Solution 18-10 wrong.
Variable costs = 56% of sales
Fixed costs = $187,100
Management’s net income goal = $82,092
Contribution margin ratio = (100%-variable cost percentage)
Contribution margin ratio = (100%-56%)
Contribution margin ratio = 54%
Required sales to reach target income of $82,092 = (Total fixed cost + Target income)/(Contribution margin ratio)
Required sales to reach target income of $82,092 = (187100+82092)/54%
Required sales to reach target income of $82,092 = $498,503.7
Answer wrong according to book
Solution 19-17
a) Manufacturing cost per unit (variable costing) = Direct material + Direct labor + Variable manufacturing overhead
Manufacturing cost per unit (variable costing) = $7.73 + $2.52 + $5.92
Manufacturing cost per unit (variable costing) = $16.17 per unit
b) Variable costing income statement:-
POLK COMPANY
Income statement
For the year ended December 31, 2012
Variable costing
Have to show debit and credit columns
Categories Wrong
Amt.
Book only has these categories:
Sales
$ 2,060,000.0
admin expenses
variable cost of godds sold
Less: Variable costs
$ 1,615,200.0
Contribtn margin
variable selling and admin expenses
fixed manufacturing overhead
Contribution margin
$ 444,800.0
fixed selling and admin expenses
Less: Fixed costs
$ 450,503.0
gross profit
net income/loss
Operating profit
$ (5,703.0)
sales
total fixed expenses
total variable expenses
d) Absorption costing income statement:-
POLK COMPANY
Income statement
For the year ended December 31, 2012
Absorption costing
Have to show debit and credit columns
Categories Wrong
Amt.
Book only has these categories:
Sales
$ 2,060,000.0
admin expenses
variable cost of godds sold
Less: Cost of goods sold
$ 1,496,800.0
Contribtn margin
variable selling and admin expenses
fixed manufacturing overhead
Gross margin
$ 563,200.0
fixed selling and admin expenses
Less: Selling and admin expenses
$ 568,903.0
gross profit
net income/loss
Operating profit
$ (5,703.0)
sales
total fixed expenses
total variable expenses
