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.

What are two possible ways of reducing the negative aspects associated with using absorption costing to evaluate the performance of a plant manager?

Cost allocation is ________.

Company X produces and sells a single product and delivers a positive contribution margin.

If the selling price and the variable cost per unit both increase 5% and fixed costs do not change, what is the effect on the contribution margin per unit ($/unit) and the contribution margin as a percentage (%) of sales?

Company X presents the following information:

• Beginning inventory of Finished goods: $112000
• Ending inventory of Finished goods: $56000
• Beginning inventory of Work in progress: $140000
• Ending inventory of Work in progress: $84000
• Direct materials used in production: $28000
• Direct Labor and overhead costs: $168000

Based on the information above, determine the cost of goods sold (COGS) for the period.

Company X produced 3000 units and presents the following information:

Manufacturing costs

• Variable cost: $150 /unit
• Fixed cost: $145 /unit

Inventory data

• Beginning inventory: 1200 units

• Ending inventory: 2200 units

If Company X uses an absorption costing system, what is the amount of fixed manufacturing costs expensed in the Income statement assuming no variances?

Company X manufactures a single product. For each unit, $3131 of direct material is used and there is $2000 of direct manufacturing labor at $20 per hour. Manufacturing overhead is applied at $29 per direct manufacturing labor hour.

Calculate the profit earned on 50 units if each unit sells for $9000.