3. Bill Braddock is considering opening a Fast 'n Clean Car Service Center, Heestimates that the following costs will be incurred during his first year of operations:Rent $9,200, Depreciation on equipment $7,000, Wages $16,400, Motor oil $2.00 perquart. He estimates that each oil change will require 5 quarts of oil. Oil filters will cost$3.00 each. He must also pay The Fast 'n Clean Corporation a franchise fee of $1.10per oil change, since he will operate the business as a franchise. In addition, utilitycosts are expected to behave in relation to the number of oil changes as follows:Number of Oil Changes4,0006,0009,000Utility Costs$ 6,000$7,300$ 9,60012,000$12,600$15,00014,000Bill Braddock anticipates that he can provide the oil change service with a filter at $25each.Instructions:(a) Using the high-low method, determine variable costs per unit and total fixedcosts.(b) Determine the break-even point in number of oil changes and sales dollars. (c)Without regard to your answers in parts (a) and (b), determine the oil changesrequired to earn net income of $20,000, assuming fixed costs are $32,000 andthe contribution margin per unit is $8

High-low method is a easy method to used to split mixed costs into variable and fixed cost. Formula…

Answered: Instructions: (a) Using the high-low…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Assume the following (1) sales = $200,000, (2) unit sales = 10,000, (3) the contribution margin ratio = 37%, and (4) net operating income = $10,000. Given these four assumptions, which of the following is true? Multiple Choice The total fixed expenses = $126,000 The variable expense per unit = $7.40 The total contribution margin = $74,000 The break-even point is 8,077 units
Solve this one
Assume the following (1) variable expenses = $308,000, (2) unit sales = 10,000, (3) the contribution margin ratio = 20 %, and (4) net operating income = $10,000. Given these four assumptions, which of the following is true? Multiple Choice The total contribution margin = $246,400 The break-even point in sales dollars is $335, 000 The total sales = $369,600 The total fixed expenses = $ 61, 600
Question 3: Oman Company's financial information is given in the table below. Year Sales (OMR) Fixed Costs 445000 Variable Costs : 2020 105000 245000 2021 500000 150000 280000 You are required to calculate the following values for each year. The years are independent of each other. a) P/V ratio, b) В.Е.P. c) Sales required to earn a profit of OMR 45000. d) Margin of safety at a profit of OMR 50000 e) Profit when sales are OMR. 300000.
Currently the unit selling price of a product is $200, the unit variable cost is $110, and the total fixed costs are $585,000. A proposal is being evaluated to increase the unit selling price to $275. Under the proposed plan, the variable cost per unit and the total fixed cost will not change. 1) Calculate the contribution margin per unit. 2) Calculate the contribution margin ratio. 3) Calculate the breakeven point in units under the current scenario.
A. APPLY THE CONCEPTS: Determine the mixed costs Costs that display characteristics of both fixed and variable costs simultaneously are called "mixed costs." The rental agreement on a piece of machinery stipulates an annual fee of $6,000 plus $2 for each hour of use. To illustrate, assume the manager wants to know what mixed costs will be at 7,000 hours of operation. Fixed Cost + (Variable Cost per Unit x Number of Units) = Mixed Cost $________________ + $_____ x 7,000 hours) = $___________ For this scenario, calculate the mixed costs at different levels across the relevant range, then graph them. Hours of Operation Mixed Cost 0 hours $________________ 4,000 $________________ 9,000 $________________ 12,000 $________________ 15,000 $________________ B. Based on the data from the table completed above, select the graph that correctly represents the mixed cost data. (selections in screenshot)
Solution method please.
Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $110 per unit, and fixed manufacturing costs are $112,000. Sales are estimated to be 4,200 units. If an amount is zero, enter "0". Do not round interim calculations. Round final answer to nearest whole dollar. a. How much would absorption costing income from operations differ between a plan to produce 4,200 units and a plan to produce 5,600 units? b. How much would variable costing income from operations differ between the two production plans?
Problem 2-29 (Algo) Changes In Cost Structure; Break-Even Analysis; Operating Leverage; Margin of Safety [LO2-4, LO2-5, LO2-7, LO2-8] Morton Company's contribution format income statement for last month is given below: Sales (46,000 units x $21 per unit) Variable expenses Contribution margin Fixed expenses Net operating income $ $ 966,000 676,200 289,800 231, 840 57,960 The industry in which Morton Company operates is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits. Required: 1. New ment has come onto market that would allow Morton Company to automate a portion of its operations. Variable expenses would be reduced by $6.30 per unit. However, fixed expenses would increase to a total of $521,640 each month. Prepare two contribution format income statements, one showing present operations and one…
Question: Warner Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows: Units Produced Total Costs 2,070 1,200 $210,500 158,400 3,200 Required: 246,400 a) Determine the variable cost per unit and the total fixed cost. (Round to nearest dollar) b) Based on part (a), estimate the total cost for 1,580 units of production.
Manufacturing costs for product X include direct materials $18 per unit, direct labor $4 per unit, variable overhead $2 per unit, and fixed overhead $3 per unit, for a total of $27 per unit. If production volume is increased by 10 units, how much will total manufacturing costs change in the short term? Assume that the new production volume is in the relevant range. (hint: the total cost equation might be useful here) increase by $240 not enough information need to know the original volume increase by $220 increase by $250 O increase by $270
For Waterway Industries at a sales volume of 5000 units, sales revenue is $67000, variable costs total $ 44000, and fixed expenses are $21000. What is the unit contribution margin? Select answer from the options below $4.20 $8.80 $9.20 $4.60

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS