Account Analysis and Contribution Margin Income Statement. Downhill Company would like to estimate costs associated with its production of bike helmets on a monthly basis. The accounting records indicate the following production costs were incurred last month for 4,000 helmets: Assembly workers’ labor (hourly) $70,000 Factory rent 3,000 Plant manager’s salary 5,000 Supplies 20,000 Factory insurance 12,000 Materials required for production 20,000 Maintenance of production equipment (based on usage) 18,000 Required: 1. Use account analysis to estimate the total fixed cost per month and the variable cost per unit. State your results in the cost equation form Y = f + vX by filling in the dollar amounts for f and v. 2. Estimate total production costs assuming 5,000 helmets will be produced and sold. 3. Prepare a contribution margin income statement assuming 5,000 helmets will be produced, and each helmet will be sold for $70. Fixed selling and administrative costs total $10,000. Variable selling and administrative costs are $8 per unit.
Account Analysis and Contribution Margin Income Statement. Downhill Company would like to estimate costs associated with its production of bike helmets on a monthly basis. The accounting records indicate the following production costs were incurred last month for 4,000 helmets: Assembly workers’ labor (hourly) $70,000 Factory rent 3,000 Plant manager’s salary 5,000 Supplies 20,000 Factory insurance 12,000 Materials required for production 20,000 Maintenance of production equipment (based on usage) 18,000 Required: 1. Use account analysis to estimate the total fixed cost per month and the variable cost per unit. State your results in the cost equation form Y = f + vX by filling in the dollar amounts for f and v. 2. Estimate total production costs assuming 5,000 helmets will be produced and sold. 3. Prepare a contribution margin income statement assuming 5,000 helmets will be produced, and each helmet will be sold for $70. Fixed selling and administrative costs total $10,000. Variable selling and administrative costs are $8 per unit.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter2: Basic Managerial Accounting Concepts
Section: Chapter Questions
Problem 54P: Preparation of Income Statement: Manufacturing Firm Laworld Inc. manufactures small camping tents....
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41. Account Analysis and Contribution Margin Income Statement. Downhill Company would like to estimate costs associated with its production of bike helmets on a monthly basis. The accounting records indicate the following production costs were incurred last month for 4,000 helmets: | |
Assembly workers’ labor (hourly) | $70,000 |
Factory rent | 3,000 |
Plant manager’s salary | 5,000 |
Supplies | 20,000 |
Factory insurance | 12,000 |
Materials required for production | 20,000 |
Maintenance of production equipment (based on usage) | 18,000 |
Required: | |
1. Use account analysis to estimate the total fixed cost per month and the variable cost per unit. State your results in the cost equation form Y = f + vX by filling in the dollar amounts for f and v. | |
2. Estimate total production costs assuming 5,000 helmets will be produced and sold. | |
3. Prepare a contribution margin income statement assuming 5,000 helmets will be produced, and each helmet will be sold for $70. Fixed selling and administrative costs total $10,000. Variable selling and administrative costs are $8 per unit. |
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