Reference no: EM133095000
Problem 1 - Dike Company makes 3 different shirts. Data concerning the 3 shirts are as follows:
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Violet
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Maroon
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Nude
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Normal Monthly Sales Volume
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100,000
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200,000
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400,000
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Selling Price Per Unit
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$1.65
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$1.50
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$0.85
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Variable Cost Per Unit
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1.25
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0.70
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0.25
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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?
Problem 2 - Alum Corporation sells its product at $30 per unit. Unit variable cost is $22 and total fixed costs total to $100,000 per month. The company currently pays salaries of $40,000 per month but with no commission. It is considering a compensation plan whereby the salespeople would receive 5% commission based on sales, but their salaries would be decreased to $25,000 per month. At what sales level is the company indifferent between the two compensation plans?
Problem 3 - 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?