# exam 1 practice problems - suggested solutions.pdf -...

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Suggested Solutions:1.a.CM% = (80 – 35)/85 = 56.25%; [800,000 + 500,000] / [0.5625] = \$2,311,1111.b.3,600,000 – 2,311,111 = 1,288,889; 1,288,889 / 3,600,000 = 36%1.c.CYProposedPrice8080Units sold (3,600,000 / 80)45,00045,000Variable costs per unit35-20%28Contribution margin per unit4552Contribution margin \$2,025,0002,340,000Fixed costs1,300,000+ 300,0001,600,000Operating income725,000740,000Yes, it increases operating income2.a.CM = (150 – 60) = 90; [1,200,000 + 200,000 + 600,000] / 90 = 22,2222.b.First, determine breakevenCM% = 90/150 = 60%; [1,200,000 + 200,000] / [0.60] = \$2,333,3338,200,000 – 2,333,333 = \$5,866,6672.c.CYProposedPrice150+10%165Units sold (8,200,000 / 150)54,667-10%49,200Variable costs per unit6060Contribution margin per unit90105Contribution margin \$4,920,0305,166,000Fixed costs1,400,000+ 100,0001,500,000Operating income3,520,0303,666,000Yes, it increases operating income3.a.[1,246,000] /14,000 = \$89.00 per DL hour3.b.Order 1Order 2Factory-wide rateDM8,050 / 10080.5011,900 / 15079.33DL3,500 / 10035.004,200 / 15028.00OH[210X89.00] / 100186.90[280x89.00] / 150166.13302.40273.463.c.Order 1 is likely over-costed using a factory wide rate and appears less profitable
4.a.6,960,000 / 240,000 = 29.004.b.ActivityOverhead Budgeted \$Driver (Budgeted volume)ABC RateDesign560,00012,500 design hours44.80Set-up180,0009,000 set-up hours20.00Materials420,000200,000 material moves2.10Manufacturing3,600,000240,000 DLH15.00Sales1,200,000400 stables sold3000.00Total6,960,0004.c.

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Term
Winter
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2 311 111 1, 2 333 333 8 200 000, 5 866 667 2, 10 400 613