The production of a new product required Venetian Manufacturing - 13599

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The production of a new product required Venetian Manufacturing Co. to lease additional plant facilities. Based on studies, the following data have been made available: Estimated annual sales– 24,000 units.. Amount Per Unit Estimated costs: Materials . . . . . . . . . . ...... . . . . . . . . . . . ...... . . . . . . . . . $ 96,000 $ 4.00 Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,400 0.60 Factory overhead . . . . . . ...... . . . . . . . . . . . . . ...... . . . . . 24,000 1.00 Administrative expense. ................ . . . . . . ...... . . . . . 28,800 1.20 Total. . . . . . . . . . . . . . ..... . . . . . . . . . . . ...... . . . . . . . . . $ 163,200 $ 6.80 Selling expenses are expected to be 5% of sales, and net income is to amount to $ 2.00 per unit. Required: 1. Calculate the selling price per unit. ( Hint: Let “ X” equal the selling price and express selling expense as a percentage of “ X.”) 2. Prepare an absorption costing income statement for the year ended December 31, 2013. 3. Calculate the break- even point expressed in dollars and in units, assuming that administrative expense and factory overhead are all fixed but other costs are fully variable.

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