ABC and CVP Analysis: Multiple ProductsGood Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow:VioletExpected sales (in cases)Selling price per caseDirect labor hours.Machine hoursReceiving ordersPacking ordersMaterial cost per caseDirect labor cost per case$8The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhead costs follow. They are classified as fixed or variable with respect to direct labor hours.FixedDirect labor benefitsMachine costsReceiving departmentPacking departmentTotal costs* All depreciation$Rose49,500 9,900$101 $8034,850 5,7009,750 2,500190,000*222,500116,000Break-even cases of RoseBreak-even cases of Violet5295$492846$43$6Variable$170,310316,290$528,500 $486,600Required:1. Using the conventional approach, compute the number of cases of Rose and the number of cases of Violet that must be sold for the company to break even. In your computations, round variable unit cost to the nearest cent and round the number ofbreak-even packages to the nearest whole number.13,090 cases2,618 ✔✔ cases 2. Using an activity-based approach, compute the number of cases of each product that must be sold for the company to break even. In your computations, round all computed amounts to the nearest cent and round the number of break-even packagesto the nearest whole number.Break-even cases of RoseBreak-even cases of VioletX casesX cases

A break-even point for a business refers to a stage where total revenue equals the total cost. At…

Answered: 2. Using an activity-based approach,…

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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Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: Estimated Estimated Variable Cost Fixed Cost (per unit sold) Production costs: Direct materials $15 Direct labor 10 Factory overhead $451,600 Selling expenses: Sales salaries and commissions 93,800 Advertising 31,800 Travel 7,100 Miscellaneous selling expense 7,800 Administrative expenses: Office and officers' salaries 91,700 Supplies 11,300 Miscellaneous administrative expense 10,500 Total $705,600 $42 It is expected that 10,800 units will be sold at a price of $140 a unit. Maximum sales within…
Brissett Corporation makes three products that use the current constraint, which is a particular type of machine. Data concerning those products appear below: GK LQ XK Selling price per unit $ 326.11 $ 543.37 $ 519.00 Variable cost per unit $ 252.05 $ 420.86 $ 397.71 Time on the constraint (minutes) 4.00 8.00 8.00 Required: a. Rank the products in order of their current profitability from the most profitable to the least profitable. In other words, rank the products in the order in which they should be emphasized. b. Assume that sufficient constraint time is available to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource? (Round your answer to 2 decimal places.) A. GK LG QX B. Maximun Amount
The constraint at Pickrel Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below: 9. VD JT SM Selling price per unit Variable cost per unit Minutes on the constraint $344.85 $415.40 $119.32 $270.18 $310.88 $ 91.96 Sklpped 5.70 6.70 1.90 Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. (Round your Intermedlate calculations to 2 declmal places.) Multiple Cholce JT, SM, VD JT. VD, SM VD, SM, JT SM, VD, JT Mc Graw < Prev 9 of 9 Next 68°F Mostly cloudy Type here to search DELL
Seascape Company has two products: Product A has a contribution margin per unit of$20and Product B has a contribution margin of $22 per unit. Required: Calculate the weighted-average unit contribution margin if Seascape has a35%/65% (Product A/Product B) product mix. Note: Round your answer to 2 decimal places.
What can the weighted average contribution margin ratio be used for? Multiple Choice To solve for a measure, at any level of sales volume, of the sensitivity of operating profit to changes in volume. Breakeven and profit planning for sales volume expressed in dollars (Y) rather than units (Q). To calculate an average per-unit contribution margin based on an assumed sales mix. To figure out the relative proportion in which a company’s products (or services) are sold. To determine the extent of fixed costs in an organization’s cost structure.
Wilderness Products, Incorporated, has designed a self-inflating sleeping pad for use by backpackers and campers. The following information is available about the new product: a. An investment of $1,350,000 will be necessary to carry inventories and accounts receivable and to purchase some new equipment needed in the manufacturing process. The company's required rate of return is 24% on all investments. b. A standard cost card has been prepared for the sleeping pad, as shown below: Direct materials Direct labor Manufacturing overhead (20% variable) Total standard cost per pad Standard Quantity or Hours 4.0 yards 2.4 hours 2.4 hours Standard Price or Rate $2.70 per yard $8.00 per hour $12.50 per hour Standard Cost $10.80 19.20 30.00 $ 60.00 c. The only variable selling and administrative expense will be a sales commission of $9 per pad. The fixed selling and administrative expenses will be $732,000 per year. d. Because the company manufactures many products, no more than 38,400 direct…
Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit and the breakeven point depend on the proportions in which the products are sold. Sales mix is the relative contribution of sales among various products sold by a firm. Assume that the sales of Jordan Incorporated for a typical year are as follows: Product Units Sold Sales Mix A 18,320 80% B 4,580 20 Total 22,900 100% Assume the following unit selling prices and unit variable costs: Product Selling Price Variable Cost Contribution Margin A $ 90 $ 75 $ 15 B 150 110 40 Fixed costs are $420,000 per year. Assume that the sales mix, expressed in terms of relative physical units sold, is constant as sales volume changes. --Assume the original facts except that now fixed costs are expected to be $42,000 higher than originally planned. How does this expected increase in fixed costs affect the breakeven point in units? How does…
Please explain this statement thoroughly. "To estimate what the profit will be at various levels of activity, multiply the number of units to be sold above or below the break-even point by the unit contribution margin."
Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below: Sales Variable expenses Contribution margin Fixed expenses Net operating income References Required: 1. What is the overall contribution margin (CM) ratio for the company? Ass 2. What is the company's overall break-even point in dollar sales? 3. Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products. complete all parts P References Sales Claimjumper $ 94,000 23,560 $ 70,440 $ 42,360 What is the overall contribution margin (CM) ratio for the company? Overal CM ratio Net operating income (loss) Makeover $ 47,000 4,640 Required 1 Required 2 What is the company's overall break-even point in dollar sales? (Do not round intermediate calculations.) Overall brouk-even point Complete this question by entering your answers in the tabs below.…
Fill in the missing amounts in each of the eight case situations below. Each case Is Independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format Income statement for each case, enter the known data, and then compute the missing items.) Required: a. Assume that only one product is being sold in each of the following four case situations: Unit sold Sales Variable expenses Fixed expenses Operating income (loss) Contribution margin per unit Sales Variable expenses Fixed expenses $ Operating income (loss) Average contribution margin (percentage) Case #1 20,400 244,800 163,200 68,000 $ $ 136,000 $ 10 Case #2 $ Case #1 536,000 43,520 10.880 $ 8,800 20% 10 $ 69 Case #3 Case #2 13,600 b. Assume that more than one product is being sold in each of the following four case situations: (Enter "Contribution margin ratio" in percent. Round your final answers to the nearest whole dollar amount.) 436.000 283.400 109.000 95,200 16,320 13 $ S CA Case #4…
2. What is the expected contribution margin ratio? Round to the nearest whole percent. 3. Determine the break-even sales in units and dollars. 4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? 5. What is the expected margin of safety in dollars and as a percentage of sales? (Round to the nearest whole percent.) 6. Determine the operating leverage. Round to one decimal place.
An analyst is constructing a simple model to determine the gross and net profit of a product, given its profit per unit, quantity sold, and the total costs assigned to the product. The calculation for gross profit is Profit per Unit times Quantity. The calculation for Net Profit is Gross Profit minus Total Costs. A B 1. 2 Profit per Unit 8 3 Quantity |10,100 4 Gross Profit 5 6 Total Costs 6,100 7 8 Net Profit With the values for Profit per Unit, Quantity, and Total Costs shown above, what should the model return for the following calculated cells? Cell Value Gross Profit Net Profit

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