Reference no: EM132811110
Question - Managerial Cost Accounting Problem
Hart Company makes children's bicycles and had the following values last year (2020):
Number of Units Produced and Sold 5,000 units
Sales $400,000
Fixed Product Costs 180,000
Variable Product Costs 140,000
Fixed Period Cost 30,000
Variable Period Costs 20,000
Income Before Tax 30,000
Income Tax 6,000
Net Income 24,000
Assuming that the units of sales is the only cost driver and that Hart will stay within their relevant range, answer each of the following INDEPENDENT questions. Please SHOW YOUR WORK!
a. What is the break-even point in UNITS?
b. If Hart sells $450,000 of bicycles, how much would the net income (after taxes) be?
c. If Direct Labor costs increase by $1.00 per unit next year, how many UNITS will Hart have to sell to earn $40,000 of Net Income (After Tax)?
d. If the factory rent increases by $6,000 next year, how many dollars must Hart have in sales in order to earn $36,000 of Income Before Tax?
e. If sales increases to $435,000 next year, how much net income would Hart report assuming the $1.00 per unit increase in direct labor costs?
f. If sales increases to $435,000 next year, how much net income would Hart report assuming the $6,000 increase in factory remit?
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