Question

Artesa, a leading firm in the semiconductor industry, produces digital integrated circuits (ICs) for the communications and defense markets.
For the year ended December 31, 2013, Artesa sold 242,400 ICs at an average selling price of $ 47 per unit. The following information also relates to 2013 (assume constant unit costs and no variances of any kind):
Inventory, January 1, 2013: .......... 32,600 ICs
Inventory, December 31, 2013: ....... 24,800 ICs
Fixed manufacturing costs: ..........$ 1,876,800
Fixed administrative costs: ..........$ 3,284,400
Direct materials costs: ........... $ 13 per IC
Direct labor costs: ............ $ 11 per IC

Required
1. How many integrated circuits did Artesa produce in 2013?
2. Calculate the breakeven point (number of ICs sold) in 2013 under:
a. Variable costing
b. Absorption costing
3. Due to difficulties in obtaining high-quality silicon, Artesa expects that direct materials costs will increase to $ 15 per IC in 2014. Assuming all other data are the same, calculate the minimum number of ICs Artesa must sell in 2014 to break even under:
a. Variable costing
b. Absorption costing



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  • CreatedMay 14, 2014
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