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SolutionsFeb1314

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

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Exercise 5-4  (20 minutes) 1. The Haaki Shop, Inc. Income Statement—Surfboard 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

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Exercise 5-6  (20 minutes) 1. The company’s 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 ...............................   6.00       4.50       3.60     Total cost per unit ...................... \$8.50 \$7.00 \$6.10 *Given.
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SolutionsFeb1314 - Exercise 5-4(20 minutes 1 The Haaki Shop...

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