CVP Analysis of Multiple ProductsAlo Company produces commercial printers. One is the regular model, a basic model that is designed to copy and print in black and white. Another model, the deluxe model, is a color printer-scanner-copier. For thecoming year, Alo expects to sell 90,000 regular models and 18,000 deluxe models. A segmented income statement for the two products is as follows:SalesRegular Model$14,400,000Deluxe Model$12,240,000Total$26,640,000Less: Variable costs8,640,0007,344,000Contribution margin$5,760,000$4,896,00015,984,000$10,656,000Less: Direct fixed costs1,200,000960,0002,160,000Segment margin$4,560,000$3,936,000$8,496,000Less: Common fixed costs1,510,400Operating income$6,985,600Required:1. Compute the number of regular models and deluxe models that must be sold to break even. Round your answers to the nearest whole unit.Regular modelsDeluxe modelsunitsunits

The contribution margin refers to the difference between the sales and the variable expense. It…

Answered: Alo Company produces commercial…

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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Posters.com is an Internet retailer of high-quality posters. The company has $750,000 in operating assets and fixed expenses of $156,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $4,800,000 per year. The company's contribution margin ratio is 9%, which means an additional dollar of sales results in additional contribution margin, and net operating income, of 9 cents. Required: 1. Complete the following table showing the relation between sales and return on investment (ROI). 2. What happens to the company's return on investment (ROI) as sales increase? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the following table showing the relation between sales and return on investment (ROI). Note: Round your percentage answers to 2 decimal places. Sales Net Operating Income $ 4,300,000 $ 231,000 $ 4,400,000 $ 4,500,000 $ 4,600,000 $ 4,700,000 $ 4,800,000 Average Operating Assets $…
The following operating information reports the results of Swifty Company’s production and sale of 12,500 air-conditioned motorcycle helmets last year. Based on early market forecasts, Swifty expects the same results this year. Sales $1,939,000 Variable manufacturing expenses 954,000 Fixed manufacturing expenses 275,000 Variable selling and administrative expenses 97,000 Fixed selling and administrative expenses 230,000 The American Motorcycle Club has offered to purchase 1,700 helmets at a price of $100 each. Swifty has sufficient idle capacity to fill the order, which would not affect the company’s cost structure or regular sales.If Swifty accepts this order, by how much will its income increase or decrease? Operating income will increase by $_______________ .
The following operating information reports the results of Ayayai Company’s production and sale of 12,500 air-conditioned motorcycle helmets last year. Based on early market forecasts, Ayayai expects the same results this year. Sales $2,026,000 Variable manufacturing expenses 862,000 Fixed manufacturing expenses 279,000 Variable selling and administrative expenses 112,000 Fixed selling and administrative expenses 229,000 The American Motorcycle Club has offered to purchase 1,600 helmets at a price of $100 each. Ayayai has sufficient idle capacity to fill the order, which would not affect the company’s cost structure or regular sales.If Ayayai accepts this order, by how much will its income increase or decrease? Operating income will select an option decreaseincrease by $enter a dollar amount .
Barkov Bakeries produces deluxe muffins in its manufacturing facility in Florida. Data concerning these products appear below. Cornbread Blueberry Plain Normal annual sales volume 200,000 300,000 500,000 Unit selling price $ 2.50 $ 3.00 $ 2.00 Variable cost per unit $ 1.80 $ 2.00 $ 1.40 Total fixed expenses for the entire company are $2,500,000 per year. All three products are sold in highly competitive markets, so the company is unable to raise its prices without losing unacceptable numbers of customers. The company has no work in process or finished goods inventories due to an extremely effective just-in-time manufacturing system.…
Comfort Ride manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year. The following informatio relates to current production of seats: Sale price per unit Variable costs per unit: Manufacturing $400 $230 Marketing and administrative $60 Total fixed costs: Manufacturing $790,000 Marketing and administrative $210,000 A. Increase by $49,000 B. Increase by $60,000 OC. Decrease by $49,000 OD. Increase by $229,000
International Printer Machines (IPM) builds three computer printer models: Alpha, Beta, and Gamma. Information for these three products is as follows: Alpha Beta Gamma Total Selling price per unit $250 $400 $1,500 Variable cost per unit $80 $200 $800 Expected unit sales (annual) 12,000 6,000 2,000 20,000 Sales mix 50 percent 40 percent 10 percent 100 percent Total annual fixed costs are $5,000,000. Assume the sales mix remains the same at all levels of sales. Required: a) Calculate the weighted average unit contribution margin, assuming a constant sales mix. b) How many units of each printer must be sold to break even? c) i) Explain what is margin of safety ii) Calculate in sales units the margin of safety for IPM, assuming projected sales are 25,000 units? SHOW YOUR WORKING
Island Novelties, Incorporated, of Palau makes two products-Hawaiian Fantasy and Tahitian Joy. Each product's selling price, variable expense per unit and annual sales volume are as follows: Hawaiian Fantasy Tahitian Joy Selling price per unit $ 12 $ 120 Variable expense per unit $9 $ 48 Number of units sold annually 36,000 5,400 Fixed expenses total $ 437,000 per year. Required: 1. Assuming the sales mix given above, do the following: a. Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole. b. Compute the company's break - even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety percentage. 2. The company has developed a new product called Samoan Delight that sells for $45 each and that has variable expenses of $27 per unit. If the company can sell 12,000 units of Samoan Delight without incurring any additional fixed expenses: a. Prepare a revised contribution…

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