Luxguard Home Paint Company produces exterior latex paint, which it sells in gallon containers. The company has two processing departments: Base Fab and Finishing. White paint, which is used as the base for all of the company's paints, is mixed from raw materials in the Base Fab Department. Pigments are then added to the basic white paint, the pigmented paint is sprayed under pressure into gallon containers, and the containers are labelled and packaged for shipment in the Refinishing Department. 

Information related to the company's operations for the month of April, below:

Production data:

Units (gallons) in process, April 1: materials 100% complete, conversion 60% complete	30,000
Units (gallons) went into production during April	420.000
Units (gallons) completed and transferred to the Finishing Department	370.000
Units (gallons) in process, April 30: materials 50% complete, conversion 25% complete	80.000

Cost data:

Work in Process Inventory, April 1: Materials Conversion	$92,000 $58,000
Added cost during April: Materials Conversion	$851,000 $ 995,000

Required:

Using the chart above, prepare a cost reconciliation report for April

Parte V

Voltar Company manufactures and sells a specialized cordless telephone for high electromagnetic radiation environments. The income statement in company contribution format for the most recent year is shown below:

	Total	Per unit	Percentage of sales
Sales (20,000 units)	$1,200,000	$60	100%
Variable expends	900,000	45	?%
Contribution margin	300.000	$15	?%
Fixed costs	240.000
operating margin	$ 60,000

Required:

1. Calculate the MC ratio and the variable expense ratio of the company.

2. Calculate the company's breakeven point in both units and sales dollars.

3. Suppose that sales increase by $400,000 next year. If cost behavior patterns remain unchanged, by how much will the company's net operating income increase?

4. Check the original data. Suppose management wants the company to make a profit of at least $90,000 next year. How many units will have to be sold to meet this profit goal?

5. In an effort to increase sales and profits, management is considering the use of a higher quality speaker. The higher quality speaker would increase variable costs by $3 per unit, but management could eliminate a quality inspector who is paid a salary of $30,000 per year. The sales manager estimates that the higher quality loudspeaker would increase annual sales by at least 20%

to. Assuming the changes are made as described above, prepare an income statement in projected contribution format for the coming year.

Answer rating: 100% (QA)

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