Homework Answers
| 8) | |
| Sales [($20*90/100 = $18 per unit * [100,000 units * 110/100)] | $1,980,000 |
| Less: Variable costs of goods sold [(100,000 units * 110/100 = 110,000 units) * ($600,000*80/100 = $480,000/100,000 units = $4.8 per unit)] | ($528,000) |
| Less: Variable operating costs ($500,000*20/100 = $100,000/100,000 units = $1 * 110,000 units) | ($110,000) |
| Contribution Margin | $1,342,000 |
| Less: Fixed cost of goods sold ($600,000*20/100) | ($120,000) |
| Less: Fixed costs of operating costs ($500,000*80/100) | ($400,000) |
| Net Income | $822,000 |
| Net Income is decreased from $900,000 to $822,000) | |
| 9) The amount of decrease is $ ($900,000 - $822,000) | $78,000 |
| Therefore, the total amount of net income decreases by $78,000. | |
| 10) | |
| Selling price after 10% decrease | $18 |
| Less: Variable cost per unit [($600,000*80/100) + ($500,000*20/100)] = $580,000/100,000 units | ($5.80) |
| Contribution Margin Per Unit (a) | $12 |
| Sales Revenue | $2,000,000 |
| Less: Variable Costs (100,000*$5.80) | ($580,000) |
| Total Contribution Margin before reduction (b) | $1,420,000 |
| Number of units required to sell with same total contribution (b/a) | 118,333 |
| Therefore, total units required to sell to earn the same contribution margin is 118,333 units. | |
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Use the following information for the next 3 questions. Presented below is the income statement of...
Presented below is the income statement of Goodwin Inc. The income statement is based on sales...
Presented below is the income statement of Goodwin Inc. The
income statement is based on sales of 100,000 units at $20 per
unit.
Goodwin estimates that 80% of Cost of Goods Sold is variable
costs, and 80% of Operating expenses is fixed costs.
Goodwin is considering lowering the sales price in order to
increase sales. Management believes that if it reduces the selling
price by 10%, then sales (in units) will increase 10%.
8.If Goodwin reduces the selling price by...
Presented below is the income statement of Goodwin Inc. The income statement is based on sales...
Presented below is the income statement of Goodwin Inc. The income statement is based on sales of 100,000 units at $20 per unit. Goodwin estimates that 80% of Cost of Goods Sold is variable costs, and 80% of Operating expenses is fixed costs. Sales $2,000,000 Less: Cost of goods sold 600,000 Gross margin $1,400,000 Less: Operating expenses 500,000 Net income $ 900,000 Goodwin is considering lowering the sales price in order to increase sales. Management believes that if it reduces...
Presented below is the income statement of Goodwin Inc. The income statement is based on sales...
Presented below is the income statement of Goodwin Inc. The
income statement is based on sales of 100,000 units at $20 per
unit.
Goodwin estimates that 80% of Cost of Goods Sold is variable
costs, and 80% of Operating expenses is fixed costs.
9.Refer to the previous question. What is the amount of the
increase or decrease in net income?
10.Assume Goodwin reduces the selling price by 10%. How many
units would Goodwin have to sell to earn the same...
Presented below is the income statement of Total Inc. The income statement is based on sales of 100,000 units at $20 per...
Presented below is the income statement of Total Inc. The income statement is based on sales of 100,000 units at $20 per unit. Total estimates that 80% of cost of goods sold is variable, and 80% of operating expenses is fixed. Sales $2,000,000 Less: COGS $600,000 Gross Margin $1,400,000 Less: Operating expenses $500,000 Net income $900,000 Total is considering lowering the sales price in order to increase sales. Management believes that if it reduces the selling price by 10%, then...
Required information (The following information applies to the questions displayed below.) Income Statement Sales (1,898 units)...
Required information (The following information applies to the questions displayed below.) Income Statement Sales (1,898 units) Variable expenses Contribution margin Fixed expenses Net operating income 45, ose 31.500 13,500 8.640 4,860 6. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income? The new sales volume is within the relevant range. Net operating income Required information (The following information applies to the questions displayed below.) Income...
Miller Company’s contribution format income statement for the most recent month is shown below: Total Per...
Miller Company’s contribution format income statement for the
most recent month is shown below:
Total
Per Unit
Sales (36,000 units)
$
216,000
$
6.00
Variable expenses
108,000
3.00
Contribution margin
108,000
$
3.00
Fixed expenses
44,000
Net operating income
$
64,000
Required:
(Consider each case independently):
1. What is the revised net operating income if unit sales
increase by 18%?
2. What is the revised net operating income if the selling price
decreases by $1.30 per unit and the number...
Miller Company’s contribution format income statement for the most recent month is shown below:
Miller Company’s contribution format income statement for the most recent month is shown below: TotalPer UnitSales (36,000 units)$216,000$6.00Variable expenses108,0003.00Contribution margin108,000$3.00Fixed expenses49,000Net operating income$59,000 Required:(Consider each case independently): 1. What is the revised net operating income if unit sales increase by 20%?2. What is the revised net operating income if the selling price decreases by $1.30 per unit and the number of units sold increases by 22%?3. What is the revised net operating income if the selling price increases by $1.30 per unit, fixed expenses...
Required information The following information applies to the questions displayed below) Oak Mart, a producer of...
Required information The following information applies to the questions displayed below) Oak Mart, a producer of solid oak tables, reports the following data from its second year of business. 319 per unit 110,000 units 113,250 units 3,250 units $ 455,000 260,000 715,000 $ Sales price per unit Units produced this year Units sold this year Units in beginning-year inventory Beginning inventory costs Variable (3,250 units x $140) Fixed (3,250 units X $80) Total Manufacturing costs this year Direct materials Direct...
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1. Use the income statements on the Absorption Statement and Variable Statement to complete the following table for the original production level. Then prepare similar income statements at a production level 10,000 units higher and add that information to the table. Assume that total fixed costs, unit variable costs, unit sales price, and the sales levels are the same at both production levels. Operating Income Original Production Level-Absorption Original Production Level-Variable Additional 10,000 Units-Absorption Additional 10,000 Units-Variable $310,000 $250,000 $...
Use the following information for the next 2 questions. James & Co., which has excess capacity,...
Use the following information for the next 2 questions. James & Co., which has excess capacity, received a special order for 4,000 units at a price of $18 per unit. Currently, production and sales are budgeted for 25,000 units without considering the special order. Budget information for the current year is presented below: Sales $ 900,000 Less: Cost of goods sold 600,000 Gross margin $ 300,000 Less: Operating expenses 200,000 Net income $ 100,000 James & Co. estimates that 70%...
Presented below is the income statement of Goodwin Inc. The
income statement is based on sales of 100,000 units at $20 per
unit.
Goodwin estimates that 80% of Cost of Goods Sold is variable
costs, and 80% of Operating expenses is fixed costs.
Goodwin is considering lowering the sales price in order to
increase sales. Management believes that if it reduces the selling
price by 10%, then sales (in units) will increase 10%.
8.If Goodwin reduces the selling price by...
Presented below is the income statement of Goodwin Inc. The
income statement is based on sales of 100,000 units at $20 per
unit.
Goodwin estimates that 80% of Cost of Goods Sold is variable
costs, and 80% of Operating expenses is fixed costs.
9.Refer to the previous question. What is the amount of the
increase or decrease in net income?
10.Assume Goodwin reduces the selling price by 10%. How many
units would Goodwin have to sell to earn the same...
Required information (The following information applies to the questions displayed below.) Income Statement Sales (1,898 units) Variable expenses Contribution margin Fixed expenses Net operating income 45, ose 31.500 13,500 8.640 4,860 6. If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income? The new sales volume is within the relevant range. Net operating income Required information (The following information applies to the questions displayed below.) Income...
Miller Company’s contribution format income statement for the
most recent month is shown below:
Total
Per Unit
Sales (36,000 units)
$
216,000
$
6.00
Variable expenses
108,000
3.00
Contribution margin
108,000
$
3.00
Fixed expenses
44,000
Net operating income
$
64,000
Required:
(Consider each case independently):
1. What is the revised net operating income if unit sales
increase by 18%?
2. What is the revised net operating income if the selling price
decreases by $1.30 per unit and the number...
Required information The following information applies to the questions displayed below) Oak Mart, a producer of solid oak tables, reports the following data from its second year of business. 319 per unit 110,000 units 113,250 units 3,250 units $ 455,000 260,000 715,000 $ Sales price per unit Units produced this year Units sold this year Units in beginning-year inventory Beginning inventory costs Variable (3,250 units x $140) Fixed (3,250 units X $80) Total Manufacturing costs this year Direct materials Direct...
Use the following information for the next 2 questions. James & Co., which has excess capacity, received a special order for 4,000 units at a price of $18 per unit. Currently, production and sales are budgeted for 25,000 units without considering the special order. Budget information for the current year is presented below: Sales $ 900,000 Less: Cost of goods sold 600,000 Gross margin $ 300,000 Less: Operating expenses 200,000 Net income $ 100,000 James & Co. estimates that 70%...
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