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Relevant Range and Fixed and Variable Costs

FirstClass Gaming Inc. manufactures components for computer games within a relevant range of 250,000 to 500,000 components per year. Within this range, the following partially completed manufacturing cost schedule has been prepared:

Components produced 250,000 375,000 500,000 Total costs: Total variable costs $300,000 (d) (j) Total fixed costs 300,000 (e) (k) Total costs $600,000 (f) (l) Cost per unit: Variable cost per unit (a) (g) (m) Fixed cost per unit (b) (h) (n) Total cost per unit (c) (i) (o)

Complete the cost schedule below. Round costs per unit to the nearest cent.

Cost Schedule Components produced 250,000 375,000 500,000 Total costs: Total variable costs $300,000 $fill in the blank 1 $fill in the blank 2 Total fixed costs 300,000 fill in the blank 3 fill in the blank 4 Total costs $600,000 $fill in the blank 5 $fill in the blank 6 Cost per unit: Variable cost per unit $fill in the blank 7 $fill in the blank 8 $fill in the blank 9 Fixed cost per unit fill in the blank 10 fill in the blank 11 fill in the blank 12 Total cost per unit $fill in the blank 13 $fill in the blank 14 $fill in the blank 15

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Break-Even Sales

Molson-Coors Brewing Company (TAP) reported the following operating information for a recent year (in millions):

Sales $11,003 Cost of goods sold (6,217) Gross profit $4,786 Marketing, general, and admin. expenses (3,032) Operating income $1,754* *Before special items

Assume that Molson-Coors sold 240 million barrels of beer during the year, variable costs were 75% of the cost of goods sold and 35% of marketing, general, and administrative expenses, and that the remaining costs are fixed. For the following year, assume that Molson-Coors expects pricing, variable costs per barrel, and fixed costs to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $50 million.

Round intermediate calculations to the nearest cent and the final answers to the nearest whole barrel. (Do not round to the nearest million.)

a. Compute the break-even sales (barrels) for the current year.
fill in the blank 1 barrels

b. Compute the anticipated break-even sales (barrels) for the following year.
fill in the blank 2 barrels

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Margin of Safety

a. If Go-Go Buggies Company, with a break-even point at $6,000,000 of sales, has actual sales of $8,000,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales?

1. Margin of Safety (dollars) $fill in the blank 1 2. Margin of Safety (percentage) fill in the blank 2 %

b. If the margin of safety for Beartooth Company was 15%, fixed costs were $9,180,000, and variable costs were 60% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.)

Actual sales in dollars $fill in the blank 3