a leading firm in the sports? industry, produces basketballs for the consumer market. For the year...

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Accounting

a leading firm in the sports? industry, produces basketballs forthe consumer market. For the year ended December? 31,
2017?,
Verena
sold
242,100
basketballs at an average selling price of
$41
per unit. The following information also relates to
2017
?(assume constant unit costs and no variances of any? kind):
Inventory, January 1, 2017:
29,300 basketballs
Inventory, December 31, 2017:
27,200 basketballs
Fixed manufacturing costs:
$1,200,000
Fixed administrative costs:
$3,234,000
Direct materials costs:
$12 per basketball
Direct labor costs:
$9 per basketball
1.
Calculate the breakeven point? (in basketballs?sold) in
2017
?under:
a.
Variable costing
b.
Absorption costing
2.
Suppose direct materials costs were
$16
per basketball instead. Assuming all other data are the? same,calculate the minimum number of basketballs
Verena
must have sold in
2017
to attain a target operating income of
$110,000
?under:
a.
Variable costing
b.
Absorption costing

Answer & Explanation Solved by verified expert

3.7 Ratings (533 Votes)

1 Calculate the breakeven point in basketballs sold in 2017 Fixed manufacturing costs 1200000 Fixed administrative costs 3234000 Total 4434000 Selling Price 41 Less Direct materials costs 12 Less Direct labor costs 9 Contribution Margin 20 Break even point under variable costing Total fixed expensesContribution margin per unit Break even point under variable costing443400020 22170000 Units See Answer

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1.	Calculate the breakeven point? (in basketballs?sold) in 2017 ?under:
	a.	Variable costing
	b.	Absorption costing
2.	Suppose direct materials costs were $16 per basketball instead. Assuming all other data are the? same,calculate the minimum number of basketballs Verena must have sold in 2017 to attain a target operating income of $110,000 ?under:
	a.	Variable costing
	b.	Absorption costing