HALUM TOYS COMPNAY

Halum Toys Company Cost of Goods Manufactured

Direct Materials
Beginning Raw Materials $15,000
+Purchase Raw Materials $87,000
Raw Materials Available for Sale $1,02,000
-Ending Raw Materials $12,000
Raw Materials Used in Production $90,000
Direct Labor $72,000
Manufacturing Overhead to Work in Process $1,50,000
Total Manufacturing Cost $3,12,000
+Beginning Work in Process $7,000
-Ending Work in Process $6,000
Cost of Goods Manufactured $3,13,000

Halum Toys Company Cost of Goods Sold

Beginning Finished Goods Inventory $39,900
+Cost of Goods Manufactured $3,13,000
Cost of Goods Available for Sale $3,52,900
-Ending Finished Goods Inventory $28,500
Unadjusted Cost of Goods Sold $3,24,400
-Over Applied Overhead $28,000
Adjusted Cost of Goods Sold $2,96,400
 Halum Toys Company High-Low Method
Unit Cost
High Level of Activity 6,000 $1,79,507
Low Level of Activity 5,000 $1,69,079
Changes of Activity 1000 $10,428

Variable Cost per Unit

Changes in Cost $10,428
=
Changes in Unit 1000
= $10.43
Fixed Cost
At 6000 unit total cost = $1, 79,507
Less variable cost (6000×10.43) = $62,580
Fixed Cost = $1, 16,927

Y= a+bx
= 1, 16,927 + 10.43x

Halum Toys Company Break Even Point in Unit

Formula Method
Fixed Cost
Unit CM
2,74,500
= 410−46.5

= 755.16 unit
 Halum Toys Company Break Even in Dollar
Formula Method
Unit of CM
CM Ratio=
Unit of S.P
363.5
= 410

= 0.89
Fixed Cost
C. M Ratio
2,74,500
=
0.89
= $ 3, 08,427

Halum Toys Company Break Even in Unit (Target Profit)

Formula Method
Fixed Cost + Target Profit
Unit C. M
2,74,500+3,000,000
=
363.5

= 9008.25 units

Halum Toys Company Margin of Safety

Sales (410× 6200) = 2,542,000
Breakeven Sales (755.16× 410) = 3, 09,616
Margin of Safety = $ 2,232,348
 Halum Toys Company Unit Product Cost Under Variable and Absorption
Costing
Unit product cost under variable costing
Direct Materials 15.00
Direct Labor 12.00
Variable Manufacturing over Head 9.50
36.50

Unit product cost under absorption costing

Direct Materials = 15.00
Direct Labor = 12.00
Variable Manufacturing over Head = 9.50
Fixed Manufacturing over Head = 20.33
57

Halum Toys Company Variable Costing Income Statement

Sales 2,542,000
(410× 6200)
Variable Expense
Variable Cost of Goods Sold 2,26,300
(6200× 36.5)
Variable Selling and Administrative Expense 62,000
( 6200× 10.00)
Contribution Margin 2,253,700
Fixed Expense
Fixed Manufacturing Overhead 1,22,00
Fixed Selling and Administrative Expense 1,52,500
Net Operating Income 1,979,200
 Halum Toys Company Absorption Costing Income Statement
Sales 2,542,000
(410× 6200)
Cost of Goods Sold 3,53,400
(6200× 57)
Gross Margin 2,188,600
Selling and Administrative Expense 2,14,500
(6200×10)+ 1,52,500
Net Operating Income 1,974,100