Colby Company manufactures digital thermometers. Based on past experience, Colby has found that its total maintenance costs can be represented by the following formula: Maintenance cost = 30, 000 + 0.5 X, where X = Number of digital thermometers Last year, Colby produced 100,000 thermometers. What is the total variable maintenance cost incurred by Colby last year? a) $50,000 b) $80,000 c) $84,000 d) $30,000

Colby Company manufactures digital thermometers. Based on past experience, Colby has found that its total maintenance costs can be represented by the following formula: Maintenance cost = 30, 000 + 0.5 X, where X = Number of digital thermometers Last year, Colby produced 100,000 thermometers. What is the total variable maintenance cost incurred by Colby last year? a) $50,000 b) $80,000 c) $84,000 d) $30,000

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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Cabin Creek Company is considering adding a new line of kitchen cabinets. The company's accountant provided the following estimated data for these cabinets: Annual sales Selling price per unit Variable manufacturing costs per unit Variable selling costs per unit Incremental fixed costs per year: Manufacturing Selling Allocated common costs per year: 800 units $ 3,670 $ 1,670 $ 520 $ 492,400 $ 72,000 Manufacturing Selling and administrative $ 97,000 $ 129,000 If the kitchen cabinets are added as a new product line, the company expects that the contribution margin earned from selling its other products will decrease by $234,000 per year. Required: 1. What is the annual financial advantage (disadvantage) of adding the new line of kitchen cabinets? 2. What is the lowest selling price per unit that could be charged for the cabinets and still make it economically desirable for the company to add the new product line? Complete this question by entering your answers in the tabs below.
Cabin Creek Company is considering adding a new line of kitchen cabinets. The company's accountant provided the following estimated data for these cabinets: Annual sales Selling price per unit Variable manufacturing costs per unit Variable selling costs per unit Incremental fixed costs per year: Manufacturing Selling Allocated common costs per year: Manufacturing Selling and administrative 800 units $ 3,580 $ 1,580 $ 430 $ 483,400 $ 63,000 $ 88,000 $ 120,000 If the kitchen cabinets are added as a new product line, the company expects that the contribution margin earned from selling its other products will decrease by $216,000 per year. Required: 1. What is the annual financial advantage (disadvantage) of adding the new line of kitchen cabinets? 2. What is the lowest selling price per unit that could be charged for the cabinets and still make it economically desirable for the company to add the new product line? Complete this question by entering your answers in the tabs below. Required…
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Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. Flanders Manufacturing data Current Units sold 216,000 Sales price per unit $2.15 Variable cost per unit $1.75 Contribution margin per unit $0.40 Fixed costs $56,000 Break-even (in units) 140,000 Break-even (in dollars) $301,000 Sales $464,400 Variable costs $378,000 Contribution margin $86,400 Fixed costs $56,000 Net income (loss) $30,400 A) What will the impact be on the break-even point if Flanders purchases the new machinery? New break-even point in units? New break-even point in dollars? B) What will the impact be on net operating income if Flanders purchases the new machinery? New net income(loss)?
Cabin Creek Company is considering adding a new line of kitchen cabinets. The company's accountant provided the following estimated data for these cabinets: Annual sales Selling price per unit Variable manufacturing costs per unit Variable selling costs per unit Incremental fixed costs per year: Manufacturing Selling r Allocated common costs per year: Manufacturing Selling and administrative 800 units $ 3,570 $ 1,570 $ 420 $ 482,400 $ 62,000 $ 87,000 $ 119,000 If the kitchen cabinets are added as a new product line, the company expects that the contribution margin earned from selling its of products will decrease by $214,000 per year. Required: 1. What is the annual financial advantage (disadvantage) of adding the new line of kitchen cabinets? 2. What is the lowest selling price per unit that could be charged for the cabinets and still make it economically desirable for the company to add the new product line? Complete this question by entering your answers in the tabs below. Required…
[The following information applies to the questions displayed below.] Astro Company sold 22,500 units of its only product and reported income of $60,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 45% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $155,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($55 per unit) Variable costs ($50 per unit) Contribution margin Fixed costs Income 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal places.) Contribution margin Contribution Margin Ratio Numerator: Contribution margin per unit $ 1 Fixed costs per unit $ 1,237,500 1,125,000 112,500 52,500 $ 60,000 $ Denominator: Selling price…
Eddie Barzoon Inc. produces a variety of products. One division makes extremely realistic Halloween costumes. The division's projected income statement for the coming year is as follows: Sales (65,000 units) $15,600,000 Less: Variable expenses 8,736,000 Contribution margin $ 6,864,000 Less: Fixed expenses 4,012,000 Operating income $ 2,852,000 a. Compute the contribution margin per unit, and calculate the break-even point in units. Repeat, using the contribution margin ratio. b. Eddie Barzoon has decided to increase the advertising budget by $140,000 and cut the average selling price to $200. These actions will increase sales revenues by $1 million. Will this improve the division's financial situation? Prepare a new income statement to support your answer. c. Suppose sales revenues exceed the estimated amount on the income statement by $612,000. Without preparing a new income statement, determine by how much profits are underestimated. d. Compute the margin of safety in dollars based…
The controller of Manufacturing Co. has collected the following data on drilling machines: Month Total Cost Total Hours March $12,460 8,100 April $12,000 7,600 May $63,000 30,000 June $14, 740 9,800 July $25,000 20000 August $55,000 22,000 The price per unit of the drilling machines is $25. Please calculate all of the following: Variable Cost and Fixed Cost using the High-Low Method. Breakeven point in units. Breakeven point in dollars using the Contribution Margin Ratio. Margin of Safety Percentage if their sales are $756,000. How many units they would need to sell in order to have a Net Income of…
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Compute the sales level required in both dollars and units to earn $120,000 of target income for next year with the machine installed. Astro Company sold 28,500 units of its only product and reported income of $57,900 for the current year. During a planning session for next year’s activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $142,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) $ 1,425,000 Variable costs ($47 per unit) 1,339,500 Contribution margin 85,500 Fixed costs 27,600 Income $ 57,900