1. ACC 349 Week 2 Connect Problems NEW
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• Question 1 The Hartford Symphony Guild is planning its annual
dinnerdance. The dinnerdance committee has assembled the
following expected costs for the event:
Dinner (per person) $10
Favors and program (per person) $4
Band $700
Rental of ballroom $2,000
Professional entertainment during intermission $2,000
Tickets and advertising $700
The committee members would like to charge $41 per person for the
evening’s activities.
Required:
1. Compute the breakeven point for the dinnerdance (in terms of the
number of persons who must attend).
2. 2. Assume that last year only 200 persons attended the dinnerdance.If
the same number attend this year, what price per ticket must be
charged in order to break even?
3. Refer to the original data ($41 ticket price per person). Prepare a
CVP graph for the dinnerdance from zero tickets up to 550 tickets
sold.
• Question 2 Walsh Company manufactures and sells one product.
The following information pertains to each of the company’s first two
years of operations:
Variable costs per unit:
Manufacturing:
Direct materials $ 21
Direct labor $ 11
Variable manufacturing overhead $ 4
Variable selling and administrative $ 3
Fixed costs per year:
Fixed manufacturing overhead $ 320,000
Fixed selling and administrative expenses $ 100,000
During its first year of operations, Walsh produced 50,000 units and
sold 40,000 units. During its second
year of operations, it produced 40,000 units and sold 50,000 units.
The selling price of the company’s
3. product is $51 per unit.
Required:
1. Assume the company uses variable costing:
a. Compute the unit product cost for year 1 and year 2.
b. Prepare an income statement for year 1 and year 2.
2. Assume the company uses absorption costing:
a. Compute the unit product cost for year 1 and year 2.
b. Prepare an income statement for year 1 and year 2.
3. Reconcile the difference between variable costing and absorption
costing net operating income in year 1and year 2.
• Question 3 Award: 6 out of 6.00 points
Barlow Company manufactures three products: A, B, and C. The
selling price, variable costs, and contribution margin for one unit of
each product follow:
Product
A B C
4. Selling price $240 $ 320 $ 300
Variable expenses:
Direct materials 18 72 27
Other variable
expenses 174 152 228
Total variable
expenses 192 224 255
Contribution margin $ 48 $
96 $ 45
Contribution margin
ratio 20% 30% 15%
The same raw material is used in all three products. Barlow Company
has only 4,900 pounds of raw
material on hand and will not be able to obtain any more of it for
several weeks due to a strike in its
supplier’s plant. Management is trying to decide which product(s) to
concentrate on next week in filling its
backlog of orders. The material costs $9 per pound.
Required:
5. 1. Compute the amount of contribution margin that will be obtained
per pound of material used in each product.
2. a. Compute the amount of contribution margin on each
product.
b. Which orders would you recommend that the company
work on next week—the orders for product A,product B, or product
C?
3. .A foreign supplier could furnish Barlow with additional stocks of
the raw material at a substantial premium over the usual price. If
there is unfilled demand for all three products, what is the highest
price that Barlow Company should be willing to pay for an additional
pound of materials?
• Question 4. Award: 6 out of 6.00 points
Imperial Jewelers is considering a special order for 24 handcrafted
gold bracelets to be given as gifts to members of a wedding party. The
normal selling price of a gold bracelet is $408.00 and its unit product
cost is $268.00 as shown below:
Direct materials $ 147
Direct labor 81
6. Manufacturing overhead 40
Unit product cost $ 268
Most of the manufacturing overhead is fixed and unaffected by
variations in how much jewelry is produced in any given period.
However, $11 of the overhead is variable with respect to the number
of bracelets produced. The customer who is interested in the special
bracelet order would like special filigree applied to the bracelets. This
filigree would require additional materials costing $10 per bracelet
and would also require acquisition of a special tool costing $457 that
would have no other use once the special order is completed. This
order would have no effect on the company’s regular sales and the
order could be fulfilled using the company’s existing capacity without
affecting any other order.
Required:
a. What effect would accepting this order have on the company’s net
operating income if a special price of $368.00 per bracelet is offered
for this order?
b. Should the special order be accepted at this price?
