Homework Answers
| Situation 1 | ||
| Existing Scenario | ||
| Particulars | Amount (P) | |
| Total (for 1million units) | Per Unit | |
| Sales | 20000000 | 20 |
| (-) Variable Cost (VC) | 12500000 | 12.5 |
| Contribution (Sales - VC) | 7500000 | 7.5 |
| (-)Fixed Cost | 3000000 | |
| Profit | 4500000 | |
| After Advertising Campaign | ||
| Particulars | Amount (P) | |
| Total (for 2million units) | Per Unit | |
| Sales | 40000000 | 20 |
| (-) Variable Cost (VC) | 25000000 | 12.5 |
| Contribution (Sales - VC) | 15000000 | 7.5 |
| (-)Fixed Cost | 3000000 | |
| Gross Profit | 12000000 | |
| Desired profit (150% of existing scenario profit) | 6750000 | |
| Balance can be used for advertising | 5250000 | |
| Situation 2 | ||
| Increase in Selling price | ||
| Particulars | Amount (P) | |
| Total (for 800,000 units) | Per Unit | |
| Sales | 16000000 | 25 |
| (-) Variable Cost (VC) | 10000000 | 12.5 |
| Contribution (Sales - VC) | 6000000 | 12.5 |
| (-)Fixed Cost | 3000000 | |
| Profit | 3000000 | |
| Profit in existing scenario | 4500000 | |
| Therefore, decline in profit | 1500000 | |
| As it is clear from the above computation that increase in Selling piece results in a declined profit of 1.5million, the decision is not a sound one. | ||
| Sales volume for desired profit | ||
| Particulars | Amount (P) | |
| Desired Profit | 4500000 | |
| (+) Fixed Cost | 3000000 | |
| Therefore, Desired contribution | 7500000 | |
| Contri per unit (as determined above) | 12.5 | |
| Therefore, Required sales volume | 600000 | |
| (Desired contribution / Contri per unit) | ||
Add Answer to:
BA 2005 - Managerial Accounting Problem: CVP ANALYSIS Chocolate Company produces a chocolate bar. Each bar...
Problem 6-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage [LO6-1, LO6-3, LO6-4, LO6-5, LO6-8]...
Problem 6-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage [LO6-1, LO6-3, LO6-4, LO6-5, LO6-8] Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales $ 1,040,000 Variable expenses 520,000 Contribution margin 520,000 Fixed expenses 180,000 Net operating income $ 340,000 Required: Answer each question independently based on the original data: 4-a....
Please work out so that I can understand. Thanks. Problem 6-23 CVP Applications; Contribution Margin Ratio:...
Please work out so that I can understand. Thanks. Problem 6-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage [LO6-1, LO6-3, LO6-4, LO6-5, LO6-8] Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $80 per unit. Variable expenses are $40.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales $ 1,920,000 Variable expenses 960,000 Contribution margin 960,000 Fixed expenses 180,000 Net operating income $ 780,000 Required: Answer...
Cost-Volume-Profit Analysis P6-A Melon Company produces a knockoff watch that sells for $40 each. Variable costs...
Cost-Volume-Profit Analysis P6-A Melon Company produces a knockoff watch that sells for $40 each. Variable costs are $12 each and fixed costs are $210,000 each year. Required: 1) What is this product's contribution margin ratio (CM %)? 2) What is this company's break-even point in sales dollars? 3) If sales increase $400,000, how much will net income increase (assuming they are operating within the relevant range and fixed costs do not change) ? 4) Assume 20,000 units were sold last...
Problem 6-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage [LO6-1, LO6-3, LO6-4, LO6-5, LO6-8]...
Problem 6-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage [LO6-1, LO6-3, LO6-4, LO6-5, LO6-8] Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales $ 1,040,000 Variable expenses 520,000 Contribution margin 520,000 Fixed expenses 180,000 Net operating income $ 340,000 Required: Answer each question independently based on the original data: 1....
Breakeven analysis; multiproduct CVP analysis Herzog Industries sells two electrical components with the following characteristics. Fixed...
Breakeven analysis; multiproduct CVP analysis Herzog Industries sells two electrical components with the following characteristics. Fixed costs for the company are $200,000 per year. XL-709 CD-918 Sales price $15.00 $38.00 Variable cost 10.00 24.00 Sales volume 30,000 units 75,000 units Required How many units of each product must Herzog Industries sell in order to break even? Herzog’s vice president of sales has determined that due to market changes, the sales price of component XL-709 can be increased to $25.00 with...
10 Problem 6-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage (L06-1, LO6- 3, LO64,...
10 Problem 6-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage (L06-1, LO6- 3, LO64, LO65, LO6-8]. Feather Friends, Inc. distributes a high-quality wooden birdhouse that sells for $20 per unit Variable expenses are $ per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: sales Variable expenses Contribution margin Fixed expenses et operating income 160.000 200.00 Required: Answer each question independently based on the original data: 1. What is the...
Problem 6-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage (LO6-1, LO6- 3, LO6-4, LO6-5,...
Problem 6-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage (LO6-1, LO6- 3, LO6-4, LO6-5, LO6-8) Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $1,040,000 520,000 520,000 180,000 $ 340,000 Required: Answer each question independently based on the original data: 1....
Problem 6-20 CVP Applications: Break-Even Analysis; Cost Structure; Target Sales (L06-1, LO6-3, L06- 4, L06-5, LO6-6,...
Problem 6-20 CVP Applications: Break-Even Analysis; Cost Structure; Target Sales (L06-1, LO6-3, L06- 4, L06-5, LO6-6, LO6-8) Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost Last year, the company sold 32,000 of these balls, with the following results: sk inces Sales (32,000...
MANAGERIAL ACCOUNTING HANDOUT PROBLEM 4 Name Score Section Problem (10 points). The Bruch Company produces a...
MANAGERIAL ACCOUNTING HANDOUT PROBLEM 4 Name Score Section Problem (10 points). The Bruch Company produces a single product. It sold 25,000 units last year with the following results. THE BRUCH COMPANY CONTRIBUTION MARGIN INCOME STATEMENT FOR PREVIOUS YEAR Sales Less Variable Costs e Costs Contribution Margin Less Fixed Costs Income Before Taxes $ 625,000 375,000 250,000 150,000 100,000 In an attempt to improve its product, Bruch is considering replacement of one of its component parts with a new and better...
3-41 CVP analysis, income taxes. (CMA, adapted) J.T. Brooks and Company, a manufacturer of quality handmade...
3-41 CVP analysis, income taxes. (CMA, adapted) J.T. Brooks and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competi- tion has led Mr. Brooks, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company's present growth. To prepare for next year's marketing campaign, the com- pany's controller has prepared and presented Mr. Brooks with the following data for...
Cost-Volume-Profit Analysis P6-A Melon Company produces a knockoff watch that sells for $40 each. Variable costs are $12 each and fixed costs are $210,000 each year. Required: 1) What is this product's contribution margin ratio (CM %)? 2) What is this company's break-even point in sales dollars? 3) If sales increase $400,000, how much will net income increase (assuming they are operating within the relevant range and fixed costs do not change) ? 4) Assume 20,000 units were sold last...
10 Problem 6-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage (L06-1, LO6- 3, LO64, LO65, LO6-8]. Feather Friends, Inc. distributes a high-quality wooden birdhouse that sells for $20 per unit Variable expenses are $ per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: sales Variable expenses Contribution margin Fixed expenses et operating income 160.000 200.00 Required: Answer each question independently based on the original data: 1. What is the...
Problem 6-23 CVP Applications; Contribution Margin Ratio: Degree of Operating Leverage (LO6-1, LO6- 3, LO6-4, LO6-5, LO6-8) Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income $1,040,000 520,000 520,000 180,000 $ 340,000 Required: Answer each question independently based on the original data: 1....
Problem 6-20 CVP Applications: Break-Even Analysis; Cost Structure; Target Sales (L06-1, LO6-3, L06- 4, L06-5, LO6-6, LO6-8) Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost Last year, the company sold 32,000 of these balls, with the following results: sk inces Sales (32,000...
MANAGERIAL ACCOUNTING HANDOUT PROBLEM 4 Name Score Section Problem (10 points). The Bruch Company produces a single product. It sold 25,000 units last year with the following results. THE BRUCH COMPANY CONTRIBUTION MARGIN INCOME STATEMENT FOR PREVIOUS YEAR Sales Less Variable Costs e Costs Contribution Margin Less Fixed Costs Income Before Taxes $ 625,000 375,000 250,000 150,000 100,000 In an attempt to improve its product, Bruch is considering replacement of one of its component parts with a new and better...
3-41 CVP analysis, income taxes. (CMA, adapted) J.T. Brooks and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competi- tion has led Mr. Brooks, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company's present growth. To prepare for next year's marketing campaign, the com- pany's controller has prepared and presented Mr. Brooks with the following data for...
Most questions answered within 3 hours.
-
At the beginning of the period, the Fabricating Department
budgeted direct labor of $136,500 and equipment...
asked 1 minute ago -
Please answer all
____ 28. Rent control is usually
justified on the grounds that it protects...
asked 38 seconds ago -
PARTS A-D HAVE BEEN ANSWERED. WAS TOLD TO REPOST. ONLY ANSWER
PARTS E and F.
A...
asked 18 minutes ago -
2) You are given the task of finding a representation for a
circle in a drawing...
asked 1 hour ago -
STUDY QUESTION: Does use of diet drug fen-phen
(fenfluramine-phentermine) cause valvular heart disease?
HINT: Valvular heart...
asked 1 hour ago -
1. An object weighing 40 N rests on a surface. The coefficient
of friction is 0.35....
asked 2 hours ago -
Investor company owns 35% of investee company voting stock and
accounts for the investment under the...
asked 3 hours ago -
The number of major faults on a randomly chosen 1 km stretch of
highway has a...
asked 4 hours ago -
Consider the competitive environment of Starbuck's, Progressive
Insurance, a manufacturing firm with low turnover, or a...
asked 4 hours ago -
3. Gains from trade
Consider two neighbouring island countries called Euphoria and
Contente. They each have...
asked 6 hours ago -
A business executive has the option to invest money in two
plans: Plan A guarantees that...
asked 9 hours ago -
Hello, can someone please help me answer this question?
How much heat is absorbed by a...
asked 9 hours ago