Werner     Company produces and sells disposable foil baking pans to     retailers for $3.15 per pan.

The variable cost p

Direct     materials$0.29Direct labor0.58Variable factory     overhead0.64Variable selling expense0.12
Fixed     manufacturing cost totals $331,324 per year. Administrative     cost (all fixed) totals $45,180.
       Required:    
     1.  Compute     the number of pans that must be sold for Werner to break     even. 
 pans
     2.  Conceptual     Connection: What is the unit variable cost? What is the unit     variable manufacturing cost? Round
Unit     variable cost$
Unit     variable manufacturing cost$
Which     is used in cost-volume-profit analysis?
       Unit       variable cost     
     3. How     many pans must be sold for Werner to earn operating income of     $13,376?
 pans
     4. How     much sales revenue must Werner have to earn operating income of     $13,376? 
$

sales 807975 807975

v cost 418095 418095 389880 Answer 3
c margin 389880 376504 13376 Number of pans to earn operating income of $
f cost 376504 13376 Number of pans to earn operating income of $
profit 13376
Answer 4
Sales revenue to earn operating income = $ 13
er pan. The variable cost per pan is as     follows:

Selling price 3.15

anufacturing cost? Round your answers to the nearest     cent.

Answer 1
Break even units = Fixed Costs/Contribution Margin per un
Direct materials 0.29 Break even units = $ 376,504/$ 1.52 = 247,700
Direct labor 0.58
Variable factory overhead 0.64 Contribution Margin per unit = Selling price per unit less To
Variable selling expenses 0.12 Contribution Margin per unit = $ 3.15 less $ 1.63 = $ 1.52
Total variable cost per unit 1.63 1.52
Fixed Costs 247700 Answer 2
Manufacturing cost 331324 Direct materials $ 0.29
Administrative cost 45180 Direct labor $ 0.58
376504 389880 Variable factory overhead $ 0.64
256500 Variable selling expenses $ 0.12
Unit Variable cost $ 1.63
arn operating income of $ 13,376 = (Fixed Costs add Desired profit)/Contribution margin per unit
arn operating income of $ 13,376 = ($ 376,504 add $ 13,376)/$ 1.52 = 256, Direct materials $ 0.29
Direct labor $ 0.58
Variable factory overhead $ 0.64
n operating income = $ 13,376 add fixed cost $ 376,504 add variable cost $ Unit Variable manufacturing cost $ 1.51

Which is used in cost-volume-profit analysis? Unit Variab

ntribution Margin per unit
2 = 247,700

ing price per unit less Total Variable Cost per unit
.15 less $ 1.63 = $ 1.52

fit analysis? Unit Variable Cost