Question 1:
GlassInc. has the following information for August 2015:<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />
|
Selling price |
$ 27 |
per unit |
|
|
Variable expenses |
$ 18 |
per unit |
|
|
Fixed expenses |
$ 8,010 |
per month |
|
|
Actual Units Sold |
1,040 |
||
Required:
1. Prepare a Contribution Income Statementwith the data provided.
2. Ifthey spend an extra $1,000 a month in advertising, sales will increase by 100units. Prepare a new Contribution Income Statement. Would their operatingincome increase or decrease?
3. Ifthey decrease the selling price from $27 to $23, sales volume would increase by50%. Prepare a new Contribution Income Statement. Would their operating incomeincrease or decrease?
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kk |
Question 2: The Long Term Care Plus Company has two service departments — actuarial and premium rating, and two production departments — marketing and sales. The distribution of each service department’s efforts to the other departments is shown below: <?xml:namespace prefix = v ns = “urn:schemas-microsoft-com:vml” /> The direct operating costs of the departments (including both variable and fixed costs) were as follows: |
Required:
Determine the totalcost allocated to the Marketing and Sales Department using the direct method.
