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3-122
140.
Fortune Tools produces and sells two products. Data concerning these products for the
most recent month appear below:
Product XYZ
Product VAR
Sales
$14,000
$27,000
Variable costs
$6,720
$12,550
141.
142.
Drum Co. has provided the following data concerning its only product:
Selling price
$200 per unit
Current sales
18,800 units
Break-even sales
14,288 units
Required:
Compute the margin of safety in both dollars and as a percentage of sales.
143.
144.
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145.
Grayson Corporation produces and sells a single product. Data concerning that product
appear below:
Selling price per unit
$230.00
Variable cost per unit
$92.00
Fixed cost per month
$621,000
146.
Morrel Co. produces and sells a single product. The company's income statement for the
most recent month is given below:
Sales (6,000 units at $40 per
$240,000
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unit)
Less manufacturing costs:
Direct materials
$48,000
Direct labor (variable)
60,000
Variable factory overhead
12,000
Fixed factory overhead
30,000
150,000
Gross margin
90,000
Less selling and other costs:
Variable selling and other
costs
24,000
Fixed selling and other costs
42,000
66,000
Operating profit
$24,000
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147.
Broken Arrow Inc. produces and sells a single product. Data concerning that product
appear below:
Per Unit
Percent of Sales
Selling price
$190
100%
Variable costs
57
30%
Contribution margin
$133
70%
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148.
Fairmount Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit
Percent of Sales
Selling price
$120
100%
Variable costs
36
30%
Contribution margin
$84
70%
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149.
3-135
150.
Volare, Inc. has decided to introduce a new product. The product can be manufactured
using either a capital-intensive or labor-intensive method. The manufacturing method will
not affect the quality or sales of the product. The estimated manufacturing costs of the
two methods are as follows:
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Capital-
Intensive
Labor-
Intensive
Variable
manufacturing cost
per unit
$14.00
$17.60
Fixed manufacturing
cost per year
$2,440,000
$1,320,000
