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L15.2030 - Cost Accounting (2025/2026)
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Company X's president has heard that there are multiple breakeven points for every product. He does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for 2020 is as follows:
Total fixed manufacturing overhead
|
$183000
|
|
Total other fixed expenses
|
$202000
|
|
Total variable manufacturing expenses
|
$260000
|
|
Total other variable expenses
|
$290000
|
|
Units produced
|
70000
|
units
|
Budgeted production
|
70000
|
units
|
Units sold
|
50000
|
units
|
Selling price
|
$74
|
What are breakeven sales in units using variable costing? (Round to the nearest unit)
John's 8-year-old Car requires repairs estimated at $11000 to make it road worthy again. His wife suggested that he should buy a 5-year-old used Jeep instead for $11000 cash. Estimated costs for the two cars are the following:
|
8-yr-old Car
|
Jeep
|
Acquisition cost
|
$30000
|
$11000
|
Repairs
|
$11000
|
—
|
Annual operating costs
|
|
|
(Gas, maintenance, insurance)
|
$2443
|
$2180
|
What should John do? What are his savings in the first year?
Company X operates on a contribution margin of 36% and currently has fixed costs of $510000. Next year, sales are projected to be $3100000. An advertising campaign is being evaluated that costs an additional $110000. How much would sales have to increase to justify the additional expenditure? (Round the final answer to the nearest dollar unit)
Which of the following sentences is TRUE?
Company X manufactures and sells a single product. The following data is available for Year 1:
- Total revenue: $5000000
- Cost of merchandise: 25% of revenue
- Sales commissions: 5% of revenue
- Marketing variable expenses: 10% of revenue
- Annual fixed selling expenses $768440
- Annual fixed administrative expenses $1815053
The company’s margin of safety in terms of revenues is:
The following information is available for Company X:
- Units sold: 3600
- Units produced 3000
- Fixed manufacturing costs: $ 264665
- Budgeted production was 3200 units
What will be the Production Volume Variance of Company X, in variable costing?
- Negative PVV = favourable adjustment to cogs (cogs decreases)
- Positive PVV = unfavourable adjustment to cogs (cogs increases)
The following information is available for Company X, with fixed costs at $640000:
Product A:
- Units sold: 16000
- Selling price: $100 /unit
- Variable costs: $40 /unit
Product B:
- Units sold: 4000
- Selling price: $200 /unit
- Variable costs: $120 /unit
Comment on the following article, extracted from the textbook (Horngren, 16th edition, page 159).
While this is an open-book exam, direct copying of content from the textbook or class notes will not earn points. Answers should demonstrate your understanding and application of the concepts.