Acct344 Cost Accounting: Week 4 Homework (Justice Company, JIM Manufacturing)

Acct344 Cost Accounting
Week 4 Homework

Problem 1:
The Justice Company has the following functional income statement for the prior month
Sales ($50 * 100,000 units) 5,000,000
Cost of goods sold
Direct materials 1,200,000
Direct labor 950,000
Variable factory overhead 600,000
Fixed factory overhead 850,000 3,600,000
Gross profit 1,400,000
Selling and administrative expense
Variable 250,000
Fixed 120,000 370,000
Operating income 1,030,000
There were no beginning and ending inventories.

Required:
a. Calculate the contribution margin per unit.
b. Calculate the contribution margin ratio.
c. What is the break-even point in units?
d. What is the amount of sales in dollars needed to obtain a before-tax profit of $40,000?

Problem 2:
JIM Manufacturing has estimated monthly sales of 18,000 units for $48 per unit. Variable costs include manufacturing costs of $27 and distribution costs of $9. Fixed costs are $60,000 per month.

Required:
1. Determine each of the following values.
a. Unit contribution margin
b. Monthly break-even unit sales volume
c. Before-tax monthly profit
d. Monthly margin of safety in units
2. Create a contribution margin-based income statement.
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