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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Q10. A company has prepared the following budget for a given month: Product Selling Price (per unit) Variable Cost (per unit) Unit Sales A $10 $4 15k B $15 $9 21k C $19 $8 4k Assuming that total fixed expenses will be $150.9 and the sales mix remains constant, determine the firm’s dollar sales to break-even. Note: The term “k” is used to represent thousands (× $1,000).
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.
XYZ Company are shown below: Per Unit Percent of Sales Selling price P1,500 100% Variable expenses 1,050 70% Contribution margin P450 30% Fixed expenses are P45,000 per month and the company is selling 200 units per month. Required: a. The marketing manager argues that a P10,000 increase in the monthly advertising budget would increase monthly sales by P45,000. Should the advertising budget be increased? (support your answer with computations) b. Refer to the original data. Management is considering using better quality of materials that would increase the variable cost by P75 per unit. The marketing manager believes the higher-quality product would increase sales by 10% per month. Should the better quality of materials be used? (support your answer with computations)
15
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…
Mike Ltd. has the following information available for this year: September October Total costs $86,000 $146,000 Budgeted sales (units) 15,000 30,000 The selling price is $12 per unit. a. What is Mike Ltd's margin of safety in units for September? a. If next year, fixed cost rise by 12%, variable costs fall by 4% and the BEP remains the same as the current year, how much must the selling price be? a. Explain why the accountant's view of breakeven is often criticised. b. Discuss how operational gearing affects a company's profits and give an example of how it can be increased.
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.
Eureka Corp. produces and sells a single product. Data concerning that product appear below: Per Unit Percent of. Selling Price Variable Costs and Expenses Contribution Margin Sales P170 100% 102 60% 40% P 68 Eived costs and expenses are P220,000 per month. Eureka is currently selling 4,000 units per month. The marketing mahager would like to cut the selling price by P15 and increase the advertising budget by P11,000 per month. The marketing manager predicts that these two changes Would increase monthly sales by 1,500 units. Should the marketing manager continue his plan? Present your computations to convince the manager of your advice.
The company just hired a new marketing manager who insists unit sales can be dramatically increased by dropping the selling price from $8 to $7. The marketing manager would like to use the following projections in the budget: Year 2 Quarter Year 3 Quarter Data 1 2 3 4 1 2 Budgeted unit sales 45,000 65,000 105,000 60,000 90,000 100,000 Selling price per unit $7 What are the total expected cash disbursements for raw materials for the year under this revised budget?
Blitzle Inc has prepared the following budget data: Sales Volume 15,000 Unit Selling Price ₱750 Unit Variable Expenses ₱550 Fixed Manufacturing Expenses ₱1,600,000 Fixed Selling & Administrative Expenses ₱1,400,000 An advertising agency claims that an aggressive advertising campaign would enable the company to increase its unit sales by 25%. The maximum amount that the company can pay for advertising and obtain a net operating income of ₱350,000 would be ₱___________.

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