Accounting for Managers Homework Set 2.2 Cost-Volume-Profit and Segment Profitability Analysis 1. Candice Corporation has decided to introduce a new product. The product can be manufactured using either a capital-intensive or labor-intensive method. The manufacturing method will not affect the quality or sales of the product. The estimated manufacturing costs of the two methods are as follows: The company 's market research department has recommended an introductory selling price of $30 per unit for the new product. The annual fixed selling and administrative expenses of the new product are $500,000. The variable selling and administrative expenses are $2 per unit regardless of how the new product is manufactured. Required: …show more content…
The company has decided to automate a portion of its operations. The change will reduce direct labor costs per unit by 40 percent, but it will double the costs for fixed factory overhead. Compute the new break-even point in units. 5. Data concerning Maline Corporation 's single product appear below: Fixed expenses are $55,000 per month. The company is currently selling 1,000 units per month. Required: The marketing manager would like to cut the selling price by $6 and increase the advertising budget by $2,700 per month. The marketing manager predicts that these two changes would increase monthly sales by 100 units. What should be the overall effect on the company 's monthly net operating income of this change? Show your work! 6. Guagliano Corporation produces and sells a single product whose selling price is $110.00 per unit and whose variable expense is $29.70 per unit. The company 's monthly fixed expense is $345,290. Required: a. Assume the company 's monthly target profit is $16,060. Determine the unit sales to attain that target profit. Show your work! b. Assume the company 's monthly target profit is $40,150. Determine the dollar sales to attain that target profit. Show your work! 7. Mitzel Corporation has provided its contribution format income statement for May. Required: a. Compute the degree of operating leverage to two decimal places. b. Using the degree of
QUESTION 5: Kai decides to keep his price the same and add color, increasing variable costs by $0.40 per issue. What is the percent increase in unit volume (copies per issue) required to maintain $500 profits and cover the increased fixed and variable
b. If the company had set a goal of increasing sales by 28% during the next five years, what should be the sales goal for 2008? 4,113,223.68
The change in the contribution margin for all the products is responsible for the change in profitability.
The rise in revenue was rapid starting from the year of operations. The key period of business was from April to September were revenues were equal to 65% of total revenue as the product was seasonal. The basis of forecasting for the year 1981 & 1982 is the expectations of sales by Mr. Turner & Mr. Rose. It is given that total sales were $ 15.80 million in first half of year 1981 and the total sales in 1981 to reach $ 30 million. Profit after tax was expected to be $ 1 million for 1st half and we assumed for the next half, profit will be in proportion to first half & expected to be amounting to $ 0.90 million. For year 1982, the sales expectation by Mr. Rose was around more than $ 71 million &
Martinez Company’s relevant range of Production is 7,500 to 12,500 units. When it produces and sells 10,000 units, its unit costs are as follows:
The product cost per unit under absorption costing is $15.00 and under variable costing are 10.60.
* If we surmise that the company’s specialist’s predictions of 4% on market growth along with renewing current and or adding more customer contracts then the profits should be as follows:
Assume that next year management wants the company to earn a minimum profit of $162,000. How many units be sold to meet this target profit figure? [3 points]
In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.
1. The local Mastermind store sells innovative educational toys. Part of their service is giving advice to customers about the best toys for a particular age group, which requires having more customer service representatives in the store. During the month long Christmas buying season, it makes half of its $500,000 yearly sales. Its contribution margin on average is 40% and its fixed costs for the year are about $150,000. The owner believes that she could make even higher sales, if she had more customer service representatives on the floor during the peak season. She plans on hiring four more people for 200 hours each at $20 per hour. How much additional revenue does she have earn to the nearest dollar
= Unit Selling Price – Unit Variable Cost = $9.00 – ($1.25 + $0.35 + $1.00) = $6.40
In this table, it reflects the changes in fixed plant overhead from $420,000 to $378,000. The company still has the fixed selling and administrative expense per quarter of $118,000. The new company fixed overhead is now at $496,000 from the past $538,000 ($42,000) change from past to
Management has decided that the suggested retail price for the 8-ounce can to the consumer will be $1.00. The only unit variable costs for the product are $0.36 for materials and $0.12 for labor. The
The $320,000, on the other hand, is a fixed cost associated with the proposed addition.
The Nelson’s wine store was operating a loss. They began their business with a $7,000 personal savings investment and a $15,000 which they had not been able to begin repayment during their nine months of operations. After the performance of a financial analysis, it was concluded that the Nelsons were losing on average $802 per month with estimated average monthly sales of $1,888 and estimated average monthly expenses of $1,580. At these levels, not only could the Nelsons not make a profit, they could not breakeven. In order to breakeven, the Nelsons would need to generate sales of $5,642 offering no salary to Bruce or $9,214 offering a salary to Bruce.