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Worth 10 pts.
Grading
Rubric:
Project
3 is due by
Tuesday, October 16th. Send via the
assignment area and make sure you save your file with first initial of first
name and last name.
Requirement
Points
You will be
graded on the accuracy of your answer and usage of cell
referencing in the DATA area.
Covers material in chapters 7 and 8.
1
0.5
2
1
DATA
3
1
ABC, Inc.
is a newly organized manufacturing business this year.
4
1
The
following company’s costs and expenses are:
5
1
6
1
Sales price per unit
$80
7
0.5
Manufacturing costs:
Fixed Costs
Variable Costs
8
0.5
Direct materials
$8
9
0.5
Direct labor
10
10
0.5
Variable Manufacturing overhead
4
11
0.5
Fixed Manufacturing overhead
$120,000
12
1
Period expenses:
13
1
Variable Selling and administrative
expenses
6
Total pts.
Possible
10
Fixed Selling and Administrative
expenses
10,000
Totals
$130,000
$28
Units produced
6,000
units
Units sold
5,900
units
Required:
Use the information in the DATA
field above using cell referencing to answer the following requirements.
1. Calculate the unit cost for variable
costing. Review Exhibit 8-2 on page
328.
2. Calculate the unit cost for absorption
costing. Review Exhibit 8-2 on page
328.
3. Prepare an absorption-costing income
statement. Review Exhibit 8-3 on page
329.
4. Prepare a variable-costing income
statement. Review Exhibit 8-3 on page 329.
5. Reconcile the differences in income that
you calculated in #3 and #4 using exhibit 8-4 on page 330 as your guide or
use the shortcut reconciliation on page 330-331.
6. Calculate the breakeven point in
units. Reference page 279.
7. Calculate the breakeven point in sales
dollars.
8. Calculate the safety margin.
9.
What does the margin of safety mean? Reference page 285. Your answer should be at least 75 words.
10. Calculate the operating leverage . Reference page 296
11. What if sales volume increases by 5% how
much will income increase in percentage terms? Make sure you have read over the DOL
discussion and
understand
the multiplier impact of changes in sales volume that occurs based on DOL.
12. What if the direct material cost per unit increases from $8 a unit to
$10, what will be the new breakeven in units? Explain why it changed.
You should
only have to change the direct labor in the data area and actually all your
answers should be updated. Please put
the direct material cost back to the original number once you have answered
the question?
13. What if the manufacturing overhead cost
decreases from 120,000 to 115,000, what will be the new breakeven
in units? Explain why it changed.
You should
only have to change the fixed MOH in the data area and actually all your
answers should be updated. Please put
the fixed MOH cost back to the original number once you have answered the
question?
