1. Explain the difference between Variable Cost Income Statement and Direct Method Income Statement, when will the net profit be equal and when not equal. 

2. As a wellknown pullover brand, we sell pullovers 50.000 units a year for 125.-$ with a contribution margin ratio 40%, a research on sales quantity showed that a 40% increase in production quantity will cause an increase in the contribution margin ratio 10%. (20 Pts)

1. Compute the breakeven points in quantity and amount.
2. Compute the quantity to sell to get a profit of 3.437.500.-$

3. A unique good is being produced in the business and financial information is recorded seriously. Here are given the financial information for last three periods: (40 Pts)

Direct Material Cost (Your School No. Last 2 digits plus 2.-$) $

Direkt Labor Cost (Your School No. Last 2 digits plus 1.-$) $

Variable Factory Overhead (Your School No. Last 2 digits $) $

Variable Marketing Expenses 15.-$

Fixed Manufacturing Cost 65,600.-$

Fixed Res. & Dev. Expenses 1,750.-$

Fixed Marketing Expenses 6,250.-$

Unit Sale Price 137.50 $

Quantity information for the last three periods are as follows:

PERIOD I PERIOD II PERIOD III

Units in the beginning of the period 250 U. 250 U.

Production units of the period 1.050 U. 880 U. 710 U.

Units sold in the period 800 U. 880 U. 960 U.

Units at the end of the period 250 U. 250 U. -

Inventories have to be evaluated with First in first out method.

Prepare the Income Statements of the business for last three periods

• With absorption method
• With variable method

Answer rating: 100% (QA)

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