4:24cesM Question Mode: M...E6-24 (Algo) Computing Target Profit, Preparing Contribution Margin Income Statement, ComputingMargin of Safety [LO 6-2, 6-3]Required:1. Calculate break-even sales for Erin Shelton, Incorporated.2. Prepare a contribution margin income statement on the basis of break-even sales.3. Calculate the required sales to meet the target profit of $930,000.4. Prepare a contribution margin income statement based on sales required to earn a target profit of $930,000.5. When the company earns $930,000 of net income, what is its margin of safety and margin of safety as a percentage of sales?Erin Shelton, Incorporated, wants to earn a target profit of $930,000 this year. The company's fixed costs are expected to be$1,260,000 and its variable costs are expected to be 60 percent of sales. Erin Shelton, Incorporated, earned $830,000 in profit lastyear.Complete this question by entering your answers in the tabs below.Required 1 Required 2 Required 3Break-Even SalesCalculate break-even sales for Erin Shelton, Incorporated.67 AUGRequired 474Saved< Required 1Required 5< PrevRequired 2 >tv4 of 4¯¯Next >gnmiddlewat.THAOHelpSave &CB

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Anchor Company manufactures a variety of tool boxes. The firm is currently operating at 80% of its full capacity of 6,000 machine- hours per month. Each unit requires 30 minutes of machine time. Its sales manager has been looking for special orders to make productive use of the excess capacity. JCL Ltd., a potential customer, has offered to buy 10,000 tool boxes at $11.90 per box, provided that the entire quantity is delivered in two months. The current per-box cost data are as follows: Direct materials. Direct labour (½ hour at $10.40/hour) Total manufacturing overhead Total unit product cost $ 3.60 5.20 3.10 $11.90 Both fixed and variable overhead are allocated using direct labour-hours as a base. Variable overhead is $2.60 per direct labour-hour. Without the order, Anchor would have enough business to operate at 4,800 direct labour-hours in each of the next two months. The regular selling price of the tool boxes is $14.90. A sales commission of 50 cents per unit is paid to sales…
APPLY THE CONCEPTS: Target income (sales revenue) Another useful method for figuring out the type of performance your company will need to reach a target income is by using sales revenue. Rather than using the number of units, this method uses total sales revenue. In companies for which the total set of goods produced and sold is more varied, this would be the preferred method, as opposed to a business in which only one product is sold. Assume a company has pricing and cost information as follows: Price and Cost Information Amount Selling Price per Unit $30 Variable Cost per Unit $15 Total Fixed Cost $15,000 For the upcoming period, the company wishes to generate operating income of $40,000. Given the cost and pricing structure for the company's product, how much sales revenue must it generate to attain its target income? Step 1: Calculate the contribution margin ratio: The contribution margin ratio is the contribution margin in proportion to the selling price on a per-unit basis.…
G http Chapter Review My... Sales price Contribution margin ratio Fixed costs Tra.. Vernon Company reported the following data regarding the product it sells: a. Break-even point in dollars a. Break-even point in units b. Sales in dollars b. Sales in units c. Break-even point in dollars c. Break-even point in units $60 Man... $ 10% $216,000 M Questio... Required Use the contribution margin ratio approach and consider each requirement separately. b Ans... 2,160,000 36,000 Bes... Saved a. What is the break-even point in dollars? In units? b. To obtain a profit of $54,000, what must the sales be in dollars? In units? c. If the sales price increases to $72 and variable costs do not change, what is the new break-even point in dollars? In units? US fron.
Q. 8 Which following costs need to be considered for both make or buy options? O. Fixed overhead O. Variable overhead O. Rental revenue Q. 9 What is the per unit cost to purchase from the vendor? Round to the nearest penny. Q. 10 Based on your analysis, the CreativeStationary Co. should make the product in-house or buy them from the vender? O. Make O. Buy Do (Q8,9,10 plz)
Question 2 Style photo sells only one product. The statement of comprehensive income for 2021 is provided below: Sales 60,000 Less variable expenses -30,000 Contribution margini 30,000 Less fixed expenses -22,500 Net income 7,500 Required: Calculate with workings: a. The contribution margin ratio in percentage. b. Three breakeven point in total sales ringgits.
estion 2: vin Question 1: a. Explain the meaning of breakeven point and the benefit of using it in businesses. b. Given the following information for SAMAR Company, answer the following questions: Selling price (per unit) Number of units sold Variable cost (per unit) Fixed cost i.Calculate contribution margin ratio ii.Find Breakeven Point in amount iii.Find Breakeven Point in units 240 R.O 700 R.O 130 R.O 560,000 R.O
Problems Saved Help Muzzillo Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. Sales (3,350 units) Variable expenses Contribution margin Fixed expenses Net operating income. Required: $ 224,450 164,150 60,300 57,100 $ 3,200 a. If the selling price increases by $4.00 per unit and the sales volume decreases by 300 units, what would be the estimated net operating income? b. If the variable cost per unit increases by $6.00, spending on advertising increases by $3,700, and unit sales increase by 2,010 units, what would be the estimated net operating income?
3.1 REQUIRED Study the information provided below and answer the following questions:3.1.1 If the sales manager’s proposal is rejected, calculate the total revenues at break-even by using the contribution margin ratio. (4 marks) 3.1.2 Calculate the additional expenditure that the company can afford to spend on advertising, in keeping with the sales manager’s proposal. (4 marks) 3.1.3 Calculate the break-even quantity if the sales manager’s proposal is accepted (using the proposed new selling price and the increase in the advertising outlay). (4 marks)INFORMATION Denel Enterprises manufactures a product that sells for R180 each.The company presently produces and sells 120 000 units per year. Unit variable manufacturing expenses and variable selling expenses are R90 and 10% of the sales price respectively. Fixed costs are R4 536 000 for manufacturing overheads and R1 944 000 for selling and administrative activities. The sales manager has proposed that the price be increased to R216 per…
Exercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3) Mazeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000 units, is as follows: Direct materials Direct labor Overhead (2/3 of which is variable) Mazeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa has the capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor. a-1. Assume that Mazeppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $2 per unit? a-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit price charged to the distributor? b-1. Assume that Mazeppa is currently operating at full capacity.…
Problem 12-21 (Algo) Prepare a contribution margin format income statement; answer what-if questions LO 12-7, 12-8, 12-9 Shown here is an income statement in the traditional format for a firm with a sales volume of 7,500 units. Cost formulas also are shown: Revenues Cost of goods sold ($5,900 + $2.25/unit) Gross profit Operating expenses: Selling ($1,200 + $0.10/unit) Administrative ($3,500 + $0.20/unit) Operating income $34,400 22,775 $ 11,625 1,950 5,000 $ 4,675 Required: a. Prepare an income statement in the contribution margin format. b. Calculate the contribution margin per unit and the contribution margin ratio. c. Calculate the firm's operating income (or loss) if the volume changed from 7,500 units to 1. 11,250 units. 2. 3,750 units. d. Refer to your answer to part a for total revenues of $34,400. Calculate the firm's operating income (or loss) if unit selling price and variable expenses per unit do not change and total revenues 1. Increase by $14,500. 2. Decrease by $3,000.
(e) Product Blue Product Red Selling $12.00 $24.00Variable cost $4.00 $8.00Contribution margin $8.00 $16.00Fixed costs apportioned $200,000 $400,00Budgeted Sales Units 140,000 60,000 Calculate the breakeven points, for each product and the company as a whole and comment on your findings f)Discuss the merits and demerits of the cost volume profit analysis (CVP)
1 Lazy Days Inc. (LDI), sells hammocks. Revenue and cost information is given below: Sales Price 3. TL 30 Unit Variable Cost 20 Annual Fixed Operating Expenses 47,500 Required: a) Determine the sales volume in units and TL amount that would be required to attain a TL 12,500 profit. Verify your answer by preparing an income statement using the contribution margin format. b) LDI is considering the implementation of a quality improvement program. The program will require a TL 2.50 increase in the variable cost per unit. To inform its customers of the quality improvements, the company plans to spend an additional TL 5,000 for advertising. Assuming that the improvement program will increase sales to a level that is 1,500 units above the amount computed in requirement a, should LDI proceed with plans to improve product quality? Support your answer by preparing a budgeted income statement. c) Determine the new break-even point volume of units and sales in TL as well as the margin of safety…

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