7.Shadow Lake Bottling Company produces a soft drink that is sold for a dollar. The company pays $500,000 in production costs, half of which are fixed costs. General, selling, and administrative costs amount to $200,000 of which $50,000 are fixed costs. Assuming production and sales of 800,000 units, what is the amount of contribution margin per unit? a.$0.125Sales – VC = CMb.$0.500$800,000 - $250,000 - $150,000 = $400,000c.$0.375CM / unit = $400,000 / 800,000 = 0.50d.$0.600e.Insufficient information available to answer 8.Owens Company expects to incur overhead costs of $10,000 per month and direct production costs of $125 per unit. The estimated production activity for the upcoming year is 1,200 units. If the company desires to earn a gross margin of $50 per unit, the sales price per unit would be which of the following amounts? 9.Joint products A and B emerge from common processing that costs $100,000 and yields 2,000 units of Product A and 1,000 units of Product B. Product A can be sold for $100 per unit. Product B can be sold for $120 per unit. How much of the joint cost will be assigned to Product A if joint costs are allocated on the basis of relative sales values? . 10.The East and West Railroad Company has two divisions, the East Division and the West Division. The company recently invested $800,000 to maintain its railroad track. Pertinent data for the two divisions are as follows:Total Miles TraveledEast Division800,000 milesWest Division1,200,000 milesWhat is the amount of track improvement cost that should be allocated to the West Division? 11. Which of the following costs would NOT be capitalized in the inventory of a manufacturing company? 2
a.Commissions paid to product salespeopleb.Utility expenses for the manufacturing plantc.Monthly salary paid to the production managerd.Indirect materials used in manufacturinge.All of the above costs would be capitalized in inventory. 12.During its first year of operations, Martin Company paid $4,000 for direct materials and $8,500 for production workers' wages. Lease payments and utilities on the production facilities amounted to $7,500 while general, selling, and administrative expenses totaled $3,000. The company produced 5,000 units and sold 4,000 units at a price of $7.50 a unit. What is the amount of gross margin for the first year?
- Summer '14
- Managerial Accounting, gross margin