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ACCT 321 WEEK 1 HOMEWORK

ACCT 321 WEEK 1 HOMEWORK

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Homework (Week 1)
Cost Accounting (ACCT 321)
Cost-Volume-Profit Analysis
 
1. Kruez & Company produces valves for the widget industry.  Kruez's per unit sales price and variable costs are as shown.
Sales price

$12

Variable costs

8

Kruez’s practical capacity is 40,000 units. Its total fixed costs aggregate $48,000 and it has a 40% effective tax rate.
The maximum net profit that Kruez can earn is:
a. $48,000.
b. $67,200.
c. $96,000.
d. $112,000.
 
 
 
2.  Bill Miller’s Corporation makes two types of widgets for use in various products. Operating data and unit cost information for its products are presented next.
 

Product A

Product B

Annual unit capacity

10,000

20,000

Annual unit demand

10,000

20,000

Selling price

$100

$80

Variable manufacturing cost

53

45

Fixed manufacturing cost

10

10

Variable selling and administrative

10

11

Fixed selling and administrative

5

4

Fixed other administrative

2

0

Unit operating profit

$20

$10

Machine hours per unit

2.0

1.5

Bill Miller’s has 40,000 productive machine hours available. The relevant contribution margins, per machine hour for each product, to be utilized in making a decision on product priorities for the coming year, are
 

Product A

Product B

a.

$17.00

$14.00

b.

$18.50

$16.00

c.

$20.00

$10.00

d.

$37.00

$24.00

 
3.  San Antonio Company produces accounting software. Its unit cost structure, based on an anticipated production volume of 150,000 units, is:
Sales price

$160

Variable costs

60

Fixed costs

55


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