The companys controller believes that the company should

Reference no: EM13576884

Tempe Mechanical Company manufactures and sells a specific type of corrosion resistant flange. The following costs are incurred during the company's year 20XX of operations:

Variable Cost Per Unit:

Manufacturing:

Direct Materials $18

Direct Labor $ 7

Variable Manufacturing Overhead $ 2

Variable Selling & Administrative $ 2

Fixed Costs Per Year:

Fixed Manufacturing Overhead $200,000

Fixed Selling & Administrative Exp $110,000

During the year the company produced 20,000 units and sold 16,000 units. The product's selling price is $50 per unit.

Required:

1.Assume the company uses absorption costing:

a. Compute the unit product cost.

b. In good order and form, prepare an Income Statement for the year.

2. Assume the company uses variable costing:

a. Compute the unit product cost.

b. In good order and form, prepare an Income Statement for the year.

3. The company's Controller believes that the company should have set last year's selling price at $51 instead of $50 per unit. She estimates the company could have sold 15,000 units at the increased sales price, thereby increasing the company's gross margin by $2,000 and its net operating income by $4,000. Assuming the Controller's estimates are accurate, do you think the price increase would have been a good idea?

Reference no: EM13576884

Questions Cloud

Bank reconciliation is a simple process of exchanging : you have read all about fraud and management and control of cash. record keeping and reconciling bank accounts is an

A university found that 30 of its students withdraw : a university found that 30 of its students withdraw without completing the introductory statistics course. assume

An electronics firm claims that the proportion of defective : an electronics firm claims that the proportion of defective units of a certain process is 5. a buyer has a standard

The predetermined manufacturing overhead rate of 14 per : costello corporation manufactures a single product. the standard cost per unit of product is shown belowdirect

The companys controller believes that the company should : tempe mechanical company manufactures and sells a specific type of corrosion resistant flange. the following costs are

Seasonal indices for the four quarters have been found to : management of daviss department store has used time-series extrapolation to forecast retail sales for the next four

Asume that customers arrive completely randomly one at a : question the manager of the hippon drug store is remodeling his facility and is considering three ways of organizing

With a major expansion planned judy projects sales next : in the past judy holmess tire dealership sold an average of 1000 radials each year. in the past two years 200 and 250

When the manager is helping the mean service time for each : question the mcdougal sandwich shop has two windows available for serving customers who arrive at a poisson rate of

User Account

All Pages