P10-2,
P10-10, CRP Week 10 Problems
P10-2 Haille Corporation has
P10-10 McDormand Products Inc
P0-12 Tarbell Manufacturing Company
P10-2 Absorption costing versus direct costing
Haille
Corporation has determined the following selling price and manufacturing cost
per unit based on normal production of 72,000 units per year:
Selling
price per unit 22
Variable
cost per unit:
Direct
materials 4
Direct labor
4
Variable
factory overhead 2
Variable
cost per unit: 10
Fixed cost
per unit:
Fixed
factory overhead per year 324,000
Fixed
selling and administrative expense per year 48,000
Normal unit
production per year 72,000
Month Units
Produced Units Sold
October
6,000 3,000
November
1,000 4,000
December
8,000 6,000
October has
no beginning inventories.
Required:
Prepare comparative income statements for each month under each of the following:
1. Absorption
costing (include under- or overapplied overhead)
2. Variable
costing
P10-10 Effect of taxes on break-even and target volume
McDormand
Products Inc. desires an after-tax income of $500,000. It has fixed costs of
$2,500,000, a unit sales price of $300, and unit variable costs of $150; it is
in the 40% tax bracket.
Required:
1. What amount of pre-tax income is needed to earn an after-tax income of $500,000?
2. What
target volume sales revenue must be reached to earn the $500,000 after-tax
income?
3. Assuming
that this is a single-product firm, how many units must be sold to earn the
after-tax income of $500,000?
4. What
target volume sales revenue would have been needed to achieve the $500,000 of
income had no income tax existed?
Comprehensive Review Problem:
Break-even
point; absorption, and variable cost analysis (Similar to Self-Study Problem 1)
Tarbell
Manufacturing Company has a maximum productive capacity of 210,000 units per
year. Normal capacity is 180,000 units per year. Standard variable
manufacturing costs are $10 per unit. Fixed factory overhead is $360,000 per
year,
Variable
selling expense is $5 per unit and fixed selling expenses is $252,000 per year.
The unit sales price is $20.
The
operating results for the year are as follows: sales, 150,000 units; production
160,000 units; beginning inventory, 10,000 units. All variances are written off
as additions to (or deductions from) the standard cost of sales.
Required:
1. What is
the break-even point expressed in dollar sales?
2. How many
units must be sold to earn a net income of $100,000 per year?
3. Prepare a
formal income statement for the year under the following:
a.
Absorption costing (Hint: Don't forget to compute the volume variance.)
b. Variable
costing.
TUTORIAL PREVIEW
Problem
10-2
Haille Corporation
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Comparative Income Statements
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For the Three Months Ending December 31, 20xx
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October
(3,000 units sold)
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November
(4,000 units sold)
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December
(6,000 units sold)
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Absorption Costing
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Variable Costing
|
Absorption Costing
|
Variable Costing
|
Absorption Costing
|
Variable Costing
|
|
Sales
|
$66,000
|
$66,000
|
$88,000
|
$88,000
|
$132,000
|
132,000
|
Less:
Cost of goods sold
|
43,500
|
30,000
|
58,000
|
40,000
|
87,000
|
60,000
|
File name: Week 10 P10-2 P10-10 CRP.xls File type: xls PRICE: $15
