General Accounting 1. Forde Co. has an operating leverage of 4. Sales are expected toincrease by 12% next year. Operating income is:a. expected to increase by 3%b. unaffectedc. expected to increase by 4%d. expected to increase by 48%2. The difference between the current sales revenue and the sales atthe break-even point is called the:a. contribution marginb. price factorc. operating leveraged. margin of safety

Step 1: 1) Change in operating income can be calculated using the formula of Operating leverage…

Answered: 1. Forde Co. has an operating leverage…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 16E

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Suppose the marginal cost and marginal revenue (in ¢000) for a product produced by a company is estimated to be MC=q+35 MR=560+22q-q^2 Where q is the quantity produced and the firm’s break-even is 5 units per week You are Required to I. determine the total cost and the total revenue function in terms of q. II. estimate the output at which profit is maximize III. calculate the maximum profit
17. During the current year, the net sales of Regine Company, were 10% below last vear's level. You should expect Regine's semi-variable costs to Increase in total and increase as a percentage of sales. b. Decrease in total and decrease as a percentage of sales. Deerease in total, but increase as a percentage of sales. d. Increase in total, but decrease as a percentage of sales. C.
1.) what is the break-even in dollar sales? 2.) what is the margin of safety percentage? 3.) what is the degree of operating leverage ? (Round your answer to 2 decimal places.) 4.) using the degree of operating leverage and without changing anything, calculate the percentage change in net operating income if unit sales increase by 20% ?
III. CVP Analysis A. Discussion Questions: 1. Explain why a contribution margin per unit becomes profit per unit above the breakeven point. 2. Suppose a firm with a contribution margin percentage of 30% increased its advertising expenses by P10,000 and found that sales increased by P 30,000. Was it a good decision to increase advertising expenses? Suppose that the contribution margin ratio is now 40%. Would it be a good decision to increase advertising expense? B. The XYZ Shoe Company operates a chain of shoe stores that sell 10 different styles of men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. XYZ is considering opening another store that is expected to have the revenue and cost relationship shown here: Unit Variable Data (per pair of shoes) Selling price Cost of shoes Sales commission Variable cost per unit…
d. Have a slöpe term but not an intercept term. Company XYZ expects the profit for next year to be lower than this year's profit. Assume that the selling price per unit, variable cost per unit, and total fixed costs will not change. Which one of the following is false? Select one: a. margin of safety next year will be lower than this year Ob.degree of operating leverage next year will be higher than this year Oc. breakeven point next year will be the same as this year Od. total fixed cost next year will be the same as this year Oe. contribution margin ratio next year will be lower than this year Next page
Question 3: Sohar Company’s financial information is given in the table below. Year Sales (OMR) Fixed Costs Variable Costs 2019 405000 90000 225000 2020 450000 120000 240000 Calculate: P/V ratio, E.P. Sales required to earn a profit of OMR 40000. Margin of safety at a profit of OMR 50000 Profit when sales are OMR. 200000.
Question 3: Sohar Company’s financial information is given in the table below. Year Sales (OMR) Fixed Costs Variable Costs 2019 405000 90000 225000 2020 450000 120000 240000 Calculate: P/V ratio, E.P. Sales required to earn a profit of OMR 40000. Margin of safety at a profit of OMR 50000 Profit when sales are OMR. 200000.
Average Rate of Return Method, Net Present Value Method, and Analysis for a service company
Many times the selling price of a product p, is related to demand D, according to the relationship p=a - bD. However, a company has found that the price of their product can be related to demand (in units per year) according to the following equation: p=108.5 – 2.08D⁰.75. In addition, there is a fixed cost of P50,000 per year and the variable cost tomanufacture the product is P68 per unit. What is the level of demand which maximizes sales? What is the maximum sales? What level of demand maximizes profit? What is the maximum profit? What are the breakeven quantities of this product if p=678.39-1.08D?
If a company’s variable costs are 70% of sales, which formula represents the computation of peso sales that will yield a profit equal to 10% of the amount of sales when P equals sales in pesos for the period and FC equals total fixed costs for the period? a. P = .2/FC b. P = FC/.2 c. P = .27/FC d. P = FC/.27
the question is in the attached pictures
Which of the following is true regarding the contribution margin ratio of asingle product company? a. As fixed expenses decrease, the contribution margin ratio increases b. The contribution margin ratio increases as the number of units sold increase c. The contribution margin ratio multiplied by the variable expense per unit equals thecontribution margin per unit d. If sales increase, the peso increase in net operating income can be computed bymultiplying the contribution margin ratio by the peso increase in sales

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