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Chapter 21: Q-21-11RQ (page 1167)
Why is it appropriate to use variable costing when planning production in the short term?
Answer
Because fixed cost is irrelevant in short run.
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Computing unit product cost, absorption costing Calculate the unit product cost using absorption costing. Round your answer to the nearest cent.
Use the following information for Short Exercises S21-2 and S21-3.
Martin Company had the following costs:
Units produced 320 units Direct materials $ 71 per unit Direct labor 40 per unit Variable manufacturing overhead 13 per unit Fixed manufacturing overhead 7,360 per year Variable selling and administrative costs 22 per unit
Fixed selling and administrative costs 1,920 per year
Question: Computing variable costing operating income Refer to the information for Concord, Inc.
Requirements:
Use the following information for Exercises E21-14 and E21-15.
Concord, Inc. has collected the following data for November (there are no beginning inventories):
Units produced and sold 500 units Sales price $ 450 per unit Direct materials 64 per unit Direct labor 68 per unit Variable manufacturing overhead 26 per unit Fixed manufacturing overhead 7,500 per month Variable selling and administrative costs 15 per unit Fixed selling and administrative costs 4,400 per month
Using variable costing, service company Refer to Exercise E21-25. The commercial business segment provided services to 200 customers. The residential business segment provided services to 400 customers. Determine the average amount Sherman Company charged each type of customer for services, the average variable cost per customer, and the average contribution margin per customer, rounded to two decimal places. What caused the difference in contribution margin in the two segments?
Analyzing profitability
Camden Company has divided its business into segments based on sales territories: East Coast, Midland, and West Coast. Following are financial data for 2018:
East Coast | Midland | West Coast | |
Units sold | 71 | 69 | 53 |
Sales price per unit | \(10,300 | \)13,600 | \(12,000 |
Variable cost per unit | 6,283 | 7,072 | 7,080 |
Prepare an income statement for Camden Company for 2018 using the contribution margin format assuming total fixed costs for the company were \)435,000. Include columns for each business segment and a column for the total company.
Using variable costing, service company Henry鈥檚 Helpers provides locksmith services. One type of service call is to evaluate private residences for security concerns and make recommendations for a safety plan. Use the data below to determine the company鈥檚 total contribution margin, contribution margin per service call, and contribution margin ratio when 220 service calls are made in the month of June.
Service Revenue $ 170 per service call
Variable Costs 68 per service call
Fixed Costs 21,040 per month
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