Answer:
Fixed overhead application rate
= <u>Budgeted fixed overhead</u>
Budgeted direct labour hours
= <u>$114,000</u>
60,000 hrs
= $1.90 per direct labour hour
Amount of overhead applied to job X387: $
Variable overhead $4.90 x 170 hours = 833
Fixed overhead $1.90 x 170 hours = 323
1,156
Explanation:
In this case, there is need to calculate the fixed overhead application rate based on direct labour hours by dividing the the budgeted fixed overhead by budgeted direct labour hours. Then, we will calculate the overhead applied to Job X387 by multiplying the fixed and variable application rate by actual direct labour hours of 170 hours.
Answer:
$114,000
Explanation:
The computation of the residual income is shown below:
As we know that
Residual Income = Net operating Income - Average Operating assets × Required rate of return
where,
Net Operating Income is
= Sales Revenue - Variable Costs - Fixed Costs
= $500,000 - $300,000 - $50,000
= $150,000
And,
Average operating Assets is
= Net Operating Income ÷ Return on Investment
= $150,000 ÷ 0.25
= $600,000
So, the residual income is
= $150,000 - $600,000 × 6%
= $150,000 - $36,000
= $114,000
Because MP3 players cost less to make, if demand does not change, there will be more profit. This is because there would be the same amount demand and less money being made into making the product, meaning less expense, which means a bigger profit.
Answer: See explanation
Explanation:
a. Prepare a CVP income statement that shows both total and per unit amounts.
CVP INCOME STATEMENT
Per unit. Total
Sales (500 units). 400. 200,000
Variable expense 280 140,000
Contribution margin. 120 60,000
Fixed expense. 48,000
Net operating Income. 12,000
b. Compute Norton's breakeven in units.
Breakeven point = 48000 / 120 = 400
c. Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.
CVP income statement for the break-even point
Per unit. Total
Sales (400 units). 400. 160,000
Variable expense 280 112,000
Contribution margin. 120 48000
Fixed expense. 48,000
Net operating Income. 0
