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 6E: Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of...

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Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of$25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk usesa PC and laser printer in processing orders. Time available on each PC system is sufficient toprocess 6,500 orders per year. The cost of each PC system is $1,100 per year. In addition to thesalaries, Elliott spends $27,560 for forms, postage, and other supplies (assuming 26,000 purchaseorders are processed). During the year, 25,350 orders were processed.Required:1. Classify the resources associated with purchasing as (1) flexible or (2) committed.2. Compute the total activity availability, and break this into activity usage and unused activity.3. Calculate the total cost of resources supplied (activity cost), and break this into the cost ofactivity used and the cost of unused activity.4. (a) Suppose that a large special order will cause an additional 500 purchase orders. Whatpurchasing costs are…
Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of $25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is $1,100 per year. In addition to the salaries, Elliott spends $27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Which of the resources associated with purchasing can be classified as flexible resources? Forms, Postage and Supplies Which of the resources associated with purchasing can be classified as committed resources? PC system and clerks 2. Compute the total activity availability, and break this into activity usage and unused activity. Activity availability: fill in the blank 3 purchase orders Activity usage: fill in the blank…
A company that builds and sells desks has a weekly overhead including salaries and plant costs of P170,000. The cost of materials for each desk is P2,000 and the desk is sold for P10,000. How many desks must be built and sold each week so that the company is guaranteed a profit?
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