O'Reilly Incorporated makes and sells many consumer products. The firm's average contribution margin ratio is 28%. Management isconsidering adding a new product that will require an additional $13,500 per month of fixed expenses and will have variable expensesof $8 per unit.Required:a. Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 28%.Note: Round your answer to 2 decimal places.b. Calculate the number of units of the new product that would have to be sold if the new product is to increase the firm's monthlyoperating income by $9,300.Note: Do not round intermediatecalculations.a Selling priceb Number of unitsper unit

Variable Cost :— It is the cost that changes with change in units. It is constant in per unit for…

Answered: O'Reilly Incorporated makes and sells…

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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Hawk Homes, Ic., makes one type of birdhouse that it sells for $30.00 each. Its variable cost is $13.50 per house, and its fixed costs total $14,239.50 per year. Hawk currently has the capacity to produce up to 2,800 birdhouses per year, so its relevant range is 0 to 2,800 houses. Required: 1. Prepare a contribution margin income statement for Hawk assuming it sells 1,110 birdhouses this year. 2. Without ancaleuletione, detonmine llawks total contribution morgin if the company breake 3. Сн 4. Calculate Hawk's break-even point in number of units and in sales revenue. 5. Suppose Hawk wants to earn $21,000 this year. Determine how many birdhouses it must sell to generate this amount of profit. O margm per umt Omarginatio. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Prepare a contribution margin income statement for Hawk assuming it sells 1,110 birdhouses this year. (Enter your answers…
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Winny's Office Furniture has a contribution margin ratio of 16%. If fixed costs are $183,800, how many dollars of revenue must the company generate in order to reach the break-even point? Round to two decimal places.
A firm is trying to choose between two machines to manufacture a new line of office furniture. The financial data for each machine have been compiled as follows: The firm's marginal tax rate is 40% and uses a 15% discount rate to value the projects. Also, assume that the required service period is indefinite. What is the internal rate of return (after tax) of machine A?(a) 28%(b)39%(c) 35%(d)43%
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?
There are two competing alternatives in your textile business. A-type Tufting Machine costs $10,000 and B-Type Tufting Machine costs $35,000. A-type Tufting Machine can result in $11,000 labour savings in the first two years and $10,000 in year three. B-type Tufting Machine can result in $20,000 labour savings in the first two years. Assume MARR=8%. and find the difference between the net present worth of these two alternatives using infinite planning horizon with project repeatability. a) None of the answers are correct O b) Between $19,176 and $20,367 c) Between $29,176 and $30,367 d) Between $17,176 and $18,367 e) Between $23,176 and $24,367 f) Between $25,176 and $26,367
19 )
Jakarta Company is a service firm with current service revenue of $300,000 and a 30% contribution margin. Its fixed costs are $36,000. Maldives Company has current sales of $6,560,000 and a 45% contribution margin. Its fixed costs are $1,918,800. A. What is the margin of safety for Jakarta and Maldives? If required, round final answers to one decimal place. Margin of safety for Jakarta: fill in the blank 1% Margin of safety for Maldives: fill in the blank 2% D. Compute the degree of operating leverage for both companies. If required, round final answers to two decimal places. Operating leverage: Jakarta fill in the blank 5 Maldives fill in the blank 6
Q1.Determine the production plan that will maximise the weekly profit of MJD Ltd and prepare a profit statement showing the profit your plan will yield. Q2.The marketing director of MJD Ltd is concerned about the company’s ability to meet the quantity demanded by its customers. Two alternative strategies are being considered to overcome this: To increase the number of hours worked using the existing machinery by working overtime. Such overtime would be paid at a premium of 50% above normal labour rates, and variable overheads costs would be expected to increase in proportion to labour costs. To buy product B from an overseas supplier at a cost of £19 per unit; which includes the cost of delivery. This purchased product would need to be repackaged at a cost of £1 per unit before it can be sold Evaluate each of the two alternative strategies and write a report to the marketing director discussing which strategy should be adopted.
Seabold Interiors sold 18,400 yards of wallpaper last year at a contributionmargin of $3.50 per yard and incurred $49,400 in total fixed costs. This year, contribution margin per yard is expected to increase to $4, and fixed costs are expected to increase to $58,000. How many units must be sold this year to earn the same operating income as was earned last year? (Hint: Use the expanded contribution margin model described in this chapter.)a. 16,900.b. 17,500.c. 18,250.d. 20,200.e. None of the above.
Brody Inc. is currently selling a product at P20 per piece. The income statement for the current month showed that Brody Inc. have sold 100,000 units, variable costs of P800,000 and fixed costs of P400,000. Management is thinking of reducing the current sales price by P2 and based on studies, this will increase unit sales by 20%. If you are the company’s management accountant, what will be the financial impact of this scenario that you will report to management? a. no change in profit b. an P80,000 drop in profitability. c. a P240,000 drop in profitability. d. a P400,000 drop in profitability.

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