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alexandr1967 [171]
3 years ago
14

Naylor Company had $154,200 of net income in 2016 when the selling price per unit was $155, the variable costs per unit were $95

, and the fixed costs were $572,900. Management expects per unit data and total fixed costs to remain the same in 2017. The president of Naylor Company is under pressure from stockholders to increase net income by $61,200 in 2017. Compute the number of units sold in 2016.
Business
2 answers:
FinnZ [79.3K]3 years ago
6 0

Answer:

The number of units sold in 2016 is 12,118 units

Explanation:

Number of units to sold in 2016=fixed costs+target profit/contribution per unit

fixed costs is $572,900

target profit=$154,200

Contribution per unit =selling price per unit -variable cost per unit

selling price per unit is $155

variable cost per unit is $95

contribution per unit=$155-$95

contribution per unit =$60

Number of units sold in 2016=($572,900+$154,200)/$60

number of units sold in 2016=$727,100/$60

number of units sold in 2016= 12,118.33  units

the number of units sold in 2016 is 12,118

mihalych1998 [28]3 years ago
4 0

Answer:

Units sold in 2016 = 12118.33

Explanation:

Given that

Net income = 154200

Fixed inputs = 572900

Selling price per unit = 155

Variable cost per unit = 95

Recall that

Net income = total revenue - total expenses

And that

Net income = (selling price - variable cost) × number of goods sold - fixed cost

Thus

154200 = (155 - 95)x - 572900

572900 + 154200 = 60x

727100 = 60x

x = 727100/60

x = 12,118.33 units

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Answer:

Part 1.  Compute the company%u2019s predetermined overhead rate for the year

Predetermined overhead rate  = $15 / Computer Hour

Part 2. Compute the underapplied or overapplied overhead for the year.

Underapplied Overheads are: $1,350,000 -  $900,000 = $450,000

Part 3.  Assume the company closes any underapplied or overapplied overhead directly to cost of goods sold. Prepare the appropriate journal entry.

Cost of goods sold $450,000 (debit)

Overhead Account $450,000 (credit)

Part 4. Company allocates any underapplied or overapplied overhead to work in process, finished goods, and cost of goods sold on the basis of the amount of overhead applied during the year that remains in each account at the end of the year:

Work In Process $18,000 (debit)

Finished Goods $73,008 (debit)

Cost of Goods Sold $315,000 (debit)

Overhead Account $450,000(credit)

Explanation:

Part 1.  Compute the company%u2019s predetermined overhead rate for the year

Predetermined overhead rate = Budgeted Overheads / Budgeted Activity

                                                    = $1,275,000/ 85,000

                                                    = $15 / Computer Hour

Part 2. Compute the underapplied or overapplied overhead for the year.

Applied Overheads = Actual hours × Predetermined overhead rate

                                 = 60,000 × $15

                                 =  $900,000

Actual Overheads = given = $1,350,000

Applied Overheads $900,000 < Actual Overheads $1,350,000, thus we have an underapplied situation

Therefore Underapplied Overheads are: $1,350,000 -  $900,000 = $450,000

Part 3.  Assume the company closes any underapplied or overapplied overhead directly to cost of goods sold. Prepare the appropriate journal entry.

Cost of goods sold $450,000 (debit)

Overhead Account $450,000 (credit)

Part 4. Company allocates any underapplied or overapplied overhead to work in process, finished goods, and cost of goods sold on the basis of the amount of overhead applied during the year that remains in each account at the end of the year:

Allocations:

                                         Totals          Weighted Average%       Allocation

Work In Process              $43,200                   4%                           $18,000

Finished Goods              $280,800               26%                           $73,008

Cost of Goods Sold        $756,000               70%                          $315,000

Total                                $1,080,000            100%                         $450,000

Journals:

Work In Process $18,000 (debit)

Finished Goods $73,008 (debit)

Cost of Goods Sold $315,000 (debit)

Overhead Account $450,000(credit)

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Effective rent = [Present value of Year 1 rent + Present value of Year 2 rent + Present value of Year 3 rent ] / [ 1 - (1 / (1 + rate)^ number of years) / rate]

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= $17.28

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