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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
P5-6B Mega Electronix carries no inventories. Its product is manufactured only when a customer’s order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31, 2014, Mega’s break-even point was $2.4 million. On sales of
$2 million, its income statement showed a gross profit of $400,000, direct materials cost of
$600,000, and direct labor costs of $700,000. The contribution margin was $150,000, and variable manufacturing overhead was $200,000.
Instructions
(a)Â Calculate the following:
1. Variable selling and administrative expenses.
2. Fixed manufacturing overhead.
3. Fixed selling and administrative expenses.
(b)Â Ignoring your answer to part (a), assume that fixed manufacturing overhead was
$100,000 and the fixed selling and administrative expenses were $80,000. The market- ing vice president feels that if the company increased its advertising, sales could be increased by 15%. What is the maximum increased advertising cost the company can incur and still report the same income as before the advertising expenditure?
(CGA adapted)
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PROBLEMS: SET C
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Visit the book’s companion website, at www.wiley.com/college/weygandt, and choose the Student Companion site to access Problem Set C.
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(Note: This is a continuation of the Waterways Problem from Chapters 1–4.)
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