154) A company is currently operating at 65% capacity producing 12,000 units. Cost information
relating to this current production is shown in the following table:
Per Unit
Sales price
$6.00
Direct material
$2.30
Direct labor
$0.87
Variable overhead
$0.91
Fixed overhead
$0.70
The company has been approached by a customer with a request for a special order for 2,000
units. What is the minimum per unit sales price that management would accept for this order if
the company wishes to increase current profits?
155) A company is currently operating at 70% capacity producing 8,000 units. Cost information
relating to this current production is shown in the following table:
Per Unit
Sales price
$15.00
Direct material
$3.20
Direct labor
$7.10
Variable overhead
$0.05
Fixed overhead
$0.60
The company has been approached by a customer with a request for a special order for 1,500
units. The sales price per unit for this special order is $10. Should the company accept the special
order?
156) Assume a company sells a given product for $33.28 per unit. How many units must the
company sell to break-even if variable selling costs are $1.40 per unit, variable production costs
are $23.56 per unit, and total fixed costs are $2,080,000?
157) Assume a company sells a given product for $95 per unit. Variable selling costs are $24.25
per unit and variable production costs are $53.50 per unit. If the company breaks even when
selling 260,000 units, what are total fixed costs?
158) Assume a company sells a given product for $18 per unit. Variable selling costs are $0.70
per unit and variable production costs are $5.30 per unit. If the company breaks even when
selling 4,000,000 units, what are total fixed costs?
159) Blackbird, Incorporated reports the following information regarding its production cost:
Units produced
39,000 units
Direct labor
$13 per unit
Direct materials
$17 per unit
Variable overhead
$200 per unit
Fixed overhead
$9,750,000 in total
a. Compute production cost per unit under variable costing.
b. Compute production cost per unit under absorption costing.
160) Triton Industries reports the following information regarding its production cost:
Units produced
77,000 units
Direct labor
$27 per unit
Direct materials
$12 per unit
Variable overhead
$33 per unit
Fixed overhead
$3,311,000 in total
a. Compute product cost per unit under variable costing.
b. Compute product cost per unit under absorption costing.
161) Home Base, Inc. reports the following production cost information:
Beginning inventory
10,000 units
Units produced
97,000 units
Units sold
92,000 units
Direct labor
$17 per unit
Direct materials
$34 per unit
Variable overhead
$26 per unit
Fixed overhead
$1,940,000 in total
Operating costs
$2,000,000 in total
Assume that productions costs have remained the same since the previous period and all units are
sold for $137.00 per unit.
a. Compute production cost per unit under variable costing.
b. Compute production cost per unit under absorption costing.
c. Determine net income using variable costing.
d. Determine net income using absorption costing.
162) Home Base, Inc. reports the following production cost information:
Units produced
97,000 units
Units sold
92,000 units
Direct labor
$17 per unit
Direct materials
$34 per unit
Variable overhead
$26 per unit
Fixed overhead
$1,940,000 in total
a. Compute production cost per unit under variable costing.
b. Compute production cost per unit under absorption costing.
c. Determine the cost of ending inventory using variable costing.
d. Determine the cost of ending inventory using absorption costing.
163) Lukin Corporation reports the following first year production cost information.
Units produced
62,000 units
Units sold
59,000 units
Direct labor
$41 per unit
Direct materials
$15 per unit
Variable overhead
$150 per unit
Fixed overhead
$4,340,000 in total
a. Compute production cost per unit under variable costing.
b. Compute production cost per unit under absorption costing.
c. Determine the cost of ending inventory using variable costing.
d. Determine the cost of ending inventory using absorption costing.
164) Lukin Corporation reports the following first year production cost information:
Units produced
62,000 units
Units sold
59,000 units
Sales price
$350 per unit
Direct labor
$41 per unit
Direct materials
$15 per unit
Variable overhead
$150 per unit
Fixed overhead
$4,340,000 in total
Operating expenses
$1,000,000
a. Compute production cost per unit under variable costing.
b. Compute production cost per unit under absorption costing.
c. Determine the net income using variable costing.
d. Determine the net income using absorption costing.
165) Castaway Company reports the following first year production cost information:
Units produced
53,000 units
Units sold
51,000 units
Direct labor
$8 per unit
Direct materials
$4 per unit
Variable overhead
$41 per unit
Fixed overhead
$3,339,000 in total
a. Compute production cost per unit under variable costing.
b. Compute production cost per unit under absorption costing.
c. Determine the cost of ending inventory using variable costing.
d. Determine the cost of ending inventory using absorption costing.
166) Castaway Company reports the following first year production cost information:
Units produced
53,000 units
Units sold
51,000 units
Sales price
$150 per unit
Direct labor
$8 per unit
Direct materials
$4 per unit
Variable overhead
$41 per unit
Fixed overhead
$3,339,000 in total
Operating expenses
$1,000,000 in total
a. Determine the net income using variable costing.
b. Determine the net income using absorption costing.
167) A company reports the following information regarding its production cost:
Units produced
14,000 units
Direct labor
$13 per unit
Direct materials
$3 per unit
Variable overhead
? in total
Fixed overhead
$56,000 in total
Required: Perform the following independent calculations.
a. Compute total variable overhead cost if the production cost per unit under variable costing is
$73.
b. Compute total variable overhead cost if the production cost per unit under absorption costing
is $73.
168) A company reports the following information regarding its production cost:
Units produced
22,000 units
Direct labor
$31 per unit
Direct materials
$27 per unit
Variable overhead
? in total
Fixed overhead
$2,750,000 in total
Required: Perform the following independent calculations.
a. Compute total variable overhead cost if the production cost per unit under variable costing is
$240.
b. Compute total variable overhead cost if the production cost per unit under absorption costing
is $240.
169) Digby Company manufactured and sold 37,000 units of its product at a price of $93 per
unit. Total variable cost per unit is $60, consisting of $58 in variable production cost and $2 in
variable selling and administrative cost. Fixed costs of manufacturing are $350,000.
a. Compute the manufacturing margin for the company under variable costing.
b. Compute the contribution margin based on this data.
c. Compute the gross margin under absorption costing.
170) Cavalier Corporation sold 26,000 units of its product at a price of $225 per unit. Total
variable cost per unit is $188, consisting of $103 in variable production cost and $85 in variable
selling and administrative cost. Compute the manufacturing margin for the company under
variable costing.
94
171) Stonehenge Inc., a manufacturer of landscaping blocks, began operations on April 1 of the
current year. During this time, the company produced 750,000 units and sold 720,000 units at a
sales price of $9 per unit. Cost information for this period is shown in the following table:
Production costs
Direct materials
$1.80 per unit
Direct labor
$.30 per unit
Variable overhead
$495,000 in total
Fixed overhead
$450,000 in total
Non production costs
Variable selling and administrative
$18,000 in total
Fixed selling and administrative
$53,000 in total
a. Prepare Stonehenge’s December 31st income statement for the current year under absorption
costing.
b. Prepare Stonehenge’s December 31st income statement for the current year under variable
costing.
96
172) Blatt Company, a manufacturer of slippers, began operations on June 1 of the current year.
During this time, the company produced 210,000 units and sold 185,000 units at a sales price of
$40 per unit. Cost information for this period is shown in the following table:
Production costs
Direct materials
$5.00 per unit
Direct labor
$4.75 per unit
Variable overhead
$302,000 in total
Fixed overhead
$405,000 in total
Non-production costs
Variable selling and administrative
$9,000 in total
Fixed selling and administrative
$25,000 in total
a. Prepare Blatt’s December 31st income statement for the current year under absorption costing.
b. Prepare Blatt’s December 31st income statement for the current year under variable costing.