Answer the following questions using the information below:Kramer Enterprises reports year-end information from 20X8 as follows:$960,000Sales (160,000 units)Variable Costs640,000Contribution Margin320,000Fixed Costs260,000Operating Income$60,00013Kramer is developing the 20X9 budget. In 20X9 the company would like to increase sellingprices by 12.5%, and as a result expects a decrease in sales volume of 9%.What is budgeted variable costs for 20X9?$720,000O $582,400O $691,200$640,000

$582,400Budgeted variable cost= $582,40020X8selling price per units= $960,000/160,000=$6variable…

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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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Important: EXCEL Spreadsheet Must be Used for this Problem. Per your request, Table 14-1 is included as an attachment. The Hurricane Lamp Company forecasts that next year’s sales will be $6 million. Fixed operating costs are estimated to be $800,000, and the variable cost ratio (that is, variable costs as a fraction of sales) is estimated to be 0.75. The firm has a $600,000 loan at 10 percent interest. It has 20,000 shares of $3 preferred stock and 60,000 shares of common stock outstanding. Hurricane Lamp is in the 40 percent corporate income tax bracket. a) Forecast Hurricane Lamp’s earnings per share (EPS) for next year. Develop a complete income statement using the revised format illustrated in Table 14.1. Then determine what Hurricane Lamp’s EPS would be if sales were 10 percent above the projected $6 million level. Answer: EPS (Sales = $6 million) = $5.40 b) Calculate Hurricane Lamp’s degree of operating leverage (DOL) at a sales level of $6 million using the following: The…
Hello please help with the problem below. Thanks Last year’s operating income for the Barnum company was $30,000. The selling price during the year was $15 per unit. The total variable costs were $180,000 and total fixed costs were $90,000. The sales manager wants to increase the selling price next year by 15% although she knows that the number of units sold would likely be reduced by 10%. If her proposal is adopted and her assumption about volume of sales is correct, what would the new operating income be?
Alliss Limited manufactures de-luxe juicing machines. Each machine has a wholesale price of £225. Variable costs of manufacture are £56 per machine. Because of increased competition, the sales director has reduced the level of sales that the company can realistically expect to make. The actual sales level in 2020 was 3561 machines, but the budget for 2021 is only 3250 machines. Fixed costs for the year 2020 are budgeted at £560 000. a)Calculate the total contribution that can be expected at a sales level of 3250 machines. b) Calculate the break-even point in units c) Calculate the break-even point in units if the selling price were to be increased by 10%. d) Advise the company's directors on whether they should increase the selling price.
Leverage Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Sales $2,000,000 Less: Variable costs 1,400,000 Contribution margin $600,000 Less: Fixed costs 450,000 Operating income $150,000 Required: Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are $200,000 greater than expected. What would the total…
Photo Finish, Incorporated produces and sells picture frames. Variable costs are expected to be $17 per frame; fixed costs for the year are expected to total $130,000. The budgeted selling price is $25 per frame. The sales units required by Photo Finish to make a before-tax profit (πB) of $15,000 would be: Multiple Choice 16,850 units. 11,625 units. 20,675 units. 28,350 units. 18,125 units.
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Marketing Docs prepares marketing plans for growing businesses. For 2017, budgeted revenues are $1,500,000 based on 500 marketing plans at an average rate per plan of $3,000. The company would like to achieve a margin of safety percentage of at least 45%. The company’s current fixed costs are $400,000 and variable costs average $2,000 per marketing plan. q. Calculate Marketing Docs’ breakeven point and margin of safety in units.
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Dd.6.
(a) A company manufactures a single product which has variable cost of £40 per unit. The contribution to sales ratio is 45%. Monthly fixed costs are £198,000. What is the breakeven point in pounds and in units? (b) John makes and sells a product which has a variable cost of £60 and sells for £80 per unit. Budgeted fixed costs are £140,000 and budgeted sales are 16000 units. Determine the sales required to achieve this profit What is the breakeven point and margin of safety? (c) TLF Ltd wishes to sell 28,000 units of its product, which has a variable cost of £30 to make and sell. Fixed costs are £94,000 and required profit is £26,000. Calculate the sales price per unit (d) Apple Ltd makes and sells a single product, for which variable costs are follows:Direct materials $20Direct labour $16Variable production overhead $12…

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