OUR LADY OF THE PILLAR COLLEGE

San Manuel Campus

Cost Accounting and Control

COST ACCOUNTING PROBLEM SET 2

A. Carlson Company incurred 170,000 in overhead costs making 12,000 units in March. It made
15,000 units and incurred 188,000 in overhead costs in April.
1. Compute the variable component of overhead cost.
2. Find the fixed factor of overhead cost.

B. Danner has an average unit cost of 22.50 at a volume of 400,000 units. At 500,000 units the
average unit cost is 20.50.
1. Compute the variable cost per unit.
2. Compute the total fixed cost.

C. Tri-County Company incurred 175,000 in overhead costs making 40,000 units in April. It made
24,000 units and incurred 147,000 in overhead costs in May.
1. Compute the variable component of overhead cost.
2. Find the fixed factor of overhead cost.

D. Bennco has an average unit cost of 18.50 at a volume of 100,000 units. At 200,000 units the
average unit cost is 14.25.
1. Compute the variable cost per unit.
2. Compute the total fixed cost.

E. Parsons Company incurred 475,000 in overhead costs making 40,000 units in August. It made
30,000 units and incurred 447,000 in overhead costs in September.
1. Compute the variable component of overhead cost.
2. Find the fixed factor of overhead cost.

F. Pitino Company has a beginning inventory of direct materials on March 1 of 30,000 and an
ending inventory on March 31 of 36,000. The following additional manufacturing cost data were
available for the month of March:
Direct materials purchased 84,000
Direct labor 60,000
Factory overhead 80,000
During March, prime cost and conversion cost added to production were:

G. Fixed and Variable Costs. In 2019, the Lin Company had sales of 2,500,000, with 1,250,000
variable and 900,000 fixed costs. In 2020, sales are expected to decrease 10% and the fixed costs
are not expected to change.

Required: Determine Lin Company's expected operating income or loss for 2020.

H. Determination of per Unit Total Costs. The estimated unit costs for Hoteling Industries, when
operating at a production and sales level of 10,000 units, are as follows:
Cost Item Estimated Unit Cost
Direct materials 15
Direct labor 10
Variable factory overhead 8
Fixed factory overhead 5
Variable marketing 4
Fixed marketing 3
 Required:

(1) Identify the estimated conversion cost per unit.

(2) Identify the estimated prime cost per unit.
(3) Determine the estimated total variable cost per unit.
(4) Compute the total cost that would be incurred during a month with a production level of
10,000 units and a sales level of 12,000 units.

I. Hopi Corporation expects the following operating results for next year:

Sales 400,000
Margin of safety 100,000
Contribution margin ratio 75%
Degree of operating leverage 4

What is Hopi expecting total fixed expenses to be next year?

J. The Garry Corporation's most recent contribution format income statement is shown below:

Total Per unit

Sales (15,000 units) 225,000 15
Variable expenses 135,000 9
Contribution margin 90,000 6
Fixed expenses 35,000
Net operating income 55,000

Required: Prepare a new contribution format income statement under each of the following
conditions and determine their breakeven point in sales and in pesos (consider each case
independently):
a. The sales volume increases by 10% and the price decreases by 0.50 per unit.
b. The selling price decreases 1.00 per unit, fixed expenses increase by 15,000, and the sales
volume decreases by 5%.
c. The selling price increases by 25%, variable expense increases by 0.75 per unit, and the
sales volume decreases by 15%.
d. The selling price increases by 1.50 per unit, variable cost increases by 1.00 per unit, fixed
expenses decrease by 15,000, and sales volume decreases by 12%.