Income (loss) from oper.

29 Jun Income (loss) from oper.

Question
1. #Ex 25-16

Based on the data below, assume that Sirrus Phone Company uses the product cost concept of applying the cost-plus approach to product pricing.

Variable Costs: Fixed Costs:

Direct materials 130.00 per unit Factory overhead 175000

Direct labor 50.00 Selling and adm. Exp 70000

Factory overhead 35.00

Selling and adm. Exp 25.00

Total 240.00 per unit

a. Determine the total manufacturing costs and the cost amount per unit for the production and sale of 3500 units for mobile phones.

b. Determine the markup percentage (rounded to two decimal places) for mobile phones.

c. Determine the selling price of mobile phones. Round to the nearest dollar.

#2. T7

1.The sales, income from operations, and invested assets for each division of Winston Company are as follows:

Sales

Income from
Operations

Invested
Assets

Division C

$5,000,000

$630,000

$3,900,000

Division D

6,800,000

760,000

4,300,000

Division E

3,750,000

750,000

7,250,000

2. Management has established a minimum rate of return for invested assets of 8%.

(a)

Determine the residual income for each division.

(b)

Based on residual income, which of the divisions is the most profitable?

#3 (T8) answer one of the multiple choice below

The condensed income statement for a business for the past year is presented as follows:

Product

F

G

H

Total

Sales

$300,000

$220,000

$340,000

$860,000

Less variable costs

180,000

190,000

220,000

590,000

Contribution margin

$120,000

$ 30,000

$120,000

$270,000

Less fixed costs

50,000

50,000

40,000

140,000

Income (loss) from oper.

$ 70,000

$ (20,000)

$ 80,000

$130,000

Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G?

$20,000 increase

$30,000 increase

$20,000 decrease

$30,000 decrease

#4 (T13)

Pnok Company has been purchasing a component, Part Q, for $18.90 a unit. Pnok is currently operating at 70% of capacity and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Part Q, determined by absorption costing methods, is estimated as follows:

Direct materials

$11.25

Direct labor

4.50

Variable factory overhead

1.12

Fixed factory overhead

3.15

Total

$20.02

1. Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Q.

#5 (T14)

FDE Manufacturing Company has a normal plant capacity of 37,500 units per month. Because of an extra large quantity of inventory on hand, it expects to produce only 30,000 units in May. Monthly fixed costs and expenses are $112,500 ($3 per unit at normal plant capacity) and variable costs and expenses are $8.25 per unit. The present selling price is $13.50 per unit. The company has an opportunity to sell 7,500 additional units at $9.90 per unit to an exporter who plans to market the product under its own brand name in a foreign market. The additional business is therefore not expected to affect the regular selling price or quantity of sales of FDE Manufacturing Company.

Prepare a differential analysis report, dated April 21 of the current year, on the proposal to sell at the special price.