Heather Hudson makes stuffed teddy bears. Recent information for her business follows:Selling price per bearTotal fixed costs per monthVariable cost per bear$31.501,729.0018.50Required:If she sells 289 bears next month, determine the margin of safety in units, in sales dollars, and as a percentage of sales.Note: Round your intermediate calculations to the nearest whole number and round your "Percentage of Sales" answer to 2decimal places. (i.e. 0.1234 should be entered as 12.34%. Round your "Margin of safety (Dollars)" answer to the nearest wholenumber.)Margin of safety (Units)Margin of safety (Dollars)Margin of safety percentage%

Margin of safety is the difference between total sales and the break-even point. The Break-even…

Answered: Heather Hudson makes stuffed teddy…

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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Cullumber, Inc. makes computer bags that sell for $30 each. For the coming year, management expects fixed costs to be $239,010. Variable costs are $21 per unit.
Warm Hands, a small company based in Prince Edward Island, manufactures and sells two types of lightweight gloves for runners- Warm and Cozy. Current revenue, cost, and unit sales data for the two products appear below: Selling price per pair Variable expenses per pair Number of pairs sold monthly Fixed expenses are $2,340 per month. Required: 1. Assuming the sales mix above, do the following: Break-even sales dollars Margin of safety in dollars Margin of safety in percentage Warm $10.00 $ 2.50 2,700 units $ a. Prepare a contribution format income statement showing both dollars and percentage columns for each product and for the company as a whole. (Round percentage answers to 2 decimal places.) WARM HANDS Contribution Income Statement Warm 0 % 0.00 $ Cozy $ 15.00 $ 7.50 % 900 units Cozy 0 % 0.00 $ Total 0 0 % b. Compute the break-even point in sales dollars for the company as a whole and the margin of safety in both dollars and percentage of sales. (Do not round your intermediate…
Desk company has a product that it currently sells in the market for $80 per unit. Does develop a new feature that if added to the 16 product will allow desk to receive a price of $95 per unit.
Legrand Company produces hand cream. In 2018, their financial information is as follows:Each jar sells for: $3.40Total variable cost (materials, labor, and overhead) per jar: $2.55Total fixed cost: $58,140Total jars sold in 2018: 81,6001. Calculate the margin of safety in units?
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Java Joe coffees wants to find an equation to estimate monthly utility costs. Java Joe's has been in business for one year and has collected the following cost data for utilities 1.which of the preceding costs is variable? Fixed? Mixed? Explain 2. using the high-low method, determine the cost function for each cost 3. combine the preceding information to get a monthly utility cost function for Java 4. next month, Java's expects to use 2200 kilowatt hours of electricity, make 1500 minutes of telephone calls and use 32000 gallons of water. Estimate total cost of utilities for the month Month Electricity bill Kilowatt hours used telefone telefone min used Water bill Gallonsof water used January $360 1200 $92.00 1100 $60 30560 February $420 1400 $91.80 1060 $60 26800 March $549 1830 $94.80 1240 $60 31450 April $405 1350 $89.60 980 $60 29965 May $588 1960 $98.00 1400 $60 30568 June $624 2080…
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Heather Hudson makes stuffed teddy bears. Recent information for her business follows: Selling price per bear Total fixed costs per month $ 34.50 1,370.00 17.50 Variable cost per bear Required: Determine the degree of operating leverage if she sells 420 bears this month. Note: Round your answer to 2 decimal places. Degree of operating leverage
A jeans maker is designing a new line of jeans called Slams. Slams will sell for $315 per unit and cost $214.20 per unit in variable costs to make. Fixed costs total $66,000. (Round your answers to 2 decimal places.) 1. Compute the contribution margin per unit. Contribution margin 2. Compute the contribution margin ratio. Numerator: Denominator: 3. Compute Income if 6,200 units are produced and sold Income Contribution Margin Ratio Contribution margin ratio 0
Liberty Coffee sells three small coffees for every large coffee. A small coffee sells for $3.00, with a variable expense of $1.50. A large coffee sells for $5.00, with a variable expense of $2.50.Requirements1. Determine the coffee shop’s monthly breakeven point in the numbers of small coffees and large coffees. Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of expenses: variable and fixed.2. Compute the coffee shop’s margin of safety in dollars.3. Use the coffee shop’s operating leverage factor (using the July contribution margin income statement) to determine its new operating income if sales volume increases 12%. Prove your results using the contribution margin income statement format. Assume that sales mix remains unchanged.

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