Reference no: EM133092405

Questions -

Q1. Dike Company makes 3 different shirts. Data concerning the 3 shirts are as follows:

	Violet	Maroon	Nude
Normal Monthly Sales Volume	100,000	200,000	400,000
Selling Price Per Unit	$1.65	$1.50	$0.85
Variable Cost Per Unit	1.25	0.70	0.25

The total fixed expenses are $400,000 per month. All 3 products are sold in highly competitive markets, so the company is unable to raise its prices without losing unacceptable number of customers. The company has an extremely lean production system, so there is no beginning or ending work in process or finished goods inventories. How much is the company's over-all break-even point in dollars?

Q2. Corny Corporation is subject to a 30% income tax rate and had the following operating information: Selling price per unit, $60; variable cost per unit, $22; and fixed costs of $504,000. Management plans to improve the quality of its product by replacing a component that costs $3.50 with a higher grade material that costs $5.50 and acquiring a $180,000 packing machine. The company will depreciate the machine over a 10-year life with no estimated salvage value using the straight line method of depreciation. If the company wants to earn an after tax income of $201,600, how many units must be sold under the new proposal?

Q3. Solo Company uses a standard cost system in accounting for the cost of its only product. The standard cost per unit (based on 10,000 units production) was set up as follows: Direct materials, 10 kgs at $11/kg.; Direct labor, 8 hours at $50 per hour; Factory overhead, 8 hours at $15 per hour. The following information on the operations appear in the company's record for the month of July: Units completed during the month; 8,000 units; units in process at the end of the month, with 100% materials but half completed, 1,000 units; Direct materials used, 95,000 kgs at $10 per kg; Direct labor, $3,510,000 at a rate of $54; Actual overhead for the month $985,000. What is the variable efficiency variance?