Exercise 11-19Margin of safety
Information concerning a product produced by Askew Company appears here.
Determine the following.
a. Contribution margin per unit.
b. Number of units that Askew must sell to break even.
c. Sales level in units that Askew must reach to earn a profit of $360,000.
d. Determine the margin of safety in units, sales dollars, and as a
percentage. (Edmonds. Survey of Accounting. 2012)
Problem 12-14Cost accumulation and allocation
Singh Manufacturing Company makes two different products, M and N. The company’s two departments are named after the products; for example, Product
M is made in Department M. Singh’s accountant has identified the following annual costs associated with these two products.
a. Identify the costs that are (1) direct costs of Department M, (2) direct costs of Department N, and (3) indirect costs.
b. Select the appropriate cost drivers for the indirect costs and allocate these costs to Departments M and N.
c. Determine the total estimated cost of the products made in Departments M and N. Assume that Singh produced 2,000 units of Product M and 4,000 units of Product N during the year. If Singh prices its products at cost plus 40 percent of cost, what price per unit must it charge for Product M and for Product N?