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Stony Brook$,$ a winery in British$$ Columbia, manufactures a premium white cabernet and sells primarily to distributors. Wine is sold in cases of one dozen bottles. In the year ended December$31,$ Stony Brook sold $249$ comma $000$ cases at an average selling price of $ $117\mathrm{.}00$ per case. The following additional data are for Stony Brook for the year ended December $31($assume constant unit costs and no$$ price, rate, or efficiency$$ variances$).$

Beginning inventory, January $1$

$33,500$ cases

Ending inventory, December $31$

$21,000$ cases

Fixed manufacturing overhead

$$4,422,550$

Fixed operating costs

$$9,506,070$

Variable costs per case:

Direct materials

Grapes

$$18\mathrm{.}70$ per case

Bottles, corks, and crates

$$11\mathrm{.}40$ per case

Direct labour

Bottling

$$6\mathrm{.}80$ per case

Winemaking

$$15\mathrm{.}90$ per case

Aging

$$2\mathrm{.}35$ per case

On December$31,$ the unit costs per case for clo

Calculate cases of production for Stony Brook for the year.

Find the$$ break$-$even point$($number of$$ cases$)$ for the$$ year:

Under variable costing

Under absorption costing

Grape prices are expected to increase $40\%$ next year. Assuming all other data remain$$ constant, what is the minimum number of cases Stony Brook must sell next year to break$$ even?

Calculate the$$ break$-$even point under variable costing.

Calculate the$$ break$-$even point under absorption costing.

Assume the owners of Stony Brook want to increase next$$ year's operating income $18\%$ over current levels. Using the same data as in requirement$3,$ recalculate the target quantity of cases under variable and absorption costing. Use approximation method for absorption costing.

Requirement $1.$ Calculate cases of production for Stony Brook for the year.

Ending inventory

$+$

Units sold

$-$

Beginning inventory

$=$

Number of cases produced

$21,000$

$+$

$249,000$

$-$

$33,500$

$=$

$236,500$

Part $2$

Requirement $2$a$.$ Find the$$ break$-$even point$($number of$$ cases$)$ for the year under variable costing. $($Round your answer for the contribution margin per case for this year to the nearest$$ cent.$)$

$($

Total fixed costs

$+$

Target operating income

$)$

$-$:

Contribution margin per case, this year

$=$

Break$-$even point, variable costing

$($

$$13,928,620$

$+$

$$0$

$)$

$-$:

$$61\mathrm{.}85$

$=$

$225,200$

Part $3$

Requirement $2$b$.$ Find the$$ break$-$even point$($number of$$ cases$)$ for the year under absorption costing.

In this$$ step, calculate the fixed manufacturing cost per case. $($Round your answer to the nearest$$ cent.$)$

Fixed manufacturing overhead

$-$:

Number of cases produced

$=$

Fixed manufacturing cost per case

$$4,422,550$

$-$:

$236,500$

$=$

$$18\mathrm{.}70$

Part $4$

$$Now$,$ calculate the$$ break$-$even point under absorption costing. $($Round your answer up to the nearest whole$$ number.$)$

Break$-$even point under absorption costing:

Now, calculate the$$ break$-$even point under absorption costing. $($Round your answer up to the nearest whole$$ number.$)$

Break$-$even point under absorption costing:

$220,303$

Part $5$

Requirement $3$a$.$ Grape prices are expected to increase $40\%$ next year. Assuming all other data remain$$ constant, what is the minimum number of cases Stony Brook must sell next year to break$$ even? Calculate the$$ break$-$even point under variable costing.

Calculate the$$ break$-$even point under variable costing.

In this$$ step, calculate the new direct materials cost per case for grapes. $($Round your answers to the nearest$$ cent.$)$

Direct materials cost for grapes, per case, this year

$+$

$($

Direct materials cost for grapes, per case, this year

$\backslash$times

Percent increase

$)$

$=$

Direct materials cost for grapes, per case, next year

$+$

$($

$\backslash$times

$40$

$\%$

$)$

$=$

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