Determine the breakeven point in dollars

Assignment Help Financial Accounting

Reference no: EM1311446

Budgeted Income Statement ( static ) and Flexible Budgeted Income Statement Variable Costing , Variance Analysis.

Downes Consolidated Industries International uses a standard cost system and records standards in the accounting records. The standard costs for one of its products are as follows.

Direct materials, 3 lbs. @ $20 per lb.	$60.00
Direct labor, 2 hrs. @ $15 per hr.	30.00
Variable overhead, 4 machine hrs. @ $1 per hr.	4.00
Fixed overhead, 4 machine hrs. @ $2.50 per hr.	10.00
Total	$104.00

Overhead is applied on the basis of machine hours. The planned level of activity (denominator level) is 320,000 machine hours. The total budgeted fixed overhead is $800,000.

Other budgeted items are:
Units selling price, $175.00 per unit
Variable selling & administrative expenses, $5 per unit.
Fixed selling & administrative expenses, $160,000.
Planned level of production and sales, 80,000.

ACTUAL RESULTS:
Direct materials purchased, 250,000 lbs. @ $22 per lb.
Direct materials used, 240,000
Direct labor, 150,000 hrs., total cost, $2,225,000
Variable overhead, $340,000
Fixed overhead, $810,000
Units produced, 82,000
Units soldd, 80,500
Selling price per unit, 160.00
Variable selling & administrative expenses, $410,000.
Fixed selling & administrative, $175,000.
Actual machine hours, 330,000.

REQUIRED:

Prepare an Income Statement of Actual Results using Variable costing.
1. Calculate the breakeven point in dollars.
2. Calculate DOL.

Reference no: EM1311446

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