4.19 Waterfront Division of Maxwell Products manufactures a component used in the production of garden tools. The President of that division states that the division has the capacity to produce 5,000 units of this component each month. The fixed costs of production are P10,000 each month. The President admits that it will take some time before the plant has enough orders to operate at capacity but those sales should range between 3,000 and 4,000 units per month. He is interested in examining what happens to the margin of safety and the operating leverage over a range of activity. To help with this analysis, the accountant tells you that each unit is sold for P20, and the variable unit cost is P15. Instructions:

4.19 Waterfront Division of Maxwell Products manufactures a component used in the production of garden tools. The President of that division states that the division has the capacity to produce 5,000 units of this component each month. The fixed costs of production are P10,000 each month. The President admits that it will take some time before the plant has enough orders to operate at capacity but those sales should range between 3,000 and 4,000 units per month. He is interested in examining what happens to the margin of safety and the operating leverage over a range of activity. To help with this analysis, the accountant tells you that each unit is sold for P20, and the variable unit cost is P15. Instructions:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Fast solve plz
If a company decreases its selling price for its products. The Increase? O Total cost O Cost plus pricing O Break even quantity. O Profit it
Please help with 7 through 10. Thank you!:)
Companies often use leverage to augment profits. Based on what you learned this week, please explain the following in detail: With regards to Operating Leverage, please explain why a company with HIGH Operating Leverage faces greater financial risk in a declining sales period compared to a company with LOW Operating Leverage. (HINT: The key here is the relation between fixed costs and variable costs.) What does a business's Contribution Margin represent? What does the Contribution Margin have to do with Operating Leverage?
Tyrene Products manufactures recreational equipment. The operating results for the most recent year for one of its products, a skateboard, are presented below. Sales Variable expenses Contribution margin Fixed expenses Net operating income. Contribution margin per skateboard Management is anxious to maintain and perhaps even improve its present level of income from the skateboards. Required: 1-a. The company's break-even point for the most recent year was 49,600 units. Compute the CM per skateboard. (Do not round intermediate calculations.) Selling price Variable expense $ 2,325,000 1,395,000 930,000 744,000 186,000 1-b. Compute the selling price and variable expenses per skateboard. (Do not round intermediate calculations. Round your answers to 2 decimal places.) $ Amount Number of skateboards per skateboard per skateboard 1-c. Compute the number of skateboards sold in the most recent year. (Do not round intermediate calculations.) E
stion Company XYZ produces and sells two types of calculators: Basic and Scientific. The Basic has a lower selling price per unit compared to the Scientific. However, the Basic has a higher contribution margin compared to the Scientific. Due to fixed production capacity, the company has a cap on total production ability. If the company's CEO has decided to shift the sales mix towards producing more Scientific calculators. What red would be the effect on total profits? d out of O a. Total profits would increase g O b. Total profits would decrease on Oc. Total profits would remain the same O d. None of the given answers O e. Cannot be determined using the above information
I need the answers of 1-6.
4. Will the break-even point would be higher or lower with May’s sales mix than with April’s sales mix? 5. Assume that sales of the Standard racket increase by $20,200. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $20,200? Do not prepare income statements; use the incremental analysis approach in determining your answer.
Vaibhav
A higher gross margin implies ______________ . The company has huge market share The company has the flexibility to change its pricing policy The company sells goods at huge discounts The cost of goods sold remains same over the years
a) Calculate the contribution margin per unit.b) Calculate the number of units Beauty Supplies Company must sell each year to break even.c) Calculate the number of units Beauty Supplies Company must sell to yield a profit of $160,000.d) Managers may use Sensitivity analysis in their accounting system.i) What is sensitivity analysis? ii) How is Sensitivity analysis useful to managers?
Study the information given below and answer each of the following questions independently: Calculate the total Marginal Income and Net Profit/Loss if all the tables are sold. 3.1 Use the marginal income ratio to calculate the break-even value. Calculate the new total Marginal Income and Net Profit/Loss, if an increase in advertising expense by R100 000 is expected to increase sales by 400 units. 3.2 3.3 3.4 3.5 How many units must be sold if the company wishes to earn a net profit of R298 920. Based on the expected sales volume of 2 400 units, determine the sales price per unit (expressed in rands and cents) that will enable the company to break even. INFORMATION Samcor Limited manufactures tables. The following information was extracted from the budget for the year ended 30 June 2022: 1. 2. 3. 4. 5. Total production and sales Selling price per table Variable manufacturing costs per table: Direct material Direct labour Overheads Fixed manufacturing overheads Other costs: Fixed…