Sanchez Company Makes and Sells Two Models of Dog Houses,the

question 144

Essay

Sanchez Company makes and sells two models of dog houses,the Puppy Palace and the Canine Castle:
$$\begin{array} { l c r } & \text { Puppy Palace } & \text { Carine Castle } \\\text { Sales price per unit } & \$ 50 & \$ 75 \\\text { Variable cost per unit } & 30 & 50 \\\text { Contribution margin per unit } & \$ 20 & \$ 25\end{array}$$ Sanchez has determined that it would break even at an annual sales volume of 5,000 units,of which 75% would be Puppy Palaces.What is the amount of Sanchez's estimated annual fixed costs?

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Definitions:

Process Costing System

An accounting method used where similar products are mass-produced, expenses are averaged over the units, making it easier to determine per-unit costs.

Cost Of Goods Sold

The immediate expenses linked to manufacturing goods sold by a company, encompassing both materials and labor costs.

Work In Process-Department X

The costs assigned to products that are in the middle of the manufacturing process within a specific department but are not yet completed.

Goods In Process

Inventory items that are partially completed; they have been started in production but are not yet finished goods.