ORIE 3150

Homework #9
Due November 14, 2018 by 9:00 PM

1. Dumont Inc. manufactures industrial water pumps. The following data are for
October 2016. The company had 5 units in beginning inventory. In October, 35 units
were produced, and 25 were sold. The average selling price was $45,200.

Variable Costs (per unit)

Direct Materials $ 6000
Direct Labor 14,000
Variable Manufacturing Overhead 3,000
Variable selling and admin. 2,500

Fixed Costs (total, monthly)

Manufacturing Overhead $240,000
Selling and admin. 100,000

Dumont uses periodic LIFO inventory costing updated monthly and carries the beginning
inventory at $24,400 variable cost per unit.
Construct a non-GAAP operating income statement for the month, using variable costing.

2, Ace Promotions sold 200,000 coffee mugs during 2015:

Sales $2,000,000
Variable costs:
Materials $380,000
Order processing 150,000
Billing labor 110,000
Selling expenses 60,000
Total variable costs 700,000
Fixed costs 1,000,000

What was the breakeven point in units and in sales dollars?

3. The Cromwell Company has three major products, ZX10, ZX20, and the ZX35. Data
from last year is shown below:

ZX10 ZX20 ZX35

Sales (units) 300 500 200
Sales price per unit $250 $210 $180
Direct material per $30 $20 $15
unit
Direct labor per $45 $30 $30
unit
Fixed Overhead per $45 $30 $30
unit

There is no variable overhead. Fixed selling expenses were $50,000 for the year. There
was no overapplied or underapplied overhead. Overhead was applied on the basis of
direct labor hours, and direct labor cost $15 per hour.
a. Find the total fixed cost per year (TFC).
b. Assuming the product mix remains the same, find the breakeven point in number of
units sold for each product.

4. The Fletcher Cox Corporation makes a single product, a deluxe portable gas grille.
Data from last year is shown below. The average selling price of a gas grill was $402.59
last year.
a) find the breakeven point, in monthly sales/production units.
b) find the operating income for last year.

Month Production (units) Cost ($)

1 10,370 $ 2,780,000
2 6,970 $ 2,430,000
3 18,430 $ 4,620,000
4 9,110 $ 2,360,000
5 5,990 $ 2,190,000
6 12,520 $ 3,300,000
7 8,480 $ 2,490,000
8 18,730 $ 5,270,000
9 3,600 $ 1,760,000
10 16,240 $ 4,440,000
11 2,610 $ 1,630,000
12 5,410 $ 1,740,000
5. Marigold Industries has the following data from their budget

Production Level 100,000 units

Selling price $5.00 per unit
Direct material $125,000
Direct Labor $100,000
Variable Overhead $30,000
Other Variable Costs $45,000
Fixed Cost $120,000

a. What is the break even in units?

b. What is the break even in sales dollars?
c. What amount of sales revenue would be needed to get a profit of $90,000?
d. Prove your answer to (c) by constructing a simple income statement.

6. Hunting Products Research Inc. of El Dorado, Arkansas, makers of the Loggy Bayou
line of archery tree stands, had the following costs and prices associated with the
production last month for one of its deer hunting stands. The company uses FIFO and
carried beginning inventory at a cost of $118.00 per unit. The manufacturing overhead
cost driver was $80 per direct labor hour.
Beginning Inventory: 100 units
Production: 1000 units
Sales 840 units
Direct materials $37,450 total
Direct labor (750 hours) $18,680 total
Actual Manuf. Overhead unknown
Selling expenses $10,000 total
Admin. expenses $7,000 total
Selling price $155.75 per unit

Find the cost of goods sold per unit using absorption costing.