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Cost Classfication & Breakeven Point

1.Following is a list of various costs incurred in producing frozen pizzas. With respect to production and sale of frozen pizzas, classify each cost as variable, fixed, or mixed.
1. Property insurance premiums, $1500 per month plus $0.005 for each dollar or property over $3,000,000.
2. Packaging
3. Hourly wages of inspectors
4. Pension cost, $0.05 per employee hour on the job
5. Hourly wages of machine operators
6. Rent on warehouse, $5,000 per month plus $5 per square foot of storage used
7. Refrigerant used in refrigeration equipment
8. Pepperoni
9. Dough
10. Tomato paste
11. Property taxes, $50,000per year on factory building and equipment
12. Electricity costs, $0.08 per kilowatt-hour
13. Salary of plant manager
14. Straight-line depreciation on the production equipment
15. Janitorial costs, $3,000 per month.

2. For the current year ending March 31. Zing Company expects fixed costs of $425,750, a unit variable cost of $40, and a unit selling price of $65.

a. Compute the anticipated break-even sales(units)
b. Compute the sale (units) required to realize income from operation of $85, 125.
3. Anheuser-Busch Companies, Inc. reported the following operating information for a recent year (in millions):

Net Sales $14,935
Cost of good sold 8,983
Marketing and distribution 2,590
Income from operations 3,362*
*Before special items

In addition, Anheuser-Busch sold 136 million barrels of beer during the year. Assume that variable costs were 70% of the cost of good sole and 45% of marketing and distribution expense. Assume that the remaining costs are fixed. For the following year, assume that Anhuser-busch expects pricing, variable costs per barrel, and fixed costs to remain constant, expect that new distribution and general office facilities are expected to increase fixed costs by $133 million.
Rounding to the nearest cent:
a. Compute the break-even sale(barrels) for the current year.
b. Compute the anticipated break-even (barrels) for the following year.


Solution Summary

The solution classify cost as fixed, variable or mixed incurred in producing frozen pizzas. And also computes breakeven point and anticipated breakeven point for Anheuser-Busch Companies, Inc & Zing Company.