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    sagnik2422's Avatar
    sagnik2422 Posts: 77, Reputation: 1
    Junior Member
     
    #1

    Dec 24, 2014, 09:22 PM
    Cost Accounting Loss Question Need Help
    Trenton and Company makes a single product requiring $50 of direct materials. Manufacturing overhead is applied using a predetermined overhead of 150% of direct labor cost. One third of manufacturing overhead is fixed. There is no under or over applied overhead and the company has no beginning or ending inventory. The company reports the following results for August :
    Number of Units Sold : 8,000
    Selling Price Per Unit : $300
    Manufacturing Cost Per Unit : $200
    Variable Selling and Admin. Expenses per unit : $45
    Total Fixed Selling and Admin Expenses : $290,000
    Question : How many units can sales go down before company incurs a loss?
    A) 1765 B) 5,100 C) 2,700 D) 6,235 E ) None
    Please show help with steps. They say 150% of direct labor cost but don't give direct labor cost, is this a trick?
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #2

    Dec 27, 2014, 07:32 PM
    Logic, what are the components of manufacturing cost?

    manufacturing cost per unit = $200
    materials = $50 = 25%
    Labour ]
    Overhead ] = $150

    if overhead = 150% of labour what does labour plus overhead =? 250% of labour

    In what way is this relevant? In what way is any of the numbers given relevant?

    don't waste your time answering questions that aren't asked

    over to you think about the selling and admin cost, this should enable you to see the company is already in loss

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