Hw-1570 drake and dean – 2 questions

3. (TCO B) Drake Company’s income statement for the most recent year appears below. Sales (45,000 units) $1,350,000 Less: variable expenses 750,000 Contribution margin 600,000 Less: fixed expenses 375,000 Net operating income $225,000 Required: a. Calculate the unit contribution margin. b. Calculate the break-even point in dollars. c. If the company desires a net operating income of $290,000, how many units must it sell? 

4. (TCO E) The Dean Company produces and sells a single product. The following data refer to the year just completed: Selling price $450 Units in beginning Inventory 0 Units produced 25,000 Units sold 22,000 Variable costs per unit: Direct materials $ 200 Direct labor $ 50 Variable

manufacturing overhead $ 30 Variable selling and admin $ 15 Fixed Costs: Fixed manufacturing overhead $ 275,000 Fixed selling and admin $ 230,000 Assume that direct labor is a variable cost.

Required:

a. Compute the cost of a single unit of product under both

the absorption costing and variable costing approaches.

b. Prepare an income statement for the year using absorption costing.

c. Prepare an income statement for the year using variable costing.