Homework Answers
| Indifference point indicates the minimum units to be sold to be profitable under automated system. |
| When sales volume is less than indifference point, profits will be lower than before. |
| Option B Profits will decrease is correct option |
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A company has calculated its indifference point to be 100,000 units for deciding on whether to...
A company has calculated its indifference point to be 100.000 units for deciding on whether to...
A company has calculated its indifference point to be 100.000 units for deciding on whether to automate its manufacturing process. What will happen to profits of the company does automate and sales volume is only 90,000 units? Multiple Choice O Protes remain the same Westerwheat, Inc. has provided the following cost information. WESTERWHEAT Contribution Margin Income Statement 150,eee units sold Total Per Unit Sales revenue $1,950, eee $13.ee Less: Variable costs 1.200, Contribution margin $ 75e, eee $ 5.0 Less:...
Sommer Corporation is deciding whether to automate one phase of its production process. The equipment has...
Sommer Corporation is deciding whether to automate one phase of its production process. The equipment has a six-year life and will cost $410,000. Projected net cash inflows from the equipment are as follows: Year 1 $115,000 Year 2 $100,000 Year 3 $110,000 Year 4 $100,000 Year 5 $95,000 Year 6 $90,000 Sommer Corporation's hurdle rate is 12%. Assume the residual value is zero. Which one of the following amounts is the net present value of the Sommer Corporation equipment? A....
For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10,...
For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10, income tax rate of 20%, targeted net income of $10,000. Assume all other variables do not affect the cost volume profit relationship, if sales in units (quantities) increase, fixed cost per unit as a percentage of unit sales 1. increase 2. decrease 3. remain constants 4. we cannot find, we need more information
Potter has received a special order for 18,000 units of its product at a special price...
Potter has received a special order for 18,000 units of its product at a special price of $17. The product normally sells for $23 and has the following manufacturing costs: Per unit $ 5 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit cost Potter is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Potter accepts the order, what effect will the order have on the company's short-term profit?...
For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10,...
For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10, income tax rate of 20%, targeted net income of $10,000. Assume all other variables do not affect the cost volume profit relationship, if sales in units (quantities) increase, fixed costs per unit 1. increase 2. decrease 3. remain constants 4. we cannot find, we need more information
Sammy Company is considering eliminating its commercial division. The company allocates foed costs based on division...
Sammy Company is considering eliminating its commercial division. The company allocates foed costs based on division sales. If the commercial division is dropped, $100,000 of the fixed costs allocated to it could be eliminated. The impact on Sammy's operating income from eliminating the commercial division would be Sales Variable costs Contribution margin Fixed costs Net income (loss) Garden $678,000 372,900 305,100 247,200 57,900 Farm $920,000 414,000 506,000 335,500 170,500 Commercial $ 692,000 649,800 42,200 252,400 (210,200) Ο Ο $10,200 decrease...
Markson Company had the following results of operations for the past year: Sales (8,000 units at...
Markson Company had the following results of operations for the past year: Sales (8,000 units at $20.70) $ 165,600 Variable manufacturing costs $ 88,800 Fixed manufacturing costs 15,700 Variable selling and administrative expenses 14,800 Fixed selling and administrative expenses 20,700 (140,000 ) Operating income $ 25,600 A foreign company whose sales will not affect Markson's market offers to buy 2,000 units at $15.05 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,670...
Benjamin Company had the following results of operations for the past year: $ 157,600 Sales (16,000...
Benjamin Company had the following results of operations for the past year: $ 157,600 Sales (16,000 units at $9.85) Direct materials and direct labor Overhead (20% variable) Selling and administrative expenses (all fixed) Operating income $93,600 13,600 31,700 (138,900) $ 18,700 A foreign company (whose sales will not affect Benjamin's market) offers to buy 3,700 units at $7.17 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $570 and selling and administrative costs...
Awtis Corporation has a margin of safety percentage of 25% based on its actual sales. The...
Awtis Corporation has a margin of safety percentage of 25% based on its actual sales. The break-even point is $366,000 and the variable expenses are 45% of sales. Given this information, the actual profit is: Multiple Choice Ο Ο 697600 Ο $67100 Ο $18,300 Ο $50,325 Kuzio Corporation produces and sells a single product. Data concerning that product appear below Selling price Variable expenses Contribution margin Per Unit $140 56 $ 84 Percent of Sales 100% 40% 60% The company...
Question 11 2 pts Gordon Company sold 2,000 more units than budgeted of its only product....
Question 11 2 pts Gordon Company sold 2,000 more units than budgeted of its only product. How will ota fxed cost be affected? O Remain constant O Decrease by same percentage as sales increase. O Increase by same percentage as sales increase ODecrease $2,000. OIncrease $2,000 2pts Question 10 2 pts A fixed cost: Requires the future outlay of cash and is relevant for future decision making Does not change with changes in the volume of activity within the relevant...
A company has calculated its indifference point to be 100.000 units for deciding on whether to automate its manufacturing process. What will happen to profits of the company does automate and sales volume is only 90,000 units? Multiple Choice O Protes remain the same Westerwheat, Inc. has provided the following cost information. WESTERWHEAT Contribution Margin Income Statement 150,eee units sold Total Per Unit Sales revenue $1,950, eee $13.ee Less: Variable costs 1.200, Contribution margin $ 75e, eee $ 5.0 Less:...
Potter has received a special order for 18,000 units of its product at a special price of $17. The product normally sells for $23 and has the following manufacturing costs: Per unit $ 5 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit cost Potter is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Potter accepts the order, what effect will the order have on the company's short-term profit?...
Sammy Company is considering eliminating its commercial division. The company allocates foed costs based on division sales. If the commercial division is dropped, $100,000 of the fixed costs allocated to it could be eliminated. The impact on Sammy's operating income from eliminating the commercial division would be Sales Variable costs Contribution margin Fixed costs Net income (loss) Garden $678,000 372,900 305,100 247,200 57,900 Farm $920,000 414,000 506,000 335,500 170,500 Commercial $ 692,000 649,800 42,200 252,400 (210,200) Ο Ο $10,200 decrease...
Benjamin Company had the following results of operations for the past year: $ 157,600 Sales (16,000 units at $9.85) Direct materials and direct labor Overhead (20% variable) Selling and administrative expenses (all fixed) Operating income $93,600 13,600 31,700 (138,900) $ 18,700 A foreign company (whose sales will not affect Benjamin's market) offers to buy 3,700 units at $7.17 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $570 and selling and administrative costs...
Awtis Corporation has a margin of safety percentage of 25% based on its actual sales. The break-even point is $366,000 and the variable expenses are 45% of sales. Given this information, the actual profit is: Multiple Choice Ο Ο 697600 Ο $67100 Ο $18,300 Ο $50,325 Kuzio Corporation produces and sells a single product. Data concerning that product appear below Selling price Variable expenses Contribution margin Per Unit $140 56 $ 84 Percent of Sales 100% 40% 60% The company...
Question 11 2 pts Gordon Company sold 2,000 more units than budgeted of its only product. How will ota fxed cost be affected? O Remain constant O Decrease by same percentage as sales increase. O Increase by same percentage as sales increase ODecrease $2,000. OIncrease $2,000 2pts Question 10 2 pts A fixed cost: Requires the future outlay of cash and is relevant for future decision making Does not change with changes in the volume of activity within the relevant...
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