price and cost characteristics: Crest Industries sells a single model of satellite radioreceivers for use in the home. The radios have the followingprice and cost characteristics:Sales price = $80 per radioVariable costs = $32 per radioFixed costs $360 per monthCrest Industries is subject to an income tax rate of 40percent. How many receivers must Crest sell to earn amonthly operating profit of $90,000 after taxes?

Given:Sales price = $80 per radioVariable costs = $32 per radioFixed costs = $360 per monthIncome…

Answered: Crest Industries sells a single model…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 16E

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Cruse Cleaning offers residential and small office cleaning services. An average cleaning service has the following price and costs. Sales price $ 128.00 per service Variable costs 90.00 per service Fixed costs 124,982 per year Cruse Cleaning is subject to an income tax rate of 22 percent. Required: How many cleaning services must Cruse Cleaning sell in a year to break even? How many cleaning services must Cruse Cleaning sell in a year to earn an annual operating profit of $34,086 after taxes?
Sheridan Dish Printery publishes the best-selling Captain Cajun Cookbook that sells for $7. The company incurs variable costs of $2 per cookbook and total fixed costs are $260,600. If the company's tax rate is 20%, how many cookbooks must be sold to generate $176,000 in net income? cookbooks
ABC Audio sells headphones and would like to earn an after-tax profit of $400 every week. Each setof headphones incurs variable cost of $5 and sells for $10. Rent and other fixed costs are $200 perweek; the income tax rate is 20%. How many headphones must ABC sell per week to meet its profitgoal?
College Pizza delivers pizzas to the dormitories and apartments near a major state university. The company’s annual fixed expenses are $40,000. The sales price of a pizza is $10, and it costs the company $5 to make and deliver each pizza. (In the following requirements, ignore income taxes.)Required:1. Using the contribution-margin approach, compute the company’s break-even point in units (pizzas).2. What is the contribution-margin ratio?3. Compute the break-even sales revenue. Use the contribution-margin ratio in your calculation.4. How many pizzas must the company sell to earn a target profit of $65,000? Use the equation method.
bed Cruse Cleaning offers residential and small office cleaning services. An average cleaning service has the following price and costs. Sales price Variable costs Fixed costs $127.00 per service 89.00 per service 119,548 per year Cruse Cleaning is subject to an income tax rate of 22 percent. Required: a. How many cleaning services must Cruse Cleaning sell in a year to break even? ook b. How many cleaning services must Cruse Cleaning sell in a year to earn an annual operating profit of $32,604 after taxes? a Required sales in a year to break even int rences b. Required sales in a year to earn an annual operating profit of $32,604 after taxes: cleaning services cleaning services
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Great Tasting Soft Drinks manufactures and sells a brand of soft drinks that is quite popular in selected areas. The selling price per bottle is $15 and variable expenses $12. The fixed expenses for the period is $200,000. How many bottles must the company sell if it wishes to make a profit before tax of $250,000?
Lucid Images Ltd manufactures premium high definition televisions. The firm’s fixed costs are$4,000,000 per year. The variable cost of each TV is $2,000, and the TVs are sold for $3,000 each. Thecompany sold 5,000 TVs during the previous year. (In the following requirements, ignore income taxes)Required:Treat each of the requirements as independent situations:a) Calculate the break-even point in units. b) What will the new break-even point be if fixed costs increase by 10 percent? c) What was the company’s net profit for the previous year? d) The sales manager believes that a reduction in the sales price to $2,500 will result in orders for1,200 more TVs each year. What will the break-even point be if the price is changed?
Lucid Images Ltd manufactures premium high definition televisions. The firm’s fixed costs are$4,000,000 per year. The variable cost of each TV is $2,000, and the TVs are sold for $3,000 each. Thecompany sold 5,000 TVs during the previous year. (In the following requirements, ignore income taxes)Required:Treat each of the requirements as independent situations:a) Calculate the break-even point in units.b) What will the new break-even point be if fixed costs increase by 10 per cent? c) What was the company’s net profit for the previous year? (4 marks)d) The sales manager believes that a reduction in the sales price to $2,500 will result in orders for 1,200 more TVs each year. What will the break-even point be if the price is changed?
Lucid Images Ltd manufactures premium high definition televisions. The firm’s fixed costs are $4,000,000 per year. The variable cost of each TV is $2,000, and the TVs are sold for $3,000 each. The company sold 5,000 TVs during the previous year. (In the following requirements, ignore income taxes) Required: Treat each of the requirements as independent situations: a) Calculate the break-even point in units. (2 marks) b) What will the new break-even point be if fixed costs increase by 10 per cent? (2 marks) c) What was the company’s net profit for the previous year? (4 marks) d) The sales manager believes that a reduction in the sales price to $2,500 will result in orders for 1,200 more TVs each year. What will the break-even point be if the price is changed? (2 marks)

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