Reference no: EM13343246

1) Using the information available to you in Exhibit 2 from Part 1 of the assignment and in Exhibit 4 from Part 2; provide detailed computations to answer the following requirements: {No Page Limit}
 
i)  Compute the average price per teddy bear needed, so LTBC could breakeven at the sales level of the year 2011.
ii)  Compute the average price per teddy bear, so LTBC could achieve a net income of $200,000 at the sales level of 2011.
iii)  Provide detailed income statements using the contribution margin approach to prove that your answers of requirements (1.i) and (1.ii)
above are correct. 
 
2) Using the information available to you in Exhibit 5 from Part 2; provide detailed computations to answer the following: {No Page Limit}
 
i)  Assuming overtime pay is needed; compute the average price per teddy bear for the special order, so LTBC could achieve a customer profit margin of 10% from the sales to Costco. ii)  Assuming overtime pay is not needed; compute the average price per teddy bear for the special order, so LTBC could achieve a customer profit margin of 30% from the sales to Costco.
 
3) Assuming that LTBC's production was at the maximum capacity level during 2011; use the sales amounts provided in Exhibit 2 and the cost behavior illustrated in Exhibit 4 to answer the following:  {No Page Limit}
 
i)  Provide a formal income statement with appropriate headings to show the operating income for the year 2011 under variable costing approach.

ii)  Provide a formal income statement with appropriate headings to show the operating income for the year 2011 under absorption costing approach.

iii)  Show the impact of reclassifying the Packing costs of $1,500,000 as fixed selling expenses rather than fixed manufacturing overhead on your answers of requirements (3.i) and (3.ii) above.