3. Jet fuel costs of Southwest Airlines.
4. Total costs of renting trucks by the city of Nashville. Charge is a lump sum of $300 per month plus $.20 per mile.
5. Straight-line depreciation on desks in the office of an attorney.
6. Advertising costs, a lump sum, planned by ABC, Inc.
7. Rental payment by the Internal Revenue Service on a five-year lease for office space in a private office building.
8. Advertising allowance granted to wholesalers by 7-up Bottling on a per-case basis.
9 Compensation of lawyers employed internally by Microsoft.
10. Crew supervisor in Lands’ End Inc mail-order house. A new supervisor is added for every 12 workers employed.
11. Public relations employee compensation to be paid by Intel.
Beverly High Fashions Company manufactured and sold 1,000 pair of leather handbags during July. Selected data for this month follow:
Direct materials used 31,000
Direct labor 16,000
Variable manufacturing overhead 13,000
Fixed manufacturing overhead 11,000
Variable selling and administrative expenses ?
Fixed selling and administrative expenses ?
Contribution margin 40,000
Operating income 22,000
There were no beginning or ending inventories.
1. What were the variable selling and administrative expenses for July?
2. What were the fixed selling and administrative expenses for July?
3. What was the cost of goods sold during July?
4. Without prejudice to your earlier answers, assume that the fixed selling and administrative expenses for July amounted to $4,000.
a. What was the break-even point in units for July?
b. How many units must be sold to earn a target operating income of $14,000?
c. What would the selling price per unit have to be if the company wanted to earn an operating income of $22,500 on the sale of 900 units?
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