SolutionsFeb1314

SolutionsFeb1314 - Exercise 5-4 (20 minutes) 1. The Haaki...

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Unformatted text preview: Exercise 5-4 (20 minutes) 1. The Haaki Shop, Inc. Income StatementSurfboard Department For the Quarter Ended May 31 Sales..................................................................... $800,000 Variable expenses: Cost of goods sold ($150 per surfboard 2,000 surfboards*)..................................................... $300,000 Selling expenses ($50 per surfboard 2,000 surfboards)...................................................... 100,000 Administrative expenses (25% $160,000)....... 40,000 440,000 Contribution margin.............................................. 360,000 Fixed expenses: Selling expenses................................................ 150,000 Administrative expenses.................................... 120,000 270,000 Net operating income............................................ $ 90,000 *$800,000 sales $400 per surfboard = 2,000 surfboards. 2. Since 2,000 surfboards were sold and the contribution margin totaled $360,000 for the quarter, the contribution of each surfboard toward fixed expenses and profits was $180 ($360,000 2,000 surfboards = $180 per surfboard). Another way to compute the $180 is: Selling price per surfboard................... $400 Less variable expenses: Cost per surfboard............................ $150 Selling expenses............................... 50 Administrative expenses ($40,000 2,000 surfboards)......... 20 220 Contribution margin per surfboard....... $180 Exercise 5-6 (20 minutes) 1. The companys variable cost per unit would be: $150,000 =$2.50 per unit. 60,000 units Taking into account the difference in behavior between variable and fixed costs, the completed schedule would be: Units produced and sold 60,000 80,000 100,000 Total costs: Variable costs......................... $150,000 * $200,000 $250,000 Fixed costs............................. 360,000 * 360,000 360,000 Total costs................................. $510,000 * $560,000 $610,000 Cost per unit: Variable cost........................... $2.50 $2.50 $2.50 Fixed cost...............................Fixed cost....
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This note was uploaded on 05/08/2008 for the course BUAD 250B taught by Professor Jackson during the Spring '07 term at USC.

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SolutionsFeb1314 - Exercise 5-4 (20 minutes) 1. The Haaki...

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