Vijay Company reports the following information regarding its production costs. Compute its product cost per unit under absorption costing.
$10 per unit
$20 per unit
Overhead cost for the year
$10 per unit
Product cost per unit under absorption costing is $48.
The costing method that utilizes or captures all the costs, whether direct or indirect, for determining the product cost is known as absorption costing. It allocates the fixed cost to each unit produced.
Cost per unit
Blanchard Company manufactures a single product that sells for $180 per unit and whose total variable costs are $135 per unit. The company’s annual fixed costs are $562,500. Management targets an annual pretax income of $1,012,500. Assume that fixed costs remain at $562,500. Compute the (1) unit sales to earn the target income and (2) dollar sales to earn the target income.
A recent income statement for BMW reports the following (in € millions). Assume 75 percent of the cost of sales and 75 percent of the selling and administrative costs are variable costs, and the remaining 25 percent of each is fixed. Compute the contribution margin (in € millions). (Round computations using percentages to the nearest whole eur)
|BMW Automobile Group|
|Cost of sales||74,043|
|Selling and administrative expenses||8,633|
Sweetgreen, launched by entrepreneurs Nic Jammet, Jon Neman, and Nate Ru, is a fast-casual restaurant brand devoted to healthy salad choices. The company also sells T-shirts, hats, and other apparel.
1. Identify at least two fixed costs that will not change regardless of how much salad Sweetgreen sells.
2. Sweetgreen is expanding. How could overly optimistic sales estimates potentially hurt its business?
3. Explain how cost-volume-profit analysis can help Nic, Jon, and Nate manage Sweetgreen.
Sun Co.’s monthly unit sales and total cost data for its operating activities of the past year follow. Management wants to use these data to predict future fixed and variable costs. (Dollar and unit amounts are in thousands.)
1. Prepare a scatter diagram for these data with sales volume (in units) plotted on the horizontal axis and total costs plotted on the vertical axis.
2. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. Draw the total costs line on the scatter diagram in part 1.
3. Use the estimated line of cost behavior and results from part 2 to predict future total costs when sales volume is (a) 100 units and (b) 170 units.
94% of StudySmarter users get better grades.Sign up for free