Exercise 13-9A (Static) Using the contribution margin approachfor a special order decision LO 13-2Hensely Company, which produces and sells a small digital clock, bases its pricingstrategy on a 25 percent markup on total cost. Based on annual production costsfor 25,000 units of product, computations for the sales price per clock follow.Unit-level costsFixed costsTotal cost (a)Markup (a x 0.25)Total sales (b)Sales price per unit (b÷ 25,000)Required$240,00060,000300,00075,000$375,000$15a. Hensely has excess capacity and receives a special order for 8,000 clocks for$12 each. Calculate the contribution margin per unit. Based on this, shouldHensely accept the special order?b. Prepare a contribution margin income statement for the special order.Complete this question by entering your answers in the tabs below.Required A Required BHensely has excess capacity and receives a special order for 8,000 clocks for $12 eachunit. Based on this, should Hensely accept the special order?Note: Round your answer to 2 decimal places.Contribution margin per unitShould Hensely accept the special order?< Required ARequired B

Contribution means the difference between the selling price and variable cost. Break even point…

Answered: Exercise 13-9A (Static) Using the…

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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Exercise 11-15A (Algo) Using contribution margin format income statement to measure the magnitude of operating leverage LO 11-3, 11-4 The following income statement was drawn from the records of Benson, a merchandising firm: BENSON COMPANY Income Statement For the Year Ended December 31 Sales revenue (4,500 units × $163) $ 733,500 Cost of goods sold (4,500 units × $82) (369,000 ) Gross margin 364,500 Sales commissions (5% of sales) (36,675 ) Administrative salaries expense (85,000 ) Advertising expense (34,000 ) Depreciation expense (48,000 ) Shipping and handling expenses (4,500 units × $3) (13,500 ) Net income $ 147,325 Required Reconstruct the income statement using the contribution margin format. Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Benson will earn if sales increase by 20 percent.
Exercise 18-13 (Algo) Computing sales to achieve target income LO C2 Sunn Company manufactures a single product that sells for $145 per unit and whose variable costs are $87 per unit. The company's annual fixed costs are $916,400. Management targets an annual income of $1,450,000. (1) Compute the unit sales to earn the target income. Numerator: 1 1 Denominator: (2) Compute the dollar sales to earn the target income. Numerator: 1 1 Denominator: = || = = || Units to Achieve Target Units to achieve target 0 Dollars to Achieve Target Dollars to achieve target 0
Exercise 20.3 (Algo) Computing Required Sales Volume (LO20-4, LO20-5) The following is information concerning a product manufactured by Ames Brothers. Sales price per unit Variable cost per unit Total fixed manufacturing and operating costs (per month) 78 43 430,000 ces a. Determine the unit contribution margin. b. Determine the number of units that must be sold each month to break even. (Round your answer to the nearest whole number.) c. Determine the number of units that must be sold to earn an operating income of $234,000 per month. (Round your answer to the nearest whole number.) a. Unit contribution margin b. Break-even units C. Target sales in units 23 NOV 11 itv li 1 W %24 ...
Exercise 6-7B. +Exercise 6-9B Using the contribution margin approach for a special order decision Benton Company produces and sells a food processor that it prices at a 32 percent markup on total cost. Based on data pertaining to producing and selling 50,000 food processors, Benton computes the sales price per food processor as follows. Unit-level costs $ 750,000 Fixed costs 500,000 $1,250,000 Total cost (a) Markup (a x 0.32) 400,000 Total sales revenue (b) $1,650,000 Sales price per unit (b 50,000) 2$ 33.00 Required Benton receives a special order for 7,000 food processors for $20 each. Benton has excess capacity. Calculate the contribution margin per unit for the special order. Based on the contribution margin per unit, should Benton accept the special order? a. b. Support your answer by preparing a contribution margin income statement for the special order. Exercise 6-10B Making an outsourcing decision Swartz Boats Company currently produces a battery used in manufacturing its…
Exercise 18-22 (Algo) CVP analysis with two products LO P3 Handy Home sells windows (80% of sales) and doors (20% of sales). The selling price of each window is $330 and of each door is $760. The variable cost of each window is $190 and of each door is $480. Fixed costs are $940,800. (1) Compute the weighted-average contribution margin (2) Compute the break-even point in units using the weighted-average contribution margin (3) Compute the number of units of each rpoduct that will be sold at the break-even point
Question Four i) Jambo Lid manufactures and markets a single product. The following information is available: Materials Conversation costs (variable) i) Dealers Margin Selling prices Fixed Costs 1,250,000 Present sales 400,000 Units Capacity utilization: 60% Shs. Per Unit 40 30 10 100 There is an acute competition. Extra efforts are necessary to sell. Suggestions have been made for increasing sales. By reducing sales price by 5% ii) By increasing dealers margin by 25% over existing rate. Which of the two suggestion you would recommend if the company desires to maintain the present profit? Give reasons.
QUESTION 2 Luna Sea Sushi, Inc. has total costs of $120,000 when it sells 40,000 units. If total fixed costs are $40,000, what is variable cost per unit?
Exercise 3-15A (Algo) Multiple product break-even analysis LO 3-6 Fanning Company manufactures two products. The budgeted per-unit contribution margin for each product follows: Sales price Variable cost per unit Contribution margin per unit Required Super $.92 (60) a. Total number of products b. Product Super b. Product Supreme $32 Supreme $ 127 Fanning expects to incur annual fixed costs of $199,100. The relative sales mix of the products is 70 percent for Super and 30 percent for Supreme. (81) units units units $.46 a. Determine the total number of products (units of Super and Supreme combined) Fanning must sell to break even. b. How many units each of Super and Supreme must Fanning sell to break even? Note: For all requirements, do not round intermediate calculations.
Problem Set: Module 4 1. EX.06.01 2. PR.06.02A.ALGO 3. BE.06.02.ALGO 4. BE.06.03.ALGO engagenow.com + 40 Contribution Margin Harry Company sells 36,000 units at $40 per unit. Variable costs are $34.00 per unit, and fixed costs are $103,700. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) operating income. a. Contribution margin ratio (Enter as a whole number.) b. Unit contribution margin (Round to the nearest cent.) c. Operating income $ : % per unit ?
estion 2: vin Question 1: a. Explain the meaning of breakeven point and the benefit of using it in businesses. b. Given the following information for SAMAR Company, answer the following questions: Selling price (per unit) Number of units sold Variable cost (per unit) Fixed cost i.Calculate contribution margin ratio ii.Find Breakeven Point in amount iii.Find Breakeven Point in units 240 R.O 700 R.O 130 R.O 560,000 R.O
Exercise A-2 Absorption Costing Approach to Setting a Selling Price [LOA-2] Martin Company is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year 15,500 Unit product cost $ 50 Projected annual selling and administrative expenses $ 66,000 Estimated investment required by the company $ 450,000 Desired return on investment (ROI) 18 % The company uses the absorption costing approach to cost-plus pricing. Required: 1. Compute the markup required to achieve the desired ROI. ((Round your final answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) 2. Compute the selling price per unit. (Round your intermediate and final answers to 2 decimal places. )
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