Reference no: EM132560825

Question 1 - HASF Tires, Inc. sells tires to service stations for an average of $45 each. The variable costs of each tire is $30 and monthly fixed manufacturing costs total $15,000. Other monthly fixed costs of the company total $12,000.

Required -

a. What is the break-even level in tires?

b. What is the margin of safety, assuming sales total $90,000?

c. What is the break-even level in tires, assuming variable costs increase by 30 percent?

d. What is the break-even level in tires, assuming the selling price goes up by 10 percent, fixed manufacturing costs decline by 10 percent and other fixed costs decline by $1500?

Question 2 - During June HASF company material purchases amounted to 5,000 pounds at a price of 7 per pound. Actual costs incurred in the production of 5,000 units were as follows:

Total direct labor cost 50,000 @10 per hour

Cost of Material used 35,000

The standards for one units of company product are as follows

Direct labor direct material

1.5 hour required for one unit 2 pounds of Material required for one unit

Rate 12 per hour price 10 per pound

Required -

1. Compute the following

Material variance

Material quantity variance

Material price variance

Labor variance

Labor rate variance

Labor hour variance

2. Summarize the variance that you computed in 1 above by showing the net overall favorable or unfavorable variance for the month. What impact did this figure have on the company income statement?