Campbell Boat Company makes inexpensive aluminum fishing boats. Production is seasonal, with considerable activity occurring in the spring and summer. Sales and production tend to decline in the fall and winter months. During year 2, the high point in activity occurred in June when it produced 200 boats at a total cost of $157,470. The low point in production occurred in January when it produced 37 boats at a total cost of $45,000. Required a. Use the high-low method to estimate the amount of fixed cost incurred each month by Campbell Boat Company. b. Determine the total estimated cost if 140 boats are made. a. Fixed cost b. Total estimated cost
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- Rooney Boat Company makes inexpensive aluminum fishing boats. Production is seasonal, with considerable activity occurring in the spring and summer. Sales and production tend to decline in the fall and winter months. During year 2, the high point in activity occurred in June when it produced 203 boats at a total cost of $157,530. The low point in production occurred in January when it produced 30 boats at a total cost of $52,000. Required a. Use the high-low method to estimate the amount of fixed cost incurred each month by Rooney Boat Company. b. Determine the total estimated cost if 170 boats are made. a. b. Fixed cost Total estimated costVernon Boat Company makes inexpensive aluminum fishing boats. Production is seasonal, with considerable activity occurring in the spring and summer. Sales and production tend to decline in the fall and winter months. During year 2, the high point in activity occurred in June when it produced 205 boats at a total cost of $163,890. The low point in production occurred in January when it produced 38 boats at a total cost of $52,000. Required a. Use the high-low method to estimate the amount of fixed cost incurred each month by Vernon Boat Company. b. Determine the total estimated cost if 110 boats are made. a. Fixed cost b. Total estimated costFanning Boat Company makes inexpensive aluminum fishing boats. Production is seasonal, with considerable activity occurring in the spring and summer. Sales and production tend to decline in the fall and winter months. During year 2, the high point in activity occurred in June when it produced 208 boats at a total cost of $164,860. The low point in production occurred in January when it produced 37 boats at a total cost of $52,000. Required a. Use the high-low method to estimate the amount of fixed cost incurred each month by Fanning Boat Company. b. Determine the total estimated cost if 160 boats are made. a. Fixed cost b. Total estimated cost
- Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 25,125 tons of its granular. Because of this year's mild winter, projected demand for its product is only 20.100 tons. Based on projected production and sales of 20.100 tons, the company estimates the following income using absorption costing. Sales (20,100 tons at $148 per ton) Cost of goods sald (20,100 tons at 360 per ton) Gross profit Selling and administrative expenses Income Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment Direct materials Direct labor Variable overhead Fixed overhead ($884,098/28,100 tons) Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative expenses of $213,400 per year. The company's president will not earn a bonus unless a positive income is reported. The…Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, but is currently producing and selling 20,.000 sails per year, The following information relates to current production. If a special sales order is accepted for 2,000 sails at a price of $87 per unit, and fixed costs increase by $20,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Sale price per unit $150 Variable costs unit: per Manufacturing Marketing and administrative $60 $20 Total fixed costs: Manufacturing Marketing and administrative S600,000 $200 000 Increase by S14,000 Decrease by S4,000 ) Decrease by S14,000 ) Decrease by S6,000 () Increase by S6,000 ()4 Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, but is currently producing and selling 20,000 sails per year. The following information relates to current production. If a special sales order is accepted for 4,500 sails at a price of $120 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Sale price per unit $150 Variable costs per unit: Manufacturing Marketing and administratrve $60 $20 Total fixed costs: Manufacturing Marketing and administrative $600,000 S200,000 Increase by $160,000 ) Increase by $150,000 ) Increase by $140,000 Increase by S170,000 ) Increase by S180,000 ()
- Citrus Girl Company (CGC) purchases quality citrus produce from local growers and sells the produce via the Internet across the United States. To keep costs down, CGC maintains a warehouse but no showroom or retail sales outlets. CGC has the following information for the second quarter of the year: Expected monthly sales for April, May, June, and July are $160,000, $ 130,000, $250,000, and $70,000, respectively. Cost of goods sold is 50 percent of expected sales. CGC's desired ending inventory is 60 percent of the following month's cost of goods sold. Monthly operating expenses are estimated to be: Salaries: $35,000. Delivery expense: 5 percent of monthly sales. Rent expense on the warehouse: $3,500. Utilities: $700. Insurance: $360. Other expenses: $460. Required: Compute the budgeted cost of purchases for each month in the second quarter. Complete the budgeted income statement for each month in the second quarter.Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 21,750 tons of its granular. Because of this year's mild winter, projected demand for its product is only 17,400 tons. Based on projected production and sales of 17,400 tons, the company estimates the following income using absorption costing. Sales (17,400 tons at $112 per ton) Cost of goods sold (17,400 tons at $60 per ton) Gross profit Selling and administrative expenses Income Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Direct materials Direct labor $ 1,360,000 1,044,000 316,000 316,000 $0 Variable overhead. Fixed overhead ($696,000/17,400 tons) $ 13 per ton $ 4 per ton $ 3 per ton $40 per ton Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative expenses of $211,600 per…Tyrene Products manufactures recreational equipment. One of the company's products, a skateboard, sells for $37.50. The skateboards are manufactured in an antiquated plant that relies heavily on direct labor workers. Thus, variable costs are high, totaling $22.50 per skateboard of which 60% is direct labor cost. Over the past year, the company sold 40,000 skateboards, with the following operating results: Sales (40,000 skateboards). Variable expenses. Contribution margin Fixed expenses Net operating income. $1,500,000 900,000 600,000 480,000 $120.000 Required: 1. Compute (a) the CM ratio and the break-even point in skateboards, and (b) the degree of operating leverage at last year's level of sales. (
- Tyrene Products manufactures recreational equipment. One of the company’s products, a skate-board, sells for $37.50. The skateboards are manufactured in an antiquated plant that relies heavily on direct labor workers. Thus, variable costs are high, totaling $22.50 per skateboard of which60% is direct labor cost.Over the past year the company sold 40,000 skateboards, with the following operating results: Sales (40,000 skateboards) $1,500,000 Variable expenses 900,000 Contribution margin 600,000 Fixed expenses 480,000 Net operating income $ 120,000 Management is anxious to maintain and perhaps even improve its present level of income from theskateboards. Required: 1. Refer again to the data in (2) above. The president has decided that the company may haveto raise the selling price of its skateboards. If Tyrene Products wants to maintain the sameCM ratio as last year, what selling price per skateboard must it charge next year to cover theincreased labor costs?2. Refer to the…Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 20,000 tons of its granular. Because of this year's mild winter, projected demand for its product is only 15,000 tons. Based on projected production and sales of 15,000 tons, the company estimates the following income using absorption costing. Sales (15,000 tons at $80 per ton) Cost of goods sold (15,000 tons at $60 per ton) Gross profit Selling and administrative expenses Income Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Direct materials. Direct labor Variable overhead Fixed overhead ($600,000/15,000 tons) Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative expenses of $210,000 per year. The company's president will not earn a bonus unless a positive income is reported.…Blazer Chemical produces and sells an Ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 19,000 tons of its granular. Because of this year's mild winter, projected demand for its product is only 15,200 tons. Based on projected production and sales of 15,200 tons, the company estimates the following income using absorption costing. Sales (15,200 tons at $80 per ton) Cost of goods sold (15,288 tons at $60 per ton) Gross profit Selling and administrative expenses) Incone $ 1,216,000 912,000 304,000 384,000 $0 Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Direct materials Direct labor Variable overhead $13 per ton $ 4 per ton Fixed overhead ($608,000/15,200 tons). $3 per ton $40 per ton Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative expenses of $212,800 per year.…