Question

Sales and costs for X Company in 2018 were as follows: Total Per Unit Sales $152,220 $17.20 Variable manufacturing costs 54,516 6.16 Variable selling costs 23,984 2.71 Fixed manufacturing costs 8,230 0.93 Fixed selling costs 2,390 0.27 X Company expects sales to increase from 8,850 units in 2018 to 9,750 units in 2019. It also expects direct labor costs per unit to decrease by $1.00 and fixed overhead costs to increase by $3,300. What is expected profit in 2019?

Answer 1

Answer:

The correct answer is 77.047

Explanation:

Firstly, calculate each item

* Revenue (units * Price) = $9750 * 17.20 = 167.700

* Variable manufacturing cost = (Units* (Variable manufacturing cost 2018 – decrease expected for 2019) =  ($9750*(6.16-1)=  50.310

* Fixed Manufacturing cost=  (Fixed manufacturing cost 2018 + Increase expected for 2019) =  (8.230+3300) = 11.530

 * Variable selling cost = 9750*2.71= 26.423

* Fixed selling cost = 2390

                               Units   price   Total  

Revenue                   9,750.00     17.20     167,700.00  

Variable Man           9,750.00       5.16     (50,310.00)

Fixed Man.           9,750.00       1.18     (11,530.00)

Vari Sell.                   9,750.00       2.71     (26,423.05)

Fixed Sell           9,750.00       0.27       (2,390.00)

Profit                                                   77,046.95