ACCT322 Managerial Accounting : Variable and Absorption Costing

Questions:

Q.1 Arsh Corporation produces and sells a product whose selling price is $110.00 per unit and whose variable expense is $29.70 per unit. The company’s monthly fixed expense is $345,290.
Required:
A. Break Even Point in Unit 
B Break Even Point in Dollar.
C.Assume the company’s monthly target profit is $16,060. Determine the unit sales to attain that target profit. Show your work!
D. Assume the company’s monthly target profit is $40,150. Determine the dollar sales to attain that target profit. Show your work! 
Q.2 Prepare a Direct Material Purchase Budget with the following information.
Plastic is the only direct material used in Framecraft’s picture frames.
Each picture frame required 8 ounces of plastic. 
Framecraft’s Purchasing Department has estimated the cost of the plastic used in the picture frames at $ 0.06 per ounce. 
Assume that each quarter’s desired units of ending direct materials inventory become the next quarter’s desired units of beginning direct materials inventory.
Framecraft’s desired level of ending direct materials inventory is 10 percent of the next quarter’s budgeted production unit. 
Beginning inventory of direct materials for the first quarter is 12000 whereas the ending direct material inventory for the fourth quarter is 20000.
Q.3 what do you mean by Variable and Absorption Costing? Explain both with suitable example.

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