1-Answer the following questions using the information below:

Beginning finished goods, 1/1/2015 $ 40,000

Ending finished goods, 12/31/2015 33,000

Cost of goods sold 250,000

Sales revenue600,000

Operating expenses 120,000

Required:

1) What is cost of goods manufactured for 2015?

2) What is gross margin for 2015?

3) What is operating income for 2015?

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2-The Western Company presents the production and cost data for the first six months of the 2015.

Month	Units produced	Mixed costs ($)
January	15000	45000
February	18000	56000
March	22000	60000
April	16000	48000
May	30000	75000
June	26000	62000

Required:Using the high-low point method, determine the followings:

1. Estimated variable cost rate.
2. Fixed cost.
3. Also determine the cost function based on data given above.

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3-Loren Company's single product has a selling price of $15 per unit. Last year the company reported variable expenses per unit of $9, fixed expenses of $90,000, and a net operating income of $30,000.

Required:

1. Compute the number of unit sales to achieve the mentioned net operating income ($30,000).
2. A study by the sales manager discloses that a 10,000 increase in the advertising costs (fixed costs) would increase unit sales by 10%. If her proposal is adopted, what is the new net operating income?

If you are the financial manager on the same company, which scenario (1 or 2) you prefer to adopt and why?

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4-

XYZ Company has been manufacturing its own widgets that are used in producing its final product. The cost of manufacturing 10,000 widgets is summarized below.

Direct materials	$25,000
Direct labour	20,000
Variable factory overhead	9,000
Fixed factory overhead	16,000
Total manufacturing costs	$70,000

A supplier offers to produce the widgets that XYZ needs for $5.5 plus freight costs of $0.50 per widget. If the company decides to buy from the supplier, 70% of the fixed factory overhead which represents depreciation and insurance costs will continue. 30% will be avoided.

a.) Decide if the company should continue to make the widget or purchase it from the outside supplier.

b.) Suppose that if the company chooses to buy the widget, the space used to manufacture the widgets before can be rented out to a tenant for $4,500. Under this scenario, decide if the company should continue to make the widget or purchase it from the outside supplier.