Reference: 08-10
Oslo Co.'s industrial photo-finishing division incurred the following expenses last year: $$\begin{array} { | l | l | l | }
\hline & \text { Variable } & \text { Fixed } \
\hline \text { Direct materials } & \$ 200,000 & \
\hline \text { Direct labour } & 150,000 & \
\hline \text { Factory overhead } & 70,000 & \$ 42,000 \
\hline \text { Selling and administrative } & 30,000 & 48,000 \
\hline \text { Total } & \underline { \$ 450,000 } & \underline { \$ 90,000 } \
\hline
\end{array}$$ During the year, the division sold 300,000 photo-prints for $2.00 each.
-If the division produces and sells 350,000 photo-prints, its total expenses would be

Question

Reference: 08-10
Oslo Co.'s industrial photo-finishing division incurred the following expenses last year: $$\begin{array} { | l | l | l | } 
\hline & \text { Variable } & \text { Fixed } \
\hline \text { Direct materials } & \$ 200,000 & \
\hline \text { Direct labour } & 150,000 & \
\hline \text { Factory overhead } & 70,000 & \$ 42,000 \
\hline \text { Selling and administrative } & 30,000 & 48,000 \
\hline \text { Total } & \underline { \$ 450,000 } & \underline { \$ 90,000 } \
\hline
\end{array}$$ During the year, the division sold 300,000 photo-prints for $2.00 each.
-If the division produces and sells 350,000 photo-prints, its total expenses would be

Quizplus · Accepted Answer

The total variable expenses for producing 300,000 photo-prints are $450,000. The variable cost per photo-print is $450,000 / 300,000 = $1.50. For 350,000 photo-prints, the total variable expenses would be 350,000 * $1.50 = $525,000. Adding the fixed expenses of $90,000 results in total expenses of $525,000 + $90,000 = $615,000.

Reference: 08-10 Oslo Co During the Year, the Division Sold 300,000 Photo-Prints for $2

Reference: 08-10
Oslo Co During the Year, the Division Sold 300,000 Photo-Prints for $2