Question 1

The Solar Clothing Company (SCC) experienced growth in the spring of 2022 as consumer interest in solar clothing soared. To accommodate increasing demand, SCC wants to develop plans for expansion. First, however, SCC needs to determine the cost of goods sold for an average sales period to calculate gross profit margin. Use the SCC cost information below to calculate the cost of goods sold for July 2022.

SCC Cost Information for July 2022

Direct Materials Inventory	July 1, 2022	$1,350,000
Direct Labor		$775,000
Work in Process Inventory	July 31, 2022	$650,000
Finished Goods Inventory	July 1, 2022	$875,000
Direct Materials Purchased		$2,750,000
Factory Overhead		$650,000
Direct Materials Inventory	July 31, 2022	$700,000
Work in Process Inventory	July 1, 2022	$525,000
Finished Goods Inventory	July 31, 2022	$850,000

Question 2.

Using the high-low method, compute the variable cost per unit and the total fixed costs of the following Smart Watch Company information from the preceding six months.

Month	Units Produced	Total Costs
January	4,500	$190,000
February	5,000	$210,000
March	5,200	$215,000
April	4,500	$190,000
May	4,000	$175,000
June	3,000	$150,000

Question 3

Because of Smart Watch Company's extraordinary expansion plan, their fixed costs are expected to skyrocket in the next year due to hiring, long-term asset purchases, and so on. The plant manager expects fixed costs to increase to $3,000,000. It sells watches for $550, and the variable costs for each are $175. Based on this information, your manager asks you to determine the following amounts:

1. the break-even point in units,
2. the break-even point in sales dollars, and
3. the number of units needed to be sold for a profit of $1,200,000.