1. (TCO 1) George Corporation has an estimated monthly sales of 3,200 units for $70 per unit. Variable costs include manufacturing costs of $36 and distribution costs of $14. Fixed costs are $40,000 per month.
Determine each of the following values.
a. Unit contribution margin
b. Monthly break-even unit sales volume
Create a contribution margin-based income statement
2. (TCO 7) Darling Manufacturing Inc. manufactures two products, A and B, from a joint process. A single production costs $5,000 and results in 200 units of A and 800 units of B. To be ready for sale, both products must be processed further, incurring seperable costs of $3 per unit for A and $4 per unit for B. The market price for Product A is $15 and for Product B is $10.
Required: Allocate joint production costs to each product using the net realizable value method
3. (TCO6) Santa Inc. manufactures toys based on the following information.
Materials (4 ounces at $4)
Direct labor (1 hour per unit)
Variable overhead (based on direct labor hours)
Fixed overhead budget
Actual results and costs
Materials used in production
Finished product units
Raw material (ounces)
Direct labor hours
Direct labor cost
Variable overhead costs
Fixed overhead costs
Compute the following variances (show calculations).
a. Materials usage variance
b. Labor rate variance
c. Fixed overhead budget variance
4. (TCO4) Eastwood Company has the following information for previous year.
Selling price $150 per unit
Variable production costs $40 per unit produced
Variable selling and admin. expenses $16 per unit sold
Fixed production costs $200,000
Fixed selling and admin. expenses $140,000
Units produced 10,000 units
Units sold 8,000 units
There were no beginning inventories.
a. What is the ending inventory for Eastwood using the absorption costing method?
b. What is the cost of ending inventory for Eastwood using the variable costing method?
5. (TCO 8) Musical Instruments Company manufactures two products (trumpets and trombones). Overhead costs ($175,000) have been divided into three cost pools that use the following activity drivers.
Number of setups
Cost per pool
Required (show all calculations)
a. What is the allocation rate for trumpets per setup using activity-based costing?
b. What is the allocation rate for trumpets per machine hours using activity-based costing?
c. What is the allocation rate for trumpets per packing order using activity-based costing?
6. (TCO 5) The Baxter Corporation has the following budgeted and actual results.
Budgeted data Actual results
Unit sales 35,000 Unit sales 36,000
Unit production 35,000 Unit production 37,000
Fixed overhead Fixed overhead
Supervision $25,000 Supervision $23,500
Depreciation $40,000 Depreciation $40,000
Rent $20,000 Rent $20,000
Variable costs per unit Variable costs
Direct materials $25.00 Direct materials $900,000
Direct labor $26.00 Direct labor $950,000
Supplies $0.25 Supplies $9,000
Indirect labor $1.30 Indirect labor $50,000
Electricity $0.20 Electricity $7,500
Prepare a performance report for all costs, showing flexible budget variances (indicate F or U).