Question :
113.Nader, Inc. produces e-readers that it sells for $80 each. : 1302754
113.Nader, Inc. produces e-readers that it sells for $80 each. Costs involved in production are:
Direct material $11 per unit
Direct labor 15 per unit
Variable manufacturing overhead 12 per unit
Fixed manufacturing overhead per year $448,000
In addition, the company has selling and administrative costs:
Fixed selling costs per year$175,000
Fixed administrative costs per year 75,000
Variable selling and administrative costs per year$6 per unit
During the year, Nader produced 28,000 readers and sold 29,400. Beginning inventory totaled 1,800 units. Assume the same unit costs in all years. How much is net income using variable costing?
114.Nader, Inc. produces e-readers that it sells for $80 each. Costs involved in production are:
Direct material $11 per unit
Direct labor 15 per unit
Variable manufacturing overhead 12 per unit
Fixed manufacturing overhead per year $448,000
In addition, the company has selling and administrative costs:
Fixed selling costs per year $175,000
Fixed administrative costs per year 75,000
Variable selling and admin costs per year$6 per unit
During the year, Nader produced 28,000 readers and sold 29,400. Beginning inventory totaled 1,800 units. Assume the same unit costs in all years.
a.How much is net income using full costing?
b.How much fixed manufacturing overhead is in ending inventory under full costing?
115.Below is a variable costing income statement for Hops Dollar Store. The budget for 2014 follows:
Hops Dollar Store
Budgeted Variable Costing Income Statement
For the Year Ending December 31, 2014
Sales $15,000,000
Less variable costs:
Cost of goods sold$5,000,000
Selling expense 4,000,000 9,000,000
Contribution margin 6,000,000
Less fixed costs:
Manufacturing expense 2,300,000
Selling expense1,200,000
Administrative expense 2,000,000 5,500,000
Net income $ 500,000
For the coming year, the company is considering hiring two additional sales representatives at $80,000 each for base salary plus 5 percent of their sales for commissions. The company anticipates that each sales representative will generate $900,000 of incremental sales. Calculate the impact on profit of the proposed hiring decision. Should the company hire the two additional sales representatives?
116.Perfect Buy produces electronic garage door openers. Information on the first three years of business follows:
201420152016
Units sold20,000 20,000 20,000
Units produced 20,000 25,000 15,000
Fixed production costs $500,000 $500,000 $500,000
Variable production costs per unit $100 $100 $100
Selling price per unit $200 $200 $200
Fixed selling and administrative
expense$150,000 $150,000 $150,000
a.Calculate net income and the value of ending inventory for each year using variable costing.
b.Explain why, using variable costing, profit does not fluctuate from year to year.
117.The following information is available for Trailblazer, a manufacturer of four-wheel all-terrain vehicles for its first two years of operation:
2014 2015
Vehicles produced 1,000 1,400
Vehicles sold 900 1,200
Selling price per unit $1,200 $1,200
Direct material per unit $350 $350
Direct labor per unit $220 $220
Variable manufacturing overhead per unit $40 $40
Fixed manufacturing overhead per year $112,000 $112,000
Variable selling and administrative expense per unit $20 $20
Fixed selling and administrative expense per year $35,000 $35,000
Calculate net income for 2015 using full costing.
