EXERCISE 2-8 Compute the Margin of Safety L02-7Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning thenext month's budget appear below:Selling price per unitVariable expense per unit.Fixed expense per month.Unit sales per month$30$20y's$7,5001,000Required: Vai Wolfor mor si to does mi bloz gnied zi loubong ano art som jedi smuA1. What is the company's margin of safety?2. What is the company's margin of safety as a percentage of its sales?

Answered: EXERCISE 2-8 Compute the Margin of…

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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/ 4 Practice Question (The following question is to be used for self study session) Production Sales 75% Just Toys Ltd. is a firm that produces stuff toys at the Montego Bay Free Zone. Details of the expected number of stuff toys to be produced and sold for the last two quarters of the calendar year 2003 are budgeted as follows: Selling price per toy Cost per toy: Material + Required: a) b) Direct labour Variable production overhead Fixed production overhead Quarter Ending Quarter Ending September December 30,2003 31,2003 13,000 15,000 12,000 16,000 $70 $14.00 Normal output is 56,000 units per annum and this amount is used for the calculation of fixed production overhead. Fixed production overhead accounts for the only production overhead variance. Fixed overhead expenditure and the production of stuff toys are spread evenly throughout the year. There were no stuff toys in inventory at July 1, 2003. Marketing and administrative costs are: Variable Fixed 9.00 3.00 10.00 15% of sales…
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Example 5 Brilliant Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Ontario Air. Brilliant's fixed costs are $36,000 per month. Ontario Air charges passengers $1,300 per round-trip ticket. Required: Under each of the following independent situation. Calculate the number of tickets Brilliant must sell each month to (a) break even and (b) make a target operating income of $12,000 per month 1.Brilliant's variable costs are $34 per ticket. Ontario Air pays Brilliant 10% commission on ticket price. 2.Brilliant's variable costs are $30 per ticket. Ontario Air pays Brilliant 10% commission on ticket price. 3.Brilliant's variable costs are $30 per ticket. Ontario Air pays $46 fixed commission per ticket to Brilliant. Comment on the results. 4.Brilliant's variable costs are $30 per ticket. It receives $46 commission per ticket from Ontario Air. It charges its customers a delivery fee of $8 per ticket. Comment on the results. Solutions:
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3-27 CVP analysis, income taxes. The Home Style Eats has two restaurants that are open 24 hours aday. Fixed costs for the two restaurants together total $430,500 per year. Service varies from a cup of coffeeto full meals. The average sales check per customer is $8.75. The average cost of food and other variablecosts for each customer is $3.50. The income tax rate is 36%. Target net income is $117,600.1. Compute the revenues needed to earn the target net income.2. How many customers are needed to break even? To earn net income of $117,600?3. Compute net income if the number of customers is 170,000.
Problem 2 The manager of the Spartan Land Restaurant is developing the operating budget for next vear using the following financial information from the current year: Current Year's Next Year's Percentage Increase (Decrease) Next Year's Amount ($) Item Amount Food revenue 00$973,000 4% $112,500 2% Beverage revenue Food cost 000. 36% 1% Beverage cost Labor (including benefits) Other operating costs 23% d ate (1%) $298,000 (2%) 16% same Encar Fixed costs $70,000 same a. What is the current year's budgeted profit (loss)? b. Develop next year's budget: indicate the profit (loss).
MC Qu. 7-70 Santa Fe Production sells a single product to Santa Fe Production sells a single product to wholesalers. The company's budget for the upcoming year revealed anticipated unit sales of 36,400, a selling price of $28, variable cost per unit of $10, and total fixed costs of $384,000. If Santa Fe’s unit sales are 300 units less than anticipated, its break-even point will: Multiple Choice increase by $18 per unit sold. decrease by $18 per unit sold. increase by $10 per unit sold. decrease by $10 per unit sold. not change.
QUESTION 4 4.1 Study the information given below and answer the following questions independently INFORMATION: Banco Limited produces a single product. The following budgeted information for 2021 is made available: Variable manufacturing costs per unit R85.24 Selling price per unit R246 Fixed manufacturing costs R4 552 000 Marketing Costs R648 000 plus 6% of sales Administration costs R320 000 plus R8 per unit sold The number of units expected to be produced and sold during 2021 is 45 000. 4.1.1 Calculate the expected break- even quantity for 2021 4.1.2 Calculate the sales volume required to achieve an operating profit of R2 4848 000 4.1.3 Suppose Banco Limited is considering a decrease of R18 per unit in the selling price of the product, With the expectation that this would increase the sales volume by 10%. Is this a good idea? Motivate your answer
t ces Exercise 6-5 (Algo) Compute the Margin of Safety [LO6-5] Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month's budget appear below: Selling price per unit Variable expense per unit Fixed expense per month Unit sales per month Required: 1. What is the company's margin of safety? $ 24 $ 16 $ 7,200 1,050 Note: Do not round intermediate calculations. 2. What is the company's margin of safety as a percentage of its sales? Note: Round your percentage answer to 2 decimal places (i.e. .1234 should be entered as 12.34). 1. Margin of safety (in dollars) 2. Margin of safety percentage %

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