Texas Company produces one product that it sells for $50 per unit. In producing that product,.
1. Texas Company produces one product that it sells for $50 per unit. In producing that product, Texas Company incurs variable costs of $35 per unit and fixed costs of $400,000. How many units of the product will Texas Company have to produce and sell to earn a profit of $42,000? (Be sure round up.)
Alabama Corporation and California Corporation have the same sales and profits as follows:
Sales $1,000,000 $1,000,000
Variable Costs 600,000 400,000
Contribution Margin 400,000 600,000
Fixed Costs 200,000 400,000
Profit 200,000 200,000
Using an operating leverage analysis, determine how much profits would increase for each company if each experienced a 10% increase in sales.
3. Virginia, LLC, sells its product for $20 and incurs variable costs in producing that product of $8 per unit and total fixed costs of $10,000. Using the contribution margin ratio approach, calculate the number of units of the product that Virginia, LLC must sell to generate a profit of $14,400.
4.Arkansas Company provided the following information at the end of 2010:
Beginning balance in Work-In-Progress $300,000
Ending balance in Work-In-Progress 350,000
Beginning balance in Finished Goods 400,000
Ending balance in Finished Goods 350,000
Direct materials costs 1,000,000
Direct labor costs 2,000,000
Manufacturing overhead 2,000,000
Selling expenses 300,000
General and administrative expenses 200,000
Prepare an income statement for fiscal year 2010.