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[solution] » 1. Blue Tree incurred a total cost of $1,000 to produce 1500

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1. Blue Tree incurred a total cost of $1,000 to produce 1500

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1. Blue Tree incurred a total cost of $1,000 to produce 1500 units of output. A total of 250 hours


was incurred for this effort. If the variable cost was $5 per direct labor hour, then the fixed cost


was how much?


2. Amazon is planning to expand its warehouse distribution center. Variable costs will increase


3% and fixed costs will increase 10%. Last year's costs are below.


Variable costs


$25 per unit


Fixed costs


$30,000 per month


Calculate the future total cost assuming 2,000 units are shipped each month.


3. If a company's sales price per unit is $50, variable costs per unit are $30, and fixed costs for the


year are $300,000. How many units must the company sell to break even?


4. A company currently breaks even at 2,000 units. Its fixed costs are $80,000 and its variable


costs are $20 per unit. What is the product's selling price per unit?


5. A company's selling price is $6 per unit, variable cost is $1.50 per unit, and fixed costs are


$12,000. What is the break-even point in sales dollars?


6 A company produces two products, A and B. A sells for $10 and has variable costs of $6. B sells


for $8 and has variable costs of $5. Fixed Costs for the period are $25,000. An equal number of A


and B units are sold. At the break-even volume, how many units of A will be sold?


7. Crane Company produces one type of machine with the following costs and revenues for the




Total revenues




Total fixed costs




Total variable costs




Total units produced and sold 700,000


a. Refer to the Crane Company. Calculate the contribution margin per unit.


b. Refer to the Crane Company. Calculate the break-even point in units.


c. Refer to the Crane Company; how many units must be sold to make an operating profit of


$300,000 for the year? 8. Charleston Company produces two products, A and B, with the following characteristics:


Product A Product B


Selling price per unit






Variable cost per unit






Expected sales (units) 15,000




Total fixed costs for the company are $30,000.


Show you work for the following questions:


A. What is the anticipated profit given the expected sales volume?


B. Assuming the product mix would be the same at the break-even point, compute the breakeven point (be sure to indicate the number of units of each product


C. If only product C were sold, how many units would be needed to break even?


D. If only product F were sold, how many units would be needed to break even?


E. If the product mix changed so that equal units of C and F were sold, what would be the new


break-even point in total units?


9. Kodak wishes to earn a 30% return on its $200,000 investment in equipment used to produce


new photography rolls. Based on estimated sales of 20,000 units of photography rolls, the cost


per unit would be as follows:


Variable manufacturing costs




Fixed selling and administrative costs $4


Fixed manufacturing costs




At how much per unit should the Photography Rolls be priced for sale? (Kindly show the work)


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