a) Compute the breakeven sales dollars of cach product assuming the same sales mix remains constant. b) Prepare an analysis showing whether Product Z should be eliminated. The amount of change to net income should be computed. c) Assume the current demand of cach product is same as the sales volume the company has for the year. Below is the machine processing time required for cach product. Product Machine processing time in hours i. How many units should the company produce for each product if there is a constraint of only 24.000 hours of machine processing time in the year. ii. Compute the highest possible net income camed by the company. 3 2 An accountant has prepared the folowing product-line income statement for the year: Product Tatal No of mts sokd 5,000 4,000 4,000 Saks Varible enpermes 200,000 S 120,000 100,000 S 60.000 40,000 S 20,000 60,000 40,000 20,000 Cotribution mangin 80,000 40,000 20,000 Fihed expenses Rert Depreciin 10,000 12,000 8,000 5.000 6,000 2,000 2,400 3,000 3,600 3,000 Ulries 4,000 1,000 Supervian' salarie 10,000 3.000 1,000 6,000 Mainenance Administrative expemes Total nad expemes Net operating ncome (bss) 6,000 20,000 3.000 1,200 1,800 10,000 27400 6,000 4,000 66.000 27.000 11,600 14,000 13.000 8,400 (7400) The following additional infonmation is available: • The factory rent of S3,000 assigned to Product Z is avoidable if the product were dropped. • The company's total depreciation would not be affected by dropping Z. • Eliminating Product Z will reduce the monthly utility bill from $3,000 to $1,600. All supervisons salaries are avoidable. If Product Z is discontinued, the maintemance department will be able to roduce monthly expenses from a total of S6,000 to S4,000; and two persons from the administrative staff can be cut, with their combined salaries total $3,000.
a) Compute the breakeven sales dollars of cach product assuming the same sales mix remains constant. b) Prepare an analysis showing whether Product Z should be eliminated. The amount of change to net income should be computed. c) Assume the current demand of cach product is same as the sales volume the company has for the year. Below is the machine processing time required for cach product. Product Machine processing time in hours i. How many units should the company produce for each product if there is a constraint of only 24.000 hours of machine processing time in the year. ii. Compute the highest possible net income camed by the company. 3 2 An accountant has prepared the folowing product-line income statement for the year: Product Tatal No of mts sokd 5,000 4,000 4,000 Saks Varible enpermes 200,000 S 120,000 100,000 S 60.000 40,000 S 20,000 60,000 40,000 20,000 Cotribution mangin 80,000 40,000 20,000 Fihed expenses Rert Depreciin 10,000 12,000 8,000 5.000 6,000 2,000 2,400 3,000 3,600 3,000 Ulries 4,000 1,000 Supervian' salarie 10,000 3.000 1,000 6,000 Mainenance Administrative expemes Total nad expemes Net operating ncome (bss) 6,000 20,000 3.000 1,200 1,800 10,000 27400 6,000 4,000 66.000 27.000 11,600 14,000 13.000 8,400 (7400) The following additional infonmation is available: • The factory rent of S3,000 assigned to Product Z is avoidable if the product were dropped. • The company's total depreciation would not be affected by dropping Z. • Eliminating Product Z will reduce the monthly utility bill from $3,000 to $1,600. All supervisons salaries are avoidable. If Product Z is discontinued, the maintemance department will be able to roduce monthly expenses from a total of S6,000 to S4,000; and two persons from the administrative staff can be cut, with their combined salaries total $3,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:a) Compute the breakeven sales dollars of cach product assuming the same sales mix remains
constant.
b) Prepare an analysis showing whether Product Z should be eliminated. The amount of
change to net income should be computed.
c) Assume the current demand of cach product is same as the sales volume the company has
for the year. Below is the machine processing time required for cach product.
Product
Machine processing time in hours
i. How many units should the company produce for each product if there is a constraint
of only 24.000 hours of machine processing time in the year.
ii. Compute the highest possible net income camed by the company.
3
2
An accountant has prepared the folowing product-line income statement for the year:
Product
Tatal
No of mts sokd
5,000
4,000
4,000
Saks
Varible enpermes
200,000 S
120,000
100,000 S
60.000
40,000 S
20,000
60,000
40,000
20,000
Cotribution mangin
80,000
40,000
20,000
Fihed expenses
Rert
Depreciin
10,000
12,000
8,000
5.000
6,000
2,000
2,400
3,000
3,600
3,000
Ulries
4,000
1,000
Supervian' salarie
10,000
3.000
1,000
6,000
Mainenance
Administrative expemes
Total nad expemes
Net operating ncome (bss)
6,000
20,000
3.000
1,200
1,800
10,000
27400
6,000
4,000
66.000
27.000
11,600
14,000
13.000
8,400
(7400)
The following additional infonmation is available:
• The factory rent of S3,000 assigned to Product Z is avoidable if the product were dropped.
• The company's total depreciation would not be affected by dropping Z.
• Eliminating Product Z will reduce the monthly utility bill from $3,000 to $1,600.
All supervisons salaries are avoidable.
If Product Z is discontinued, the maintemance department will be able to roduce monthly
expenses from a total of S6,000 to S4,000; and two persons from the administrative staff can
be cut, with their combined salaries total $3,000.
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