CVP; multiproductMel's Accessories sells wallets and money clips. Historically, the firm's sales have averaged three wallets for every money clip. Each wallet has an $8 contribution margin, and each money clip has a $6 contributionmargin. Mel's incurs fixed cost in the amount of $180,000. The selling prices of wallets and money clips, respectively, are $30 and $15. The corporate-wide tax rate is 40 percent.a. How much revenue is needed to break even? $ 756,000xHow many wallets and money clips does this represent?648,000x wallets108,000x money clipsb. How much revenue is needed to earn a pre-tax profit of $150,000?Note: Do not round until you determine the number of units of each product; round number of units to the next highest whole unit in your calculations.$ 0c. How much revenue is needed to earn an after-tax profit of $150,000?Note: Do not round until you determine the number of units of each product; round number of units to the next highest whole unit in your calculations.$ 0d. If Mel's earns the revenue determined in (b) but does so by selling five wallets for every two money clips, what would be the pre-tax profit (or loss)?Note: Do not round until you determine the number of units of each product; round number of units to the next highest whole unit in your calculations.$ 0xCheck

Break-Even Point and CVP Analysis is a concept of cost accounting to determine the break-even level…

Answered: CVP; multiproduct Mel's Accessories…

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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Grixdale Tax Services prepares taxes for individuals. Grixdale offers a simplified pricing model with two alternatives for taxpayers: Standard Deduction (Standard) or Itemized Deductions (Itemized). Price and variable costs for the two services are listed below. Sales price (per return) Variable costs (per return) Standard $190.00 150.00 The annual fixed costs at Grixdale are $507,500. Based on experience, the owner estimates that Standard Deduction returns represent 25 percent of the the firm's business. Itemized $ 530.00 310.00 Required: How many Standard Deduction and Itemized Deduction returns must be filed annually to break even? Standard Deduction returns Itemized Deduction returns Answer is complete but not entirely correct. Break-Even Sales in Units 12,688 2,302
Posters.com is a small Internet retailer of high-quality posters. The company has $810,000 in operating assets and fixed expenses of $162,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $4,600,000 per year. The company’s contribution margin ratio is 10%, which means that an additional dollar of sales results in additional contribution margin, and net operating income, of 10 cents. Required: Complete the following table showing the relation between sales and return on investment (ROI). What happens to the company’s return on investment (ROI) as sales increase? req 1 Complete the following table showing the relation between sales and return on investment (ROI). (Round your percentage answers to 2 decimal places.) Sales Net Operating Income Average Operating Assets ROI $4,100,000 $248,000 $810,000 % $4,200,000 $810,000 % $4,300,000 $810,000 % $4,400,000…
Clank Bicycles is a bicycle retailer that sells road bikes and mountain bikes. Mountain bikes accounts for 60% of the store’s total sales volume. The selling price and variable cost per unit are as follows: Road bike Mountain bike Selling price 4,700 3,400 Product cost 3,080 2,600 Sales commission 60 40 Annual fixed costs are $113,400. Ignore tax effects and assume a constant sales mix. Required: Calculate the break-even point in units and dollars. Calculate how many bicycles of each type needed to be sold to earn a target net profit of $340,200?Hint: Same formula as a single product, but divided by ‘weighted average unit contribution margin’ instead of ‘unit contribution margin’.
Tim's Bicycle Shop sells 21-speed bicycles. For purposes of a cost-volume-profit analysis, the shop owner has divided sales into two categories, as follows: product type high quality medium quality price invoice cost 840 620 sales commission sales price 1850 920 100 40 Three-quarters of the shop's sales are medium-quality bikes. The shop's annual fixed expenses are $270,400. (In the following requirements, ignore income taxes.) a. What is the shop's break-even sales volume in dollars? Assume a constant sales mix. b. How many bicycles of each type must be sold to earn a target net income of $126,750? Assume a constant sales mix.
Team Spirit Calendars imprints calendars with college names. The company has fixed expenses of $1,065,000 each month plus variable expenses of $3.50 per carton of calendars. Of the variable expense, 71% is cost of goods sold, while the remaining 29% relates to variable operating expenses. The company sells each carton of calendars for $13.50. Read the requirements. Requirement 1. Compute the number of cartons of calendars that Team Spirit Calendars must sell each month to breakeven. Begin by determining the basic income statement equation. Variable expenses Sales revenue ... The breakeven sales is 106,500 cartons. Fixed expenses Using the basic income statement equation you determined above solve for the number of cartons to break even. = Operating income Requirement 2. Compute the dollar amount of monthly sales Team Spirit Calendars needs in order to earn $304,000 in operating income. Begin by determining the formula. Fixed expenses + Target operating income ( (Round the contribution…
Coney Adventures Inc. sells one product for $5. The variable cost per item is $3, and the fixed costs for the firm are $40. Assume that the income tax rate for Redlands is 40%. Compute the number of units and sales revenue needed to achieve an $18 net profit. Compute the number of units and sales revenue needed to achieve an 8% profit margin. (Ignore income taxes.) Compute the number of units and sales revenue needed to achieve a 12% net profit margin. (Assume a 40% income tax rate.)
PA2. Stork Enterprises delivers care packages for special occasions. They charge $45 for a smallpackage and $80 for a large package. The sales tax rate is 6%. During the month of May, Stork delivers 38small packages and 22 large packages.A. What is the total tax charged to the customer per small package? What is the overall charge per smallpackage?B. What is the total tax charged to the customer per large package? What is the overall charge per largepackage?C. How much sales tax liability does Stork Enterprises have for the month of May?D. What accounts are used to recognize this tax situation for the month of May?E. When Stork remits payment to the sales tax governing body, what happens to the sales tax liability? PA5. Review the following transactions and prepare any necessary journal entries.A. On July 16, Arrow Corp. purchases 200 computers (Equipment) at $500 per computer from a supplier,on credit. The terms of the purchase are 4/10, n/50 from the invoice date of July 16.B. On…
CVP: Before- and After-Tax Targeted Income Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges a price of $230 per helmet. Variable costs are $92.00 per helmet, and fixed costs are $1,158,000. The tax rate is 25 percent. Last year, 14,000 helmets were sold. Required: 1. What is Head-Gear's net income for last year? 4. Suppose Head-Gear wants to earn after-tax net income of $590,850. How many units must be sold? In your computations, round dollar amounts to the nearest dollar. Round your final answer to the nearest whole unit. 5. Suppose the income tax rate rises to 35 percent. How many units must be sold for Head-Gear to earn after-tax income of $610,740? Round to the nearest whole unit.
Santel cash operates a chain of exclusive ski boutiques in the western United States. The store purchases several hats styles from a single distributor at $12 each. All other cost incurred by the company are fixed. Sandhill cash sells the hats for $30 each. If it cost total 135,000 per year what is the breakeven point in units?in sales dollars? What is sandhills's contribution margin ratio? And what is their variable cost ratio?
Grixdale Tax Services prepares taxes for individuals. Grixdale offers a simplified pricing model with two alternatives for taxpayers: Standard Deduction (Standard) or Itemized Deductions (Itemized). Price and variable costs for the two services are listed below. Standard Itemized Sales price (per return) $ 180.00 $ 510.00 Variable costs (per return ) 140.00 290.00 The annual fixed costs at Grixdale are $490,000. Based on experience, the owner estimates that Standard Deduction returns represent 25 percent of the the firm's business. Required: How many Standard Deduction and Itemized Deduction returns must be filed annually to break even?
pp. Subject :- Accounting
A music store sells new instruments. The store also sells used instruments for people who are willing to give the store part of the sales price. The sale of used instruments, called sales commissions, amount to about one-fourth [25%] of total income. On the firm’s classified income statement under the “Revenue” heading are both New Instrument Sales and Sales Commissions. Do you agree with presentation of these in the Income Statement? Why or why not?

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