Happy Toes produces sports socks. The company has fixed expenses of $95,000 and variable expenses of $0.95 per package.Each package sells for $1.90. The number of packages Happy Toes needed to sell to earn a $28,000 operating income was129,474 packages (rounded). If Happy Toes can decrease its variable costs to $0.85 per package by increasing its fixed costs to$110,000, how many packages will it have to sell to generate $28,000 of operating income? Is this more or less than before?Why?Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution marginapproach.=Sales in units

MARGINAL COSTING INCOME STATEMENT Marginal Costing Income Statement is one of the Important Cost…

Answered: Happy Toes produces sports socks. 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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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?
The company produces and sells athletic shoes for children. The costs associated with each pair of shoes are estimated to be $14 of variable costs and $5 of fixed costs. The shoes normally sell for $35 per pair. A local children’s athletic league has offered to buy 100 pairs of shoes for $19 each. The company has excess capacity. How much additional revenue would be earned if they accept the offer?
A company rents snow skis and transports customers to and from their ski trip at a local ski slope. The trip is priced at $20 per person and has a CM ratio of 40%. The company's fixed expenses are $84,000. Last year, sales were $400,000 and profit was $36,000. How many units need to be sold to break- even, and how many need to be sold to earn a profit of $42,000? Multiple Choice 4,500 and 5,250 6,000 and 8,143 14,000 and 21,000 10 500 and 15 750
Raveen Products sells camping equipment. One of the company’s products, a camp lantern, sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month. Required: 1. Compute the company’s break-even point in number of lanterns and in total sales dollars. 2. Compute the company’s Margin of Safety in sales dollar and in percentage. 3. At present, the company is selling 8,000 lanterns per month. The sales manager is convinced that a 10% reduction in the selling price will result in a 25% increase in the number of lanterns sold each month. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. Show both total and per unit data on your statements. 4. Refer to the data in (3) above. How many lanterns would have to be sold at the new selling price to yield a minimum net operating income of $72,000 per month?
Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $130 per unit. Variable expenses are $91 per stove, and fixed expenses associated with the stove total $191,100 per month. Required: 1. What is the break-even point in unit sales and in dollar sales? 2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or a lower break-even point? (Assume that the fixed expenses remain unchanged.) 3. At present, the company is selling 15,000 stoves per month. The sales manager is convinced that a 10% reduction in the selling price would result in a 25% increase in monthly sales of stoves. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. 4. Refer to the data in Required 3. How many stoves would have to be sold at the new selling price to attain a target profit of $71,000 per month?…
Stacy Inc. makes and sells phones. The price of the standard model is $280 and its variable expenses are $150. The price of the deluxe model is $460 and its variable expenses are $250. The total fixed expenses are $405,000. Generally, Stacy sells 6 standard models and 4 deluxe models. What is the number of standard models sold by Stacy to earn $202,500 ? 1,500 3,750 2,500 2,250
Gardendale Associates offers landscape consultations, where they provide design advice and plans to residential customers. A single consultation is priced at $750.00. The variable costs of a consultation total $330.00 consisting mostly of labor and supplies. Annual fixed costs are $102,900. Gardendale Associates is subject to an Income tax rate of 24 percent. Required: a. What total revenue does Gardendale have to generate from selling consultations to break even? b. What total revenue does Gardendale have to generate from selling consultations to earn an annual operating profit of $106,400 after taxes? Break-even revenue Required revenue

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