T-Tunes, Inc. is considering the introduction of a new music player with the following price and cost

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Question:

T-Tunes, Inc. is considering the introduction of a new music player with the following price and cost characteristics:

Sales price per unit: $125
Variable cost per unit: $75
Annual fixed costs: $180,000

(a) How many units must T-Tunes sell to break even?
(b) How many units must T-Tunes sell to make an operating profit of $120,000 for the year?
(c) What will the operating profit be, assuming that the projected sales for the year are 7,500 units?

Kramer Company has decided to use a predetermined rate to assign factory overhead to production. The following predictions have been made for 2010:

Total factory overhead costs	$180,000
Direct labor hours	50,000 hours
Direct labor costs	$250,000
Machine hours	60,000 hours

Compute the predetermined factory overhead rate under three different bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours.

(Points : 30)

The Moundsview Company provided you with the following information for the fiscal year ending on December 31:

Work-in-process inventory, 12/31	$115,800
Finished goods inventory, 1/1	614,800
Direct labor costs incurred	2,008,600
Manufacturing overhead costs	5,368,800
Direct materials inventory, 1/1	501,600
Finished goods inventory, 12/31	1,022,000
Direct materials purchased	3,500,400
Work-in-process inventory, 1/1	202,000
Direct materials inventory, 12/31	338,800

(a) Compute the total manufacturing costs incurred during the year.
(b) Compute the total work-in-process during the year.
(c) Compute the cost of goods manufactured during the year.
(d) Compute the cost of goods sold during the year.