Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 11, Problem 3E
To determine
Total fixed cost per unit of production
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Exercise 2:
Company C has the following information for the year 20X2:
$50
Unit sales price
Unit variable cost
$30
Production, sales and admin fixed cost
Interest charge for the year
Operating assets at the beginning of the year
Operating assets at the end of the
Minimum return rate
$400,000
$60,000
$600,000
$800,000
10%
year
30,000 units
Maximum capacity
Requirements:
Question 3
Anggur Sdn Bhd produce 3 products, and the material cost per tonne and estimated annual
sales for each of the products are:
Product
A
B
C
Material cost per unit
RM20.00
RM18.00
RM15.00
Estimated sales
2,000 tonnes
4,000 tonnes
10,000 tonnes
+
+
The indirect cost of operating the machinery used to produce all three products is
RM300,000 per year. In the past, prices have been set by allocating the indirect costs to
the 3 products EQUALLY. The resulting total costs (material costs plus allocated fixed
overhead) are then marked up by 50 per cent.
Required:
a) Calculate the allocation of the above fixed costs per tonne for each product.
b) Base on part a), calculate cost per tonne, revenue per tonne, and price per tonne using
the method described for the price settings.
c) Compute revenue, contribution margin and profit per tonne and in total for the
company.
d) Discuss the pros and cons of the price settings in this manner, and propose a better
way to set the prices.
Question 2
Dickson Group has two divisions. The following statement shows the financial result
of each division for the year ended 2020.
Year 2020
Division B
Division A
Product type
Equipment B
Component A
Sales volume
72,000 units
140,000 units
$00
$00
Sales revenue
720,000
196,000
Variable costs
(382,000)%23
(140,000)
Contribution
338,000
56,000
Fixed costs
60,000
(20,000)
Operating profit
278,000
36,000
# include buying components from Division A.
Division A manufactures one type of component only. It sells the components to
external customers and also to Division B. The following information is available:
Division A
Current production capacity
140,000 units
Sold to Division B
72,000 units
Sold to external markets 68,000 units
External market demand for Component A
Market price $1500 per unit
112,000 units
The current policy of the group is that internal sales 72,000 units should be
transferred at their opportunity cost. Consequently, some components were
transferred to Division B…
Chapter 11 Solutions
Survey Of Accounting
Ch. 11 - 1.Define fixed cost and variable cost and give an...Ch. 11 - Prob. 2QCh. 11 - 3.Define the term operating leverage and explain...Ch. 11 - Prob. 4QCh. 11 - Prob. 5QCh. 11 - 6.If volume is increasing, would a company benefit...Ch. 11 - Explain the risk and rewards to a company that...Ch. 11 - 9.Are companies with predominately fixed cost...Ch. 11 - 10.How is the relevant range of activity related...Ch. 11 - Which cost structure has the greater risk?...
Ch. 11 - 14.The president of Bright Corporation tells you...Ch. 11 - Prob. 12QCh. 11 - Prob. 13QCh. 11 - Prob. 14QCh. 11 - Prob. 15QCh. 11 - Prob. 16QCh. 11 - Prob. 17QCh. 11 - Prob. 1ECh. 11 - Prob. 2ECh. 11 - Prob. 3ECh. 11 - Exercise 2-4A Determining total variable cost The...Ch. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Prob. 7ECh. 11 - Prob. 8ECh. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prepare an income statement using the contribution...Ch. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 17ECh. 11 - Prob. 18ECh. 11 - Prob. 19ECh. 11 - Prob. 20ECh. 11 - Prob. 21PCh. 11 - Prob. 22PCh. 11 - Problem 2-19A Context-sensitive nature of cost...Ch. 11 - Prob. 24PCh. 11 - Prob. 25PCh. 11 - Prob. 26PCh. 11 - Prob. 27PCh. 11 - Prob. 28PCh. 11 - Prob. 29PCh. 11 - Prob. 1ATCCh. 11 - Prob. 2ATCCh. 11 - Prob. 3ATCCh. 11 - Prob. 4ATCCh. 11 - Prob. 5ATC
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