Chapter 18: Q20DQ (page 832)
Should Apple use single product or multiproduct break-even analysis? Explain.
Apple may use multiproduct break-even points for all types of products sold, for efficient costing.
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Vijay Company reports the following information regarding its production costs. Compute its product cost per unit under absorption costing.
Direct material | \(10 per unit |
Direct labor | \)20 per unit |
Overhead cost for the year | |
Variable overhead | \(10 per unit |
Fixed overhead | \)160,000 |
Unit produced | 20,000 units |
In performing CVP analysis for a manufacturing company, what simplifying assumption is usually made about the volume of production and the volume of sales?
Question: Business Solutions sells upscale modular desk units and office chairs in the ratio of 3:2 (desk unit: chair). The selling prices are \(1,250 per desk unit and \)500 per chair. The variable costs are \(750 per desk unit and \)250 per chair. Fixed costs are $120,000.
Required
1. Compute the selling price per composite unit.
2. Compute the variable costs per composite unit.
3. Compute the break-even point in composite units.
4. Compute the number of units of each product that would be sold at the break-even point.
US-Mobile manufactures and sells two products, tablet computers and smartphones, in the ratio of 5:3. Fixed costs are \(105,000, and the contribution margin per composite unit is \)125. What number of each type of product is sold at the break-even point?
SBD Phone Company sells its waterproof phone case for \(90 per unit. Fixed costs total \)162,000, and variable costs are \(36 per unit. Compute the units of product that must be sold to earn a pre-tax income of \)200,000. (Round to the nearest whole unit.)
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