Omega Widget Manufacturers has variable costs (of making 10,000 widgets) that equal $20 per widget. Omega's total fixed costs equal $100,000. Currently, the selling price is $32 per widget (anticipated sales for next year = 10,000 units)

During the budgeting process, Manager Abel recommends continuing production at 10,000 uruts. Manager Belzos recommends manufacturing 12,500 units. Supervisor Wylie, who is the production line supervisor, is seeking promotion to manager of the Omega factory in Lanai, Hawaii, and also receives a bonus equal to 5% of net product line revenue, it just "demands" that the production quantity be 16,000 units. (There is enough production capacity to make 16,000 uillts. Omega has no selling or general expenses.)

Bonita Corporation has suggested that they buy 3,000 devices, but they are only willing to pay $25 per unit. Omega has the ability to complete the order. Fixed costs will remain the same. Can this be solved without making income statements? (Hint: use contribution margin.)

QUESTIONS

1. What is the variable cost per unit of direct materials, direct labor, and variable factory overhead, all added together (for one unit) according to the problem?

2. What will be the variable cost per unit of direct materials, direct labor, and variable factory overhead added (for one unit) if 10,000 units are produced?

3. What will be the variable cost per unit of direct materials, direct labor, and variable factory overhead added together (for one unit) if 12,500 units are produced?

4. What will be the variable cost per unit of direct materials, direct labor, and variable factory overhead added (for one unit) if 16,000 units are produced?

5. What will be the variable cost per unit of direct materials, direct labor, and variable factory overhead added (for one unit) if 25,000 units are produced?

6. What will be the total fixed overhead costs of the factory if they produce 10,000 units?

7. What will be the total fixed overhead costs of the factory if they produce 12,500 units?

8. What will be the total factory fixed overhead costs if they produce 16,000 units?

9. What will be the total fixed overhead costs of the factory if they produce 25,000 units?

10. How much sales (expressed in units) has Omega forecast for the coming year, even if they make 10,000 units?

11. How much in sales (expressed in units) does Omega forecast for the coming year, even if they make 12,500 units?

12. How much sales (expressed in units) has Omega forecast for the coming year, even if they make 16,000 units?

13. What will be the fixed factory overhead cost per unit if 10,000 units are manufactured and each unit "absorbs" its 'full' share of that $100,000 fixed manufacturing cost?

14. What will be the fixed factory overhead cost per unit if 12,500 units are manufactured and each unit "absorbs" its "full" share of that $100,000 fixed manufacturing cost?

15. What will be the fixed factory overhead cost per unit if 16,000 units are manufactured and each unit "absorbs" its "full" share of that $100,000 fixed manufacturing cost?

16. If the company manufactures 10,000 units, what is the TOTAL cost of one unit manufactured?

17. If the company manufactures 12,500 units, what is the TOTAL cost of one unit manufactured?

18. If the company manufactures 16,000 units, what is the TOTAL cost of one unit manufactured?

19. What is the TOTAL cost of goods sold expense based on TOTAL COST if 10,000 units are manufactured and only 10,000 units are sold?

20. What is the TOTAL cost of goods sold expense based on TOTAL COST if 12,500 units are manufactured and only 10,000 units are sold?

21. What is the TOTAL cost of goods sold expense based on FULL COST if 16,000 units are manufactured and only 10,000 units are sold?

22. What is the net revenue under TOTAL COST if 10,000 units are manufactured and only 10,000 units are sold?

23. What is the net revenue under TOTAL COST if 12,500 units are manufactured and only 10,000 units are sold?

24. What is the net revenue under TOTAL COST if 16,000 units are manufactured and only 10,000 units are sold?

25. What is the "net revenue from variable costs" for all 3 levels of manufacturing, regardless of how many units are manufactured, but when only 10,000 units are sold?

Answer rating: 100% (QA)

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