1.Sarasota, Inc. produces stereo speakers. The selling price per pair of speakers is $1,000. The variable cost of production is $210 and the fixed cost per month is $57,670. For November, the company expects to sell 137 pairs of speakers.
a). Calculate expected profit. b). Calculate the contribution margin ratio, C) Break-even sales d) Expected sales and E)margin of safety in dollars. (Round contribution margin ratio and intermediate calculations to 2 decimal places,) THIS IS IMPORTANT TO ROUND 2 decimals.
2 .PennyWorth Metal Works received an offer from a big-box retail company to purchase 2,820 metal outdoor tables for $204 each. PennyWorth Metal Works accountants determine that the following costs apply to the tables:
Direct material $121
Direct labor 47
Manufacturing overhead 66
Of the $66 of overhead, $13 is variable and $53 relates to fixed costs. The $53 of fixed overhead is allocated as $1.04 per direct labor dollar.
(a) What will be the real effect on profit if the order is accepted?
b)The profit will decrease or increase? and by what?
3. Vermillion Company’s copy department, which does almost all of the photocopying for the sales department and the administrative department, budgets the following costs for the year, based on the expected activity of 4,500,000 copies:
Employee benefits (fixed)11,250
Depreciation of copy machines (fixed)9,000
Paper (variable, one cent per copy)45,000
Toner (variable, one cent per copy)45,000
The costs are assigned to two cost pools, one for fixed and one for variable costs. The costs are then assigned to the sales department and the administrative department. Fixed costs are assigned on a lump-sum basis, 40 percent to sales and 60 percent to administration. The variable costs are assigned at a rate of 2 cents per copy.
Assuming 4,290,000 copies were made during the year, 2,250,000 for sales and 2,040,000 for administration, a)calculate the copy department costs allocated to sales and b)administration.