Question

Wedder Company sold 10,000 units last year at RM20. Unit costs are as follows: RM Direct...

Wedder Company sold 10,000 units last year at RM20. Unit costs are as follows:
RM
Direct materials 3.90
Direct labor 1.40
Variable factory overhead 2.10
Variable selling and administrative expenses 1.60

Total fixed factory overhead is RM52,000 per year and total fixed selling and administrative expense is RM38,000.

Required:
a) Calculate the contribution margin per unit and contribution ratio.                         

b) Calculate the break-even points (in units and RM).                                                

c) Calculate the units that Wedder must sell in order to earn an operating income of RM20,000.                                                                                                              
(Total: 10 Marks)

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer to Q(a)

Contribution margin per unit : Selling price - Variable cost per unit

= 20-3.90-1.40-2.10-1.60 ; 11.0 Per unit

Contribution Margin Ratio: Contribution margin/Sales *100 ; 11.0/20.0*100 ; 55%

Answer to Q(b)

Break Even Points : Fixed Cost/Contribution Margin unit

; 52,000+38,000/11 ; 8182 Units round off

ANswer to Q(C)

Unit to sell to earn a income of 20,000 ; Fixed Cost + Desired income / Contribution margin

= (52,000+38,000+20,000)/11 ; 10,000 Units

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit...
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the break-even number of helmets. 2. Check your answer by preparing a contribution margin income statement based on the break-even units.
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit...
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the break-even number of helmets. 2. Check your answer by preparing a contribution margin income statement based on the break-even units.
Head-First Company plans to sell 4,400 bicycle helmets at $84 each in the coming year. Unit...
Head-First Company plans to sell 4,400 bicycle helmets at $84 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $60,450 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the break-even number of helmets. 2. Check your answer by preparing a contribution margin income statement based on the break-even units. 1. Calculate the break-even number of helmets. helmets 2....
Using the following per-unit and total amounts, prepare a flexible budget at the 12,000 unit, and...
Using the following per-unit and total amounts, prepare a flexible budget at the 12,000 unit, and 14,000 unit levels of production and sales for Earthen Products Inc.: Selling price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75.00 Direct materials per unit . . . . ....
Selling price per unit (package of 2 CDs)...................................... $27.00 Variable costs per unit: Direct material............................................................................................................... $5.50...
Selling price per unit (package of 2 CDs)...................................... $27.00 Variable costs per unit: Direct material............................................................................................................... $5.50 Direct labor...................................................................................................................... $6.00 Artist's royalties.............................................................................................................. $5.00 Manufacturing overhead.......................................................................................... $3.50 Selling expenses............................................................................................................ $2.50 Total variable costs per unit............................................................ $22.50 Annual fixed costs: Manufacturing overhead.......................................................................................... $192,000 Selling and administrative....................................................................................... $276,000 Total fixed costs................................................................................ $468,000 Forecasted annual sales volume (120,000 units)......................... $3,240,000 Management estimates that direct-labor costs will increase by 8% next year. How many units will the company have to sell next year to reach its...
Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and...
Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.10 Direct labor $ 3.60 Variable manufacturing overhead $ 1.40 Fixed manufacturing overhead $ 4.00 Fixed selling expense $ 3.10 Fixed administrative expense $ 2.10 Sales commissions $ 1.10 Variable administrative expense $ 0.55 13. If the selling price is $22.10 per unit, what is the...
In 2020, Oriental Company sold 800 units at RM500 each. Variable costs were RM250 per unit,,...
In 2020, Oriental Company sold 800 units at RM500 each. Variable costs were RM250 per unit,, and fixed costs were RM200,000. The selling price is expected to increase by 10% for 2021 and unit sold is 1,250 units. Oriental Company is tentatively planning to invest in equipment that would increase fixed costs to RM255,000, while decreasing variable costs per unit by 12%. (a)        Compute the break-even point in Ringgit Malaysia (RM) for the year 2020 by using mathematical equation....
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit...
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the number of helmets Head-First must sell to earn operating income of $81,900. 2. Check your answer by preparing a contribution margin income statement based on the number of units...
Head-First Company plans to sell 4,200 bicycle helmets at $71 each in the coming year. Unit...
Head-First Company plans to sell 4,200 bicycle helmets at $71 each in the coming year. Unit variable cost is $44 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $50,000 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the number of helmets Head-First must sell to earn operating income of $67,990. 2. Check your answer by preparing a contribution margin income statement based on the number of units...
1) Doon Company incurred the following costs while producing 560 ​units: direct​ materials, $9 per​ unit;...
1) Doon Company incurred the following costs while producing 560 ​units: direct​ materials, $9 per​ unit; direct​ labor, $30 per​ unit; variable manufacturing​ overhead, $14 per unit; total fixed manufacturing overhead​ costs, $11,200​; variable selling and administrative​ costs, $3 per​ unit; total fixed selling and administrative​ costs, $7,280. There are no beginning inventories. What is the ending balance in Finished Goods Inventory using variable costing if 400 units are​ sold?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT