Reference no: EM133088531
Questions -
Q1. Alum Corporation sells its product at $30 per unit. Unit variable cost is $22 and total fixed costs total to $100,000 per month. The company currently pays salaries of $40,000 per month but with no commission. It is considering a compensation plan whereby the salespeople would receive 5% commission based on sales, but their salaries would be decreased to $25,000 per month. At what sales level is the company indifferent between the two compensation plans?
Q2. Corny Corporation is subject to a 30% income tax rate and had the following operating information: Selling price per unit, $60; variable cost per unit, $22; and fixed costs of $504,000. Management plans to improve the quality of its product by replacing a component that costs $3.50 with a higher grade material that costs $5.50 and acquiring a $180,000 packing machine. The company will depreciate the machine over a 10-year life with no estimated salvage value using the straight line method of depreciation. If the company wants to earn an after tax income of $201,600, how many units must be sold under the new proposal?
Q3. The standard product mix for making 12,500 tubes of alcohol is:
|
|
Kilograms
|
Cost Per Unit
|
Total Cost
|
|
Material A
|
1,500
|
$0.06
|
$90
|
|
Material B
|
625
|
0.40
|
250
|
|
Material C
|
1,000
|
0.25
|
250
|
In June, 77,500 tubes were produced from an input of:
|
|
Kilograms
|
Cost Per Unit
|
Total Cost
|
|
Material A
|
8,750
|
$0.056
|
$490
|
|
Material B
|
3,750
|
0.380
|
1,425
|
|
Material C
|
6,250
|
0.280
|
1,750
|
Calculate the materials yield variance.