Question

Werner Company produces and sells disposable foil baking pans to retailers for $2.75 per pan.
The variable cost per pan is as follows:
Direct materials ...........$0.37
Direct labor .............. 0.63
Variable factory overhead ......... 0.53
Variable selling expense ......... 0.12
Fixed manufacturing cost totals $111,425 per year. Administrative cost (all fixed) totals $48,350.

Required:
1. Compute the number of pans that must be sold for Werner to break even.
2. Conceptual Connection: What is the unit variable cost? What is the unit variable manufacturing cost? Which is used in cost-volume-profit analysis and why?
3. How many pans must be sold for Werner to earn operating income of $13,530?
4. How much sales revenue must Werner have to earn operating income of $13,530?


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  • CreatedSeptember 22, 2015
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