Influence of fixed and variable costs on price

Assignment Help Accounting Basics
Reference no: EM131110939

Influence of fixed and Variable Costs on Price and profit. In 19A,The Keswick Products company produced an machine that sold for $600, of which amount $450 represented cost of goods sold and $50 represented marketing and administrative expenses. The cost of goods sold was comprised of 40% materials cost, 40% labor cost, and 20% factory overhead. During 19A 2000 machines were sold. During 19B, an increase of 20% in the cost of materials and an increase of 255 in the cost of labor are anticipated. The company plans to raise the selling price to $675 per unit with a resulting decrease off 40% in the number of units to be sold.

Required:'(1) an income statement for the year 19B indicating the new costs per unit. Assume that materials and labor costs will still equal 80% of the cost of goods sold for 19B and marketing and administrative expenses are still $50 per unit.

(2) After the statement required in (1) was prepared, it was ascertained that the 20% factory overhead in 19A consisted of $100,000 fixed expenses and $80,000 variable expenses. The decrease in number of units to be sold in 19B does not influence the fixed costs. Prepare a revised income statement for 19B disregarding the 80% relationship of materials and labor costs to cost to cost of goods sold.

Reference no: EM131110939

Amortization table and adjusting journal entry

Watson Bottle Company: Bond amortization table and the adjusting journal entry. On June 1, 2008, Watson Bottle Company sold $400,000 in long-term bonds for $351,040. The bon

Validity, credibility, reliability

What are some reasons you might consider data or information to lack validity, credibility, or reliability? Explain your answer by using at least 3 examples--at least one fo

Determination of beneficiarys income

Determination of Beneficiary's Income. A trust is authorized to make discretionary distributions of income and principal to its two beneficiaries, Roy and Sandy.

Question based on managerial accounting

Surprise Corporation's sales budget showed expected sales of 13,400 widgets. Starting finished goods contained 1,200 widgets. The firm determined that 14,100 units should be p

Measurement of the pension obligation

Alternative methods exist for the measurement of the pension obligation (liability). Which measure requires the use of future salaries in its computation?

Business expenses basics

Roxanne is an aerobics (Jumping Jacks) instructor. She submitted a list of her business expenses to you. The list includes: DVD player $500; CD Music $500; Leotards and Tigh

Unamortized discount on the bonds

Maas Enterprises has $2,190,000 of 6 percent bonds outstanding. There is $40,000 of unamortized discount remaining on the bonds after the March 1, 2011, semiannual interest

Outlining supply chain logistics systems

As a supply chain manager, you have been asked by senior management to write a memo outlining supply chain logistics systems. The organization is considering a new approach


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd