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QUESTION 6.
Jammin Co. manufactures and markets several products. Management is considering the
future of one product, electronic keyboards, that has not been as profitable as planned. Since
this product is manufactured and marketed independently of the other products, its total costs
can be precisely measured. Next year’s plans call for a $225 selling price per unit. The fixed
costs for the year are expected to be $30,000, up to a maximum capacity of 700 units.
Forecasted variable costs are $150 per unit.
Required:
1. Estimate the keyboards’ break-even point in terms of (a) sales units and (b) sales dollars.
2. Prepare a contribution margin income statement showing sales, variable costs, and fixed
costs for keyboards at the break-even point.
3. Assumed that the actual sales volume is 600 units, compute the company’s margin of safety
in dollars
QUESTION 7.
The production manager of Rordan Corporation has submitted the following forecast of units
to be produced by quarter for the upcoming fiscal year:
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Units to be
8,000
6,500
7,000
7,500
produced
Each unit requires 0.35 direct labor-hours, and direct laborers are paid $12.00 per hour.
Required:
1. Construct the company’s direct labor budget for the upcoming fiscal year, assuming that t
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