Exercise 9-9

Insert your answers into the gray-shaded cells of columns E and G. If an

answer is incorrect, the word “wrong” will appear.

a.

Direct materials

$     1,50,000

Direct labor

        1,00,000

Manufacturing overhead

           75,000

Total variable production cost

Divided by units produced

        3,00,000

Variable production cost per cap

$              –   

b.

Contribution margin per unit:

Revenue

$     4,80,000

Less variable costs:

Cost of goods sold

$ 1,94,400

Selling and administration

       90,000

Contribution margin

Divided by units sold

        1,80,000

Contribution margin per unit

c.

High Flight Toys

Income Statement

For Year Ended December 31, 2010

Sales

$     4,80,000

Less variable costs:

Cost of goods sold

$ 1,94,400

Selling and administration

       90,000

Contribution margin

Less fixed expenses:

Manufacturing overhead

$ 1,12,500

Selling and administration

    1,00,000

Net income (loss)

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