Question 2 . Question : ( TCO 4 ) Assume that we are manufacturing a product and assume that the sales price per unit is $ 80 , the variable cost is $ 20 per unit , and the fixed cost is $ 90,000 ; a ) how many units would we need to sell to break even ? b ) How many units would we need to sell to earn a profit of $ 120,000 ? c ) How many units do we need to sell to double that profit to $ 240,000 ? D ) Why didn ' t the number of units double from Part B to Part C ?
Question 3 . Question : ( TCO 5 ) Sivan Co . manufactures and sells one product . For the year , they started with no opening inventory ; produced 100,000 units , but only sold 70,000 units . The selling price per each unit is $ 60 .
The variable costs per unit were : Direct materials ......................... 7 Direct Labor ............................. 6 Variable manufacturing overhead .... 5 Variable selling and administrative … 6 Fixed costs per year : Fixed manufacturing Overhead ................$ 700,000 Fixed Selling and Administrative expenses .. $ 300,000
( a ) Prepare the Income Statement using Absorption Costing . ( b ) Prepare the Income Statement using Variable Costing .
Question 4 . Question : ( TCO 6 ) At Long Co ., electricity cost starts with a minimum fixed cost , and after that , there is a perfectly variable expense . Using estimated machine hours :
Machine hours |
Cost |
50,000 |
$ 102,000 |