Final Fa2009 Solution

28 compute carvilles variable cost per case note that

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Unformatted text preview: $7,500 Carville believes that its cost function is stable and will not change in the future. 28. Compute Carville’s variable cost per case. Note that variable cost is the only part of total cost that will change when volume changes. So, variable cost per case is: ($142,500 – $130,000) / (2,500 – 2,000 cases) = $12,500 / 500 cases = $25/case 29. What total cost should Carville expect if it sells 3,000 cases? 3,000 cases is 500 more than sold in July. So, cost for 3,000 cases is $142,500 + 500 @ $25 = $155,000 30. Hernandez Salon Products presented the following income statement for the month of December. Revenue ...........................................................................$200,000 Cost of Goods Sold Direct Materials ............................................................50,000 Direct Labor ..................................................................30,000 Variable Manufacturing Overhead ...............................12,000 Fixed Manufacturing Overhead ....................................90,000 Gross Margin .......................................................................18,000 Variable Selling and Administrative Expense ..............20,000 Fixed Selling and Administrative Expense ...................15,000 Profit ............................................................................... <$17,000> Compute Hernandez’s breakeven point in revenue dollars. CM ratio = ($200,000-$50,000-$30,000-$12,000-$20,000) / ($200,000) = 44% So, find R so that 44% * R – ($90000 + $45,000) = 0 R = $238,626 (or $238,637) 6A:002 Fall 2009 – Final Exam Page 14 Use the following information about Inspiration to answer questions 31 through 33. Inspiration Products manufactures corporate inspirational gifts, including inspirational posters. Though it has the capacity to manufacture 22,000 posters, current demand is only 21,000 posters. It believes that demand for its posters will continue to be 21,000 per year. Inspiration reported the fo...
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This note was uploaded on 09/29/2011 for the course 06A 002 taught by Professor Stuff during the Spring '11 term at University of Iowa.

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