Question

Yellowstone Company began operations on January 1 to produce a single product. It used an absorption...

Yellowstone Company began operations on January 1 to produce a single product. It used an absorption costing system with a planned production volume of 93,000 units. During its first year of operations, the planned production volume was achieved, and there were no fixed selling or administrative expenses. Inventory on December 31 was 9,300 units, and operating income for the year was $334,800.

Required:
1. If Yellowstone Company had used variable costing, its operating income would have been $297,600. Compute the break-even point in units under variable costing.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

first we shall know the amount of fixed cost per unit from the given information:

difference in operating incomes / ending inventory

=> (334,800-297,600) / 9,300 units

=>$4 per unit.

total fixed costs =$4*93,000 units

=>$372,000.

total contribution = total fixed costs + profit under variable costing

=>372,000 +297,600

=>$669,600.

units sold =93,000 sold - 9,300 closing stock.

contribution per unit = $669,600 / 83,700 units sold

=>$8 per unit.

break even units = fixed costs / contribution per unit

=>$372,000 / 8

=>46,500 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
Yellowstone Company began operations on January 1 to produce a single product. It used an absorption...
Yellowstone Company began operations on January 1 to produce a single product. It used an absorption costing system with a planned production volume of 115,000 units. During its first year of operations, the planned production volume was achieved, and there were no fixed selling or administrative expenses. Inventory on December 31 was 11,500 units, and operating income for the year was $103,500. Required: 1. If Yellowstone Company had used variable costing, its operating income would have been $57,500. Compute the...
All, inc. began operations on January 1, 2016. the company does not generally carry work in...
All, inc. began operations on January 1, 2016. the company does not generally carry work in process inventories at the end of the year. variable products costs per unit were the same for 2016, 2017, and 2018 and total $68 per unit. total fixed overhead costs are $600,000 per year. variable selling and administrative costs are $9 for each unit sold. fixed selling and administrative costs are $240,000 per year. the selling price is $450 per unit for all three...
Exercise 6-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer...
Exercise 6-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 40 per unit Direct labor $ 60 per unit Overhead costs for the year Variable overhead $ 3,000,000 Fixed overhead $ 7,000,000 Selling and administrative costs for the year Variable $ 750,000 Fixed $ 4,750,000 Production and sales for the year...
Hanks Corporation produces a single product. Operating data for the company and its absorption costing income...
Hanks Corporation produces a single product. Operating data for the company and its absorption costing income statements for the last two years are presented below: Yearl Year 2 Units in beginning inventory 0 1,000 Units produced 9,000 9,000 Units sold 8,000 10,000 Year 1 Year 2 Sales $80,000 $100,000 Cost of goods sold 48 000 60 000 Gross margin 32,000 40,000 Selling and administrative expenses 28 000 30 000 Net operating income $4,000 $10,000 Variable manufacturing costs are $4 per...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units × $44.60 per unit) $ 1,739,400 Cost of goods sold (39,000 units × $22 per unit) 858,000 Gross margin 881,400 Selling and administrative expenses 409,500 Net operating income $ 471,900 The company’s selling and administrative expenses consist of $292,500 per year in fixed expenses and $3 per unit sold in variable expenses. The...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year appears below:    Whitman Company Income Statement   Sales (42,000 units × $43.10 per unit) $ 1,810,200   Cost of goods sold (42,000 units × $21 per unit) 882,000   Gross margin 928,200   Selling and administrative expenses 441,000   Net operating income $ 487,200    The company’s selling and administrative expenses consist of $315,000 per year in fixed expenses and $3 per unit sold in...
Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and...
Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (14,500 units) $2,030,000 Production costs (19,000 units): Direct materials $984,200 Direct labor 473,100 Variable factory overhead 235,600 Fixed factory overhead 157,700 1,850,600 Selling and administrative expenses: Variable selling and administrative expenses $286,800 Fixed selling and administrative expenses 111,000 397,800 Shawnee Motors Inc. assembles and sells MP3...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement...
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units × $42.60 per unit) $ 1,661,400 Cost of goods sold (39,000 units × $21 per unit) 819,000 Gross margin 842,400 Selling and administrative expenses 409,500 Net operating income $ 432,900 The company’s selling and administrative expenses consist of $292,500 per year in fixed expenses and $3 per unit sold in variable expenses. The...
1. Compute the product cost per meal produced under absorption costing and under variable costing. 2....
1. Compute the product cost per meal produced under absorption costing and under variable costing. 2. Prepare income statements for January 2018 ​using: a. absorption costing. b. variable costing. 3. Is operating income higher under absorption costing or variable costing in January? Stella​'s Foods produces frozen meals that it sells for $7 each. The company computes a new monthly fixed manufacturing overhead allocation rate based on the planned number of meals to be produced that month. Assume all costs and...
Exercise 19-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer...
Exercise 19-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 40 per unit Direct labor $ 60 per unit Overhead costs for the year Variable overhead $ 3,000,000 Fixed overhead $ 7,000,000 Selling and administrative costs for the year Variable $ 770,000 Fixed $ 4,250,000 Production and sales for the year...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT