HW 2

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School

Georgia State University *

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8145

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Accounting

Date

Apr 3, 2024

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docx

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Uploaded by KidOpossumPerson388

2-31: a. Break-Even: ALLIGATORS DOLPHINS TOTAL SELLING PRICE/UNIT $20 $25 $200,000 VARIABLE COST/UNIT $8 $10 FIXED COST $1.29 M $1.29M # OF UNITS SOLD 140,000 60,000 CONTIBUTION MARGIN $12 $15 SALE MIX 70% 30% WEIGHTED AVERAGE $8.4 $4.50 Total Breakeven Unit Sales = $1.29M + 0 / (8.4 + 4.5) = 100,000 Number of Alligator = 70,000 or 70% of 100,000 (Multiple by assumed product mix) Number of Dolphins = 30,000 or 30% of 100,000 b. Break-Even: ALLIGATORS DOLPHINS SELLING PRICE/UNIT $20 $25 VARIABLE COST/UNIT $8 $10 FIXED COST $1.29 M $1.29M # OF UNITS SOLD 60,000 140,000 CONTIBUTION MARGIN $12 $15 SALE MIX 30% 60% WEIGHTED AVERAGE $3.60 $10.50 Total Breakeven Unit Sales = $1.29M + 0 / (3.6 + 10.5) = 91,490 Number of Alligator = 27,447or 30% of 91,490 Number of Dolphins = 64,043 or 70% of 91,490 c. Explain why the total number of toys from (a) is the same/different from (b). The weighted average contribution margin in part (a) is 12.9 which is higher than the contribution margin in part (b) 12.6. The higher the total weighted average contribution margin, the fewer total units are required to achieve the breakeven point.

2-40: Contribtution M $ 12.00 Fixed Cost $ 4,500,000.00 # of Units Sold 500,000.00 Revenue $ 15,000,000.00 Expense $ 13,500,000.00 Profit $ 1,500,000.00 After Tax Incom $ 1,050,000.00 Break Even $ 375,000.00 c. 3-25: FAB Motor's Cost Per Unit Direct Materials $ 80.00 Direct Labor $ 60.00 Variable Overhead Cost $ 56.00 Fixed Overhead Cost $ 17.00 Total Cost $ 213.00 Superior Comressor Price $ 200.00 3-48: Capacity level, profitability, opportunity cost. Wedmark's Corporation Cupertino. California, plant manufactures chips used in personal computers. Its practical capacity is 2,000 chips per week, and fixed costs are $75,000 per week. The selling price is $500 per chip. Production this quarter is 1,600 chips per week. At this level of production, variable costs are $720,000. a. What will the plant's profit per week be if it operates at practical capacity? Sales = 2000 x 500 = 1,000,000 Less variable cost = 900000 (2000 x 720000/1600) Contribution margin = 100000 Less: fixed cost = 75000

Plant's profit = 25000 b. If the plant's accounting system allocates fixed cost using a rate based on its practical capacity level as the base, what is the reported cost per unit? Fixed cost = 75000/2000 = 37.5 Variable cost = 720000/1600 = 450 Total cost per unit =487.5 c. Suppose that a new customer offers $480 per chip for an order of 200 chips per week for delivery beginning this quarter. If this order is accepted, production will increase from 1,600 chips at present to 1,800 chips per week. What is the estimated change in the company's profit if it accepts the order? Expected change in the profit = 200 x (480-450)= $6000 d. Suppose that the new customer in (c) offered $480 per chip for an order of 600 chips per week and that Wedmark cannot schedule overtime production. Consequently, it would have to give up some of its current sales to fill the new order for 600 chips per week. What is the estimated change in Wedmark's profit if it accepts this order for 600 chips per week? Contribution from new order = 600 x 30 = 18000 Less: CM for current sales = 200 x 50 = 10000 Profit will increase by = $8000 3-60: Product XL1 xl2 XL3 PRICE $ 10.00 14 12 DIRECT MATERIAL $ 4.00 4.7 5 DIRECT LABOR $ 2.00 3.3 2.5 VARIABLE OVERHEAS $ 2.00 3.3 2.5 CM $ 2.00 $ 2.70 $ 2.00 MACHINE HR/UNIT 0.20 0.35 0.25 CM/MACHINE HR $ 10.00 $ 7.71 $ 8.00 I III II MAX SALES $ 200,000 200000 200000 Max Production 40,000 70,000 50,000 Plant Capacity = 120k xl1 $ 80,000.00 xl3 $ 30,000 xl2 85,714.29

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