Reference no: EM132842760

PROBLEM 1 - Price per unit P 92.00 Discount to customers 10% Direct cost per unit P 52.60. The marketing department of X Company proposed a price cut on its leading brand, a product called "Vaccine." From the accounting records these are available:

Variable operating expense per unit P5.60

Proposed price cut per unit P10.00

Estimated sales volume before price cut 1,220 pcs.

A. How much is the estimated contribution margin that will be lost due to price cut, assuming the same pre-price cut sales volume?

B. For the same X Company, in the immediately preceding number, what is the additional volume required after the price cut to get the same contribution margin before the price cut? Round off to the nearest whole unit.

PROBLEM 2 - Tonykinn Company is contemplating of marketing a new product. Fixed costs will be $800,000 for production of 75,000 units or less and $1,200,000 if production exceeds 75,000 units The variable cost ratio is 60% for the first 75,000. Contribution margin percentage will increase to 50% for units in excess of 75,000. If the product is expected to sell for $25 per unit, how many units must Tonykinn sell to breakeven?

PROBLEM 3 - The following information is available for X Co. for its first year of operations:

Sales in units 5,000

Production in units 8,000

Manufacturing costs:

Direct labor $3 per unit

Direct material 5 per unit

Variable overhead 1 per unit

Fixed overhead $100,000

Net income (absorption method) $30,000

Sales price per unit $40

A. What would X Co. have reported as its income before income taxes if it had used variable costing?

B. What was the total amount of SG&A expense incurred by X Co.?

C. Based on variable costing, what would X Co. show as the value of its ending inventory?

PROBLEM 4 - Next month's budgeted sales for TEMP is 18,000 units. Each unit of product TEMP uses 6 kilograms of raw materials. The production and inventory budgets for June 1992 are as follows:

Opening Inventory Planned Ending Inventory

Raw materials 21,000 kgs. 24,400 kgs.

Finished goods 15,000 units 11,400 units

During the production process, it is usually found that 10% of production units are scrapped as defective and this loss occurs after the raw materials have been placed in process. What will the raw material purchases be in June?

PROBLEM 5 - JLT Corporation expects to sell 150,000 units during the first quarter of 1998, with an ending inventory for the quarter of 20,000 units. Variable manufacturing costs are budgeted at P50 per unit, with 70% of total variable manufacturing costs requiring cash payments during the quarter. Fixed manufacturing costs are budgeted at P120,000 per quarter, 40% of which are expected to require cash payment during the quarter. In the cash budget, payments for manufacturing costs during the quarter will total ______

PROBLEM 6 - Zebra Corporation has the following activities: creating bills of materials (BOM), studying manufacturing capabilities, improving manufacturing processes, training employees, and designing tooling. The general ledger accounts reveal the following expenditures for manufacturing engineering:

Salaries $150,000

Equipment 80,000

Supplies 20,000

Total $250,000

The equipment is used for two activities: improving processes and designing tooling. Thirty-five percent of the equipment's time is used for improving processes and sixty-five percent is used for designing tools. The salaries are for two engineers. One is paid $100,000, while the other earns $50,000. The $100,000 engineer spends 40% of his time training employees in new processes and 60% of his time on improving processes. The remaining engineer spends equal time on all activities. Supplies are consumed in the following proportions:

Creating BOMs 25%

Studying capabilities 10%

Improving processes 20%

Training employees 25%

Designing tooling 20%

A. What is the cost assigned to the creating BOMs activity?

B. What is the cost assigned to the improving processes activity?

C. What is the cost assigned to the training employees activity?

D. What is the cost assigned to the designing tooling activity?

PROBLEM 7 - A company keeps 20 days of raw materials inventory on hand to avoid shutdowns due to raw materials shortages. Carrying costs average $2,000 per day. A competitor keeps 10 days of inventory on hand the competitor's carrying costs average $1,000 per day. What is the value added cost?