Diversified Investor Group is opening an office in Portland, Oregon. Fixed monthly costs are office rent ($8,800),depreciation on office furniture ($2,000), utilities ($2,100), special telephone lines ($1,500), a connection with anonline brokerage service ($2,700), and the salary of a financial planner ($10,900). Variable costs include payments tothe financial planner (9% of revenue), advertising (11% of revenue), supplies and postage (4% of revenue), andusage fees for the telephone lines and computerized brokerage service (6% of revenue).Read the requirements.Requirement 2. Use the equation approach to compute the dollar revenues needed to earn a monthly target profitof $11,200.Begin by selecting the formula to compute the required sales in units to earn a target profit.=Target profitRearrange the formula you determined above and compute the required number of trades to earn a monthly targetprofit of $11,200.Diversified must maketrades to earn a monthly operating income of $11,200.

The formula we need to compute the required revenue to reach a target profit is the contribution…

Answered: Diversified Investor Group is opening…

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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Planning Specialists Investors is opening an office in Atlanta, Georgia. Fixed monthly expenses are office rent ($2,500), depreciation on office furniture ($260), utilities ($250), special telephone lines ($600), a subscription to an online brokerage service ($640), and the salary of a financial planner ($1,750). Variable expenses include payments to the financial planner (10% of revenue), advertising (5% of revenue), supplies and postage (2% of revenue), and usage fees for the telephone lines and computerized brokerage service (8% of revenue). Read the requirements. Requirement 1. Compute the investment firm's breakeven revenue in dollars. If the average trade leads to $500 in revenue for Planning Specialists, how many trades must it make to breakeven? First identify the formula to calculate the breakeven point in dollars. (Contribution margin per unit ▼ + Requirements 1. Compute the investment firm's breakeven revenue in dollars. If the average trade leads to $500 in revenue for…
The Sandhill Acres Inn is trying to determine its break-even point during its off - peak season. The inn has 50 rooms that it rents at $60 a night. Operating costs are as follows: Salaries $8,000 per month Property tax $1,400 per month Depreciation (straight-line) $1,000 per month Maintenance $250 per month Maid service $10 per room Other costs $ 20 per room a) Determine the inn's break-even point in number of rented rooms per month. b) Determine the inn's break-even point in sales dollars.
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Cullumber provides shuttle service between 4 hotels near a medical center and an international airport. Cullumber uses two 10- passenger vans to offer 12 round trips per day. A recent month's activity in the form of a cost-volume-profit income statement is as follows. Sales (1,370 passengers) Variable costs Fuel Tolls and parking Maintenance Contribution margin Fixed costs Salaries Depreciation (straight-line) Insurance Net income Break-even point Break-even point $3,836 $ 2,359 655 12,300 1,100 1,000 $34,250 6,850 Calculate the break-even point in (1) sales dollars and (2) number of passengers. 27,400 14,400 $13,000 passengers
Lavage Rapide owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the company's costs: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses. $ 0.03 For example, electricity costs should be $1,000 per month plus $0.07 per car washed. The company expects to wash 8.300 cars in August and to collect an average of $6.20 per car washed. The actual operating results for August are as follows: Lavage Rapide Income Statement Actual cars washed Revenue Expenses: For the Month Ended August 31 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Fixed Cost Cost per per Month Car Washed $ 0.70 $1,000 $ 0.07 $0.10 $.0.30 $ 4,300 $ 8,200 $2,100 $ 1,700 Administrative expenses Total expenses Het operating income 8,400 $53,560 6,310 1,551 1,070 7,150 8,200 2.300 1,849 28,430 $ 25,110
William Diesel owns the Fredonia Barber Shop. He employs 5 barbers and pays each a base salary of $1,510 per month. One of the barbers serves as the manager and receives an extra $580 per month. In addition to the base salary, each barber also receives a commission of $8.40 per haircut. Other costs are as follows. Advertising Rent Barber supplies Utilities Magazines William currently charges $18.00 per haircut. (a) Determine the unit variable costs per haircut and the total monthly fixed costs. (Round variable costs to 2 decimal places, e.g. 2.25.) Your answer is correct.. Total unit variable cost per haircut Total fixed costs (b) $300 per month $1,020 per month $0.45 per haircut $150 per month plus $0.15 per haircut $30 per month eTextbook and Media (d) V Your answer is correct. Break-even point Break-even point sales $ Compute the break-even point in sales units and in sales dollars. eTextbook and Media Your answer is incorrect. $ Net income $ $ 1070 19260 9 9630 haircuts Determine…
A 90-room motel has an average room rate of $64 and average occupancy of 77%. Its fixed costs are $800,000 a year, and its variable costs total $500,000. The owner wants to increase operating income from current level to $250,000. She decides to do the following adjustments: increase price by $6 spend $30,000 more per year on marketing to compensate for the higher room rate To motivate the staff, the owner also set a $2,000 reward to the best employee Send guest fruits to each room, which costs $5 per room How many rooms does she need to sell per night?
Mortgage Investor Group opening an office in Portland, OregonFixed monthly costs are office rent ($8,900) , depreciation on office furniture (1, 800), utilities ($2,200), special telephone lines ($1,000), a connection with an online brokerage service ($2,700) , and the salary of a financial planner ($4,400). Variable costs include payments to the financial planner (9% of revenue), advertising (11% of revenue), supplies and postage (4% of revenue) and usage fees for the telephone lines and computerized brokerage service (6% of revenue). Requirement 4. Suppose that the average revenue Mortgage earns increases to $1.500 per trade. The new breakeven point trades. How does the affect the break even point? Unber new assumptions, Mortage must make ____________ trades to breakeven
Flavor Enterprises has been approached about providing a new service to its clients. The company will bill clients $160 per hour; the related hourly variable and fixed operating costs will be $70 and $18, respectively. If all employees are currently working at full capacity on other client matters and average hourly profit margin is $88, should the company accept this new services or not, use calculation to support your answer.
You run a nail salon. Fixed monthly cost is $5,102.00 for rent and utilities, $5,992.00 is spent in salaries and $1,613.00 in insurance. Also every customer requires approximately $3.00 in supplies. You charge $90.00 on average for each service. You are considering moving the salon to an upscale neighborhood where the rent and utilities will increase to $11,786.00, salaries to $6,735.00 and insurance to $2,228.00 per month. Cost of supplies will increase to $7.00 per service. However you can now charge $167.00 per service. What is the PROFIT or Loss at the crossover point? If a loss include the - Round the quantity to 3 digits when using to calculate the profit Submit Answer format: Number: Round to: 2 decimal places.
Flora’s Flats produces comfortable and portable women’s shoes designed to be worn as a second pair of shoes after a formal event. The company has the following financial information: The company’s sales price is $20 per unit. The variable costs of producing flats is $6 per unit. The company expects to have fixed costs of $10,000 next year. The company expects to sell 1,000 pairs of flats next year. Assume no taxes a. Prepare a budgeted contribution format income statement. b. Compute the margin of safety in both dollar and percentage terms. c. Compute the degree of operating leverage. d. If sales increase by 20% in the following year, how much would net income increase (use the degree of operating leverage to compute your answer).
Lavage Rapide owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the company's costs: Cleaning supplies Electricity Maintenance Rent Wages and salaries. Depreciation Administrative expenses For example, electricity costs should be $1,300 per month plus $0.08 per car washed. The company expects to wash 8,000 cars in August and to collect an average of $6.70 per car washed. The company actually washed 8,100 cars in August. Revenue Expenses: Fixed Cost per Cost per Month Car Washed $ 1,300 $4,400 $ 8,300 $2,000 $ 1,700 Lavage Rapide Activity Variances For the Month Ended August 31 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent $ 0.70 $ 0.08 Required: Calculate the company's activity variances for August. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.…

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