Clicker Question Preparation Guide Ch 6 Clicker questions will be asked in class based on your completion of this preparation guide Example in class question What is the answer to Question 1 b You will not have time to complete this guide in class 1 Bryson s Brewery has the following selected information Root Beer Butter Beer Total Sales Revenue 700 000 300 000 1 000 000 Total Fixed Costs 264 000 Contribution Margin Ratio 30 40 a What is Bryson s break even point in sales dollars for each product line Root Beer and Butter Beer 2 Sleep Corporation manufactures and sells three different types of mattresses They are referred to as Good Supreme and Ultimate mattresses Stuffing and fluffing time is limited More time is required to stuff and fluff the pads used in the Supreme and Ultimate mattresses Additional information is provided below Selling price Variable costs and expenses Contribution margin Stuffing and fluffing time required Good 80 00 46 80 33 20 0 4 hrs Supreme 305 194 60 110 40 1 2hrs Ultimate 999 00 475 00 524 00 6 hrs a What is the contribution margin per unit of limited resource for each type of mattress b If additional stuffing and fluffing time could be obtained how should the additional capacity be used Additional capacity should be used to make mattresses 3 Meyers Sons has the following unit sales and cost data for their best selling product Note The following situations in parts a and b are independent of each other Selling price per unit Variable cost per unit Fixed costs Current units sold 600 260 429 600 2 800 units a Situation A Meyers Sons is anticipating a price increase from their suppliers for materials and instead of raising the selling price of their product they have purchased additional advertising in an effort to increase their sales If variable costs increase 10 due to the increased material costs and fixed costs increase by 10 000 due to the additional advertising what is the new amount of units that they need to sell to break even b Situation B Meyers Sons is considering purchasing additional advertising for 15 000 in an effort to be more competitive in the market What is the change in Net Income the company can expect based on this change in fixed costs and assuming they are able to increase their sales to 3 400 units sold 4 Maverick Company produces basketballs It incurred the following costs during the year Direct materials Direct labor Fixed manufacturing overhead Variable manufacturing overhead Selling costs 14 850 25 450 11 850 29 550 21 050 a What are the total product costs for the company under variable costing b What are the total product costs for the company under absorption 5 Harris Company s fixed overhead costs are 4 per unit and its variable overhead costs are 8 per unit In the first month of operations 50 000 units are produced and 46 000 units are sold Which costing approach will report higher net income and why By what amount will net income be different between the two costing methods
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