(CVP; DOL; MS—two quarters; comprehensive) Following is information pertaining to Dayton Co.’s operations of the first and second quarter of 2010:
|
QUARTER |
||
|
First |
Second |
|
|
Units |
|
|
|
Production |
70,000 |
60,000 |
|
Sales |
60,000 |
70,000 |
|
Expected activity level |
65,000 |
65,000 |
|
Unit selling price |
$ 75.00 |
$ 75.00 |
|
Unit variable costs |
|
|
|
Direct material |
$ 34.50 |
$ 34.50 |
|
Direct labor |
16.50 |
16.50 |
|
Factory overhead |
7.80 |
7.80 |
|
Selling and administrative |
5.70 |
5.70 |
|
Fixed costs |
|
|
|
Factory overhead |
$195,000 |
$195,000 |
|
Selling and administrative |
42,800 |
42,800 |
Additional Information
- There were no finished goods at January 1, 2010.
- Dayton Co. writes off any quarterly underapplied or overapplied overhead as an adjustment to Cost of Goods Sold.
- Dayton Co.’s income tax rate is 35 percent.
a. Prepare a variable costing income statement for each quarter.
b. Calculate each of the following for 2010 if 260,000 units were produced and sold:
1. Unit contribution margin.
2. Contribution margin ratio.
3. Total contribution margin.
4. Net income.
5. Degree of operating leverage.
6. Annual break even unit sales volume.
7. Annual break even dollar sales volume.
8. Annual margin of safety as a percentage.
9. Annual margin of safety in units.