Homework Answers
(a)
Working Note:
Income Statement for Year 2019
| Particulars | Amount |
| Sales | 1,500,000.00 |
| Less: Variable expenses | 750,000.00 |
| Contribution | 750,000.00 |
| Less: Fixed Expenses | 1,000,200.00 |
| (250,200.00) |
Break-even point in dollars for 2019 = (Fixed cost) / Contribution margin ratio
Contribution Margin Ratio= Total contribution/ Total sales units
= 750000/75000
= 10
Break-even point in dollars for 2019 = (Fixed cost) / Contribution margin ratio
= 1000200/10
= $ 100,020
Hence break-even point in dollars for 2019 is $100,020.
(2)
Alternative - 1
| Particulars | Amount | |
| Sales | 1,875,000.00 | 75000 units * {(1500000/75000)*125%}= 75000*25 |
| Less: Variable expenses | 750,000.00 | |
| Contribution | 1,125,000.00 | |
| Less: Fixed Expenses | 1,000,200.00 | |
| 124,800.00 |
Contribution Margin Ratio= Total contribution/ Total sales units
= 1125000/75000 = 15
Break-even point in dollars= (Fixed cost) / Contribution margin ratio
= 1000200/15
= $ 66680
Alternative 2
New Fixed expense= 1000200 - old salary + new salary
= 1000200 - 198000 + 37995
= 840,195
new variable expense =750000 + 1500000 *5%
= 750000+75000
= 825000
Income statement as follows:
| Particulars | Amount |
| Sales | 1,500,000.00 |
| Less: Variable expenses | 825,000.00 |
| Contribution | 675,000.00 |
| Less: Fixed Expenses | 840,195.00 |
| (165,195.00) |
Contribution Margin Ratio= Total contribution/ Total sales units
= 675000 / 75000 = 9
Break-even point in dollars= (Fixed cost) / Contribution margin ratio
= 840195/ 9
= $93,355
Alternative 3
The structure of costs and expenses in 2020 will be as follows after buying high tech factory machine:
| Particulas | Total | Variable | Fixed |
| COGS | 1,080,000.00 | 540,000.00 | 540,000.00 |
| selling exp | 520,200.00 | 95,000.00 | 425,000.00 |
| Adm exp | 150,000.00 | 55,000.00 | 95,000.00 |
| 1,750,200.00 | 690,000.00 | 1,060,000.00 |
Hence the income statement will be as follows:
| Particulars | Amount |
| Sales | 1,500,000.00 |
| Less: Variable expenses | 690,000.00 |
| Contribution | 810,000.00 |
| Less: Fixed Expenses | 1,060,000.00 |
| (250,000.00) |
Contribution Margin Ratio= Total contribution/ Total sales units
= 810000 / 75000 = 10.8
Break-even point in dollars= (Fixed cost) / Contribution margin ratio
= 1060000/10.8
= $98148.15
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Midlands Inc. had a bad year in 2019. For the first time in its history, it...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 78,000 units of product: net sales $1,560,000; total costs and expenses $1,935,960; and net loss $375,960. Costs and expenses consisted of the following Cost of goods sold Selling expenses Total $1,258,000 524,960 153,000 $1,935,960 Variable Fixed $785,000 $473,000 93.000 431.960 58,000 95,000 $936,000 $999,960 Administrative expenses Management is considering the...
Midlands Inc. had a bad year in 2019. For the first time in its history, it...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 79,000 units of product: net sales $1,975,000; total costs and expenses $1,997,300; and net loss $22,300. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold Selling expenses $1,345,250 $840,500 $504,750 506,050 91,000 415,050 146,000 56,000 90,000 $1,997,300 $987,500 $1,009,800 Administrative expenses Management is considering the...
Midlands Inc. had a bad year in 2019. For the first time in its history, it...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 78,000 units of product: net sales $1,560,000; total costs and expenses $1,785,000; and net loss $225,000. Costs and expenses consisted of the following: Cost of goods sold Selling expenses Administrative expenses Total Variable Fixed $1,121,600 $631,000 $490,600 511,400 92,000 419,400 152,000 57,000 95.000 $1,785,000 $780,000 $1,005,000 Management is considering the...
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Current Attempt in Progress Midlands Inc. had a bad year in 2019. For the first time...
Current Attempt in Progress Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 78,000 units of product: net sales $1,560,000; total costs and expenses $1,795,200; and net loss $235,200. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,125,600 $633,000 $492,600 Selling expenses 522,600 90,000 432,600 Administrative expenses 147,000 57,000 90,000 $1,795,200 $780,000 $1,015,200...
Midlands Inc. had a bad year in 2016. For the first time in its history, it...
Midlands Inc. had a bad year in 2016. For the first time in its
history, it operated at a loss. The company’s income statement
showed the following results from selling 79,000 units of product:
net sales $1,580,000; total costs and expenses $1,968,000; and net
loss $388,000. Costs and expenses consisted of the
following.
Midlands Inc. had a bad year in 2016. For the first time in its history, it operated at a loss. The company's income statement showed the following...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 79,000 units of product: net sales $1,580,000; total costs and expenses $1,968,240; and net loss $388,240. Costs and expenses consisted of the following: Total Variable $1,307,600 $796,000 512,640 94,000 Fixed $511,600 Cost of goods sold Selling expenses 418,640 Administrative expenses 148,000 $1,968.240 58,000 90,000 $948,000 $1,020,240 Management is considering the...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1.780.200; and net loss $280,200. Costs and expenses consisted of the following Total Variable Fixed Cost of goods sold Selling expenses $1,106,000 $598,000 $508,000 522,200 95,000 427,200 152,000 57,000 95,000 $1,780,200 $750,000 $1,030,200 Administrative expenses Management is considering the...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 75,000 units of product: net sales $ 1,500,000; total costs and expenses $ 1,900,000; and net loss $400,000. Costs and expenses consisted of the following. Total Variable Fixed 1,240,000 $755,000 $485,000 515,000 90,000 425,000 Administrative expenses 145,000 55,000 90,000 $1,900,000 $900,000 $1,000,000 Cost of goods sold Selling expenses Management is...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 79,000 units of product: net sales $1,975,000; total costs and expenses $1,997,300; and net loss $22,300. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Total Variable Fixed $1,345,250 $840,500 $504,750 506,050 91,000 415,050 146,000 56,000 90,000 $1,997,300 $987,500 $1,009,800 Administrative expenses Management is considering the...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 78,000 units of product: net sales $1,560,000; total costs and expenses $1,935,960; and net loss $375,960. Costs and expenses consisted of the following Cost of goods sold Selling expenses Total $1,258,000 524,960 153,000 $1,935,960 Variable Fixed $785,000 $473,000 93.000 431.960 58,000 95,000 $936,000 $999,960 Administrative expenses Management is considering the...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 79,000 units of product: net sales $1,975,000; total costs and expenses $1,997,300; and net loss $22,300. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold Selling expenses $1,345,250 $840,500 $504,750 506,050 91,000 415,050 146,000 56,000 90,000 $1,997,300 $987,500 $1,009,800 Administrative expenses Management is considering the...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 78,000 units of product: net sales $1,560,000; total costs and expenses $1,785,000; and net loss $225,000. Costs and expenses consisted of the following: Cost of goods sold Selling expenses Administrative expenses Total Variable Fixed $1,121,600 $631,000 $490,600 511,400 92,000 419,400 152,000 57,000 95.000 $1,785,000 $780,000 $1,005,000 Management is considering the...
Midlands Inc. had a bad year in 2016. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 79,000 units of product: net sales $1,975,000; total costs and expenses $1,805,000; and net loss $-170,000. Costs and expenses consisted of the following. Total Variable Fixed $503,000 Cost of goods sold Selling expenses $1,148,000 510,000 $645,000 90,000 420,000 Administrative expenses 147,000 $1,805,000 55,000 92,000 $790,000 $1,015,000 Management is considering the...
Current Attempt in Progress Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 78,000 units of product: net sales $1,560,000; total costs and expenses $1,795,200; and net loss $235,200. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,125,600 $633,000 $492,600 Selling expenses 522,600 90,000 432,600 Administrative expenses 147,000 57,000 90,000 $1,795,200 $780,000 $1,015,200...
Midlands Inc. had a bad year in 2016. For the first time in its
history, it operated at a loss. The company’s income statement
showed the following results from selling 79,000 units of product:
net sales $1,580,000; total costs and expenses $1,968,000; and net
loss $388,000. Costs and expenses consisted of the
following.
Midlands Inc. had a bad year in 2016. For the first time in its history, it operated at a loss. The company's income statement showed the following...
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