In 2023 , Sandy's Sandwich Shoppe had a capacity of $10,000,000 of sales , actual sales of $6,000,000 , break -even sales of $4,500,000 , fixed costs of $ 1,800,000 , and variable costs of 60% of actual sales What was Sandy's margin of safety expressed in terms of dollars ? $300,000 $ 2,700,000 None of the listed choices are correct $ 1,800,000 $ 1,500,000

In 2023 , Sandy's Sandwich Shoppe had a capacity of $10,000,000 of sales , actual sales of $6,000,000 , break -even sales of $4,500,000 , fixed costs of $ 1,800,000 , and variable costs of 60% of actual sales What was Sandy's margin of safety expressed in terms of dollars ? $300,000 $ 2,700,000 None of the listed choices are correct $ 1,800,000 $ 1,500,000

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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In 2019, Papa Company provided the following data: Sales price per unit P100; Variable cost per unit P60; Total fixed cost at P1,500,000. For 2020, Papa Company is planning to buy a machine that will reduce the production workers and cut the sales price of the product at the same time. The new machine will increase the fixed cost by P500,000 due to depreciation; variable cost per unit will decrease by 25% due to reduction of direct workers; and the sales price will be reduced by 10%. What is the break-even units in 2020? * 45,000 O 44,444 O 37.500 O 50,000
In 2019, Reyes Company provided the following data: Sales price per unit P100; Variable cost per unit P60; Total fixed cost at P1,500,000. For 2020, Papa Company is planning to buy a machine that will reduce the production workers and cut the sales price of the product at the same time. The new machine will increase the fixed cost by P500,000 due to depreciation; variable cost per unit will decrease by 25% due to reduction of direct workers; and the sales price will be reduced by 10%. What is the profit (before tax) if the company produces and sells 45,000 units in 2020? a.28,000 b.25,000 c.27,000 d.26,000 What is the break-even units in 2020? a.37.500 b.50,000 c.44,444 d.45,000 What is the profit if the company operates at 45,000-unit volume? a.P600,000 b.P300,000 c.P 45,000 d.None of the above
In 2021, Roger sold 1,500 units at P500 each. Variable expenses were P300 per unit, and fixed expenses were P160,000. The same selling price is expected for 2022. Roger's variable cost per unit will rise by 10% in 2022 due to increasing material costs, so they are tentatively planning to cut fixed costs by P10,000. Logan must sell in 2022 to maintain the same income level as 2021 would be units (nearest whole number)
Meditation Haven has three product lines. Its only unprofitable line is yoga blocks. The results of the yoga blocks line for 2020 is below:Sales 350000 Variable expenses 230000 Fixed expenses 180000 Net loss (60000) If this product line is eliminated, 70% of the fixed expenses can be eliminated. Using incremental analysis, would you recommend the company drop the yoga block line and why?
In a slow year, Deutsche Burgers will produce 3.2 million hamburgers at a total cost of $5.4 million. In a good year, it can produce 5.4 million hamburgers at a total cost of $6.1 million. What are the fixed costs of hamburger production? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places. What is the variable cost per hamburger? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. What is the average cost per burger when the firm produces 2 million hamburgers? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. What is the average cost per burger when the firm produces 3 million hamburgers? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Why is the average cost lower when more burgers are produced?
3) If demand for 2022 is instead 2,500 units should the company pay to increase their capacity? Why? Please explain your calculations and reference to the chart in Figure 1. Assume units are sold at the normal price. Please mention the concept of incremental profits. Hint: If you expand capacity, you will have to pay additional fixed costs of $25,000. Remember that fixed costs are fixed within the relevant range. If you expand capacity then you are outside this range. If you expand capacity then you can make revenue on 500 additional units at the normal price and would pay variable costs on 500 additional units. Please consider the incremental profit or loss of expanding capacity. The incremental profit is the increase in revenues minus the increase in costs of adding 500 more units. If the incremental profit of expanding capacity is positive then you should do so.
e. 5,000 XYZ company is studying the profitability of a change in operation and has gathered the following information. Current Operation: Fixed Costs: $38,000, Selling Price: $16, Variable Cost: $10, and Sales (Units): 9,000. Anticipated Operation: Fixed Costs: $48,000, Selling Price: $22, Variable Cost: $12, and Sales (Units): 6,000. Should XYZ company make the change? Select one: O a. No, because sales will drop by 3,000 units. Ob. It is impossible to judge because additional information is needed. Oc. No, because the company will be worse off by $4,000. O d. Yes, the company will be better off by $6,000. Oe. No, because the company will be worse off by $22000. Next page
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