Reference no: EM131017270

McCracken Aerial, Inc., produces and sells a unique type of TV antenna. The company has just opened a new plant to manufacture the antenna, and the following cost and revenue data have been provided for the first month of the plant's operation:

Beginning inventory		0
Units produced		39,250
Units sold		35,000
Selling price per unit	$	90
Selling and administrative expenses:
Variable per unit	$	6
Fixed (total)	$	525,000
Manufacturing costs
Direct materials cost per unit	$	18.0
Direct labor cost per unit	$	9.0
Variable manufacturing overhead cost per unit	$	3
Fixed manufacturing overhead cost (total)	$	981,250

Because the new antenna is unique in design, management is anxious to see how profitable it will be and has asked that an income statement be prepared for the month.

Required: 

a.	Determine the unit product cost. (Do not round intermediate calculations and round your final answer to 1 decimal place.)
b.	Prepare an income statement for the month.
2.	Assume that the company uses variable costing.
a.	Determine the unit product cost. (Do not round intermediate calculations and round your final answer to 1 decimal place.)
b.	Prepare a contribution format income statement for the month.

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The contribution margin ratio is equal to:

1 - (Contribution Margin/Sales).

Total manufacturing expenses/Sales.

1 - (Gross Margin/Sales).

(Sales - Variable expenses)/Sales.

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Moccio Enterprises, Inc., produces and sells a single product whose selling price is $120.00 per unit and whose variable expense is $37.20 per unit. The company's monthly fixed expense is $356,040.

Assume the company's target profit is $15,000. The dollar sales to attain that target profit is closest to:

$1,196,903

$701,894

$537,739

$371,040

Florek Inc. produces and sells a single product. The company has provided its contribution format income statement for March.

Sales (6,000 units)	$	330,000
Variable expenses		210,000
Contribution margin		120,000
Fixed expenses		87,500
Net operating income	$	32,500

If the company sells 6,200 units, its net operating income should be closest to:

$32,500
$43,500
$33,583
$36,500
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Data concerning Cutshall Enterprises Corporation's single product appear below:

Selling price per unit	$	190.00
Variable expense per unit	$	94.50
Fixed expense per month	$	438,790

The unit sales to attain the company's monthly target profit of $25,000 is closest to: (Do not round your intermediate calculations.)

4,595
4,908
4,856
2,441
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Brees Inc., a company that produces and sells a single product, has provided its contribution format income statement for April.

Sales (6,200 units)	$136,400
Variable expenses	80,600
Contribution margin	55,800
Fixed expenses	48,700
Net operating income	$7,100

If the company sells 5,800 units, its total contribution margin should be closest to:

$52,200
$47,000
$55,800
$6,642
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Data concerning Matsumoto Corporation's single product appear below: 

Selling price per unit	$130.00
Variable expense per unit	$52.00
Fixed expense per month	$280,800

Assume the company's target profit is $5,000. The unit sales to attain that target profit is closest to:

5,496 units
2,198 units
3,664 units
3,786 units

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Spartan Systems reported total sales of $325,000, at a price of $45 and per unit variable expenses of $32, for the sales of their single product.

	Total	Per Unit
Sales	$325,000	$45
Variable expenses	195,000	32
Contribution margin	130,000	$13
Fixed expenses	105,000
Net operating income	$25,000

What is the amount of contribution margin if sales volume increases by 30%?

$130,000
$32,500
$17,500
$169,000
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A manufacturer of cedar shingles has supplied the following data: 

Bundles of cedar shakes produced and sold	280,000
Sales revenue	$2,072,000
Variable manufacturing expense	$1,134,000
Fixed manufacturing expense	$436,000
Variable selling and administrative expense	$238,000
Fixed selling and administrative expense	$164,000
Net operating income	$100,000

The company's break-even in unit sales is closest to:

240,000
25,038
81,081
130,149
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Data concerning Wythe Corporation's single product appear below:

	Per Unit	Percent of Sales
Selling price	$150	100%
Variable expenses	90	60%
Contribution margin	$60	40%

Fixed expenses are $106,000 per month. The company is currently selling 2,000 units per month. The marketing manager would like to cut the selling price by $15 and increase the advertising budget by $5,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 800 units. What should be the overall effect on the company's monthly net operating income of this change?

increase of $31,000
increase of $103,000
increase of $1,000
decrease of $31,000
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Lore Corporation has provided the following information: 

Sales	$200,000
Variable expenses	$40,000
Fixed expenses	$10,000

Lore's break-even point in dollar sales is:

$12,500
$40,000
$10,000
$50,000
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The records of the Dodge Corporation show the following results for the most recent year:

Sales (16,000 units)	$256,000
Variable expenses	$160,000
Net operating income	$32,000

Given these data, the unit contribution margin was:

$16
$6
$4
$2
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The following monthly data are available for the Wyatt Corporation and its only product: 

Unit selling price	$36
Unit variable expenses	$28
Total fixed expenses	$50,000
Actual sales for the month of May	7,000	units

The margin of safety for the company during May was:

$27,000
$56,000
$6,000
$106,000
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Darwin Inc. sells a particular textbook for $32. Variable expenses are $24 per book. At the current volume of 56,000 books sold per year the company is just breaking even. Given these data, the annual fixed expenses associated with the textbook total:

$2,240,000
$1,344,000
$1,792,000
$448,000