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*P6.7 (LO 5), AN Writing Danqing Industries produces plastic that is used for injection-molding applications such as gears for small motors. In 2019, the first year of operations, Danqing produced 4,000 tons of plastic and sold 3,500 tons. In 2020, the production and sales results were exactly reversed. In each year, the selling price per ton was HK$2,000, variable manufacturing costs were 15% of the sales price of units produced, variable selling expenses were 10% of the selling price of units sold, fixed manufacturing costs were HK$2,800,000, and fixed administrative expenses were HK$500,000. 500,000

*P6.7 (LO 5), AN Writing Danqing Industries produces plastic that is used for injection-molding applications such as gears for small motors. In 2019, the first year of operations, Danqing produced 4,000 tons of plastic and sold 3,500 tons. In 2020, the production and sales results were exactly reversed. In each year, the selling price per ton was HK$2,000, variable manufacturing costs were 15% of the sales price of units produced, variable selling expenses were 10% of the selling price of units sold, fixed manufacturing costs were HK$2,800,000, and fixed administrative expenses were HK$500,000. 500,000

FINANCIAL ACCOUNTING
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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tog9) 29022 lenoltibbA zizyienAilo9mlo D. Calculate the company's break-even point in sales for the vear 2020 if it hires its own sales force to replace the network of agents. c. Calculate the degree of operating leverage at sales of €75 million if (1) Bonita Beauty uses sales agents, and (2) Bonita Beauty employs its own sales staff. Describe the advantages and disadvan- tages of each alternative. с. (2) d. Calculate the estimated sales volume that would generate an identical net income for the year ending December 31, 2020, regardless of whether Bonita Beauty employs its own sales staff and pays them an 8% commission or continues to use the independent network of agents. *P6.7 (LO 5), AN Writing Danqing Industries produces plastic that is used for injection-molding applications such as gears for small motors. In 2019, the first year of operations, Danqing produced 4,000 tons of plastic and sold 3,500 tons. In 2020, the production and sales results were exactly reversed. In each year, the selling price per ton was HK$2,000, variable manufacturing costs were 15% of the sales price of units produced, variable selling expenses were 10% of the selling price of units sold, fixed manufacturing costs were HK$2,800,000, and fixed administrative expenses were 500,000 380.000 Prepa absor costin inven HK$500,000. anoidoundent pnoo linu sge di snimatodA Instructions a. Prepare income statements for each year using variable costing. (Use the format from Illustra- word ylinsbi а. 2 tion 6A.5.) ved boblom b. ingome statements for each year using absorption costing. (Use the format from Illustra-
Transcribed Image Text:tog9) 29022 lenoltibbA zizyienAilo9mlo D. Calculate the company's break-even point in sales for the vear 2020 if it hires its own sales force to replace the network of agents. c. Calculate the degree of operating leverage at sales of €75 million if (1) Bonita Beauty uses sales agents, and (2) Bonita Beauty employs its own sales staff. Describe the advantages and disadvan- tages of each alternative. с. (2) d. Calculate the estimated sales volume that would generate an identical net income for the year ending December 31, 2020, regardless of whether Bonita Beauty employs its own sales staff and pays them an 8% commission or continues to use the independent network of agents. *P6.7 (LO 5), AN Writing Danqing Industries produces plastic that is used for injection-molding applications such as gears for small motors. In 2019, the first year of operations, Danqing produced 4,000 tons of plastic and sold 3,500 tons. In 2020, the production and sales results were exactly reversed. In each year, the selling price per ton was HK$2,000, variable manufacturing costs were 15% of the sales price of units produced, variable selling expenses were 10% of the selling price of units sold, fixed manufacturing costs were HK$2,800,000, and fixed administrative expenses were 500,000 380.000 Prepa absor costin inven HK$500,000. anoidoundent pnoo linu sge di snimatodA Instructions a. Prepare income statements for each year using variable costing. (Use the format from Illustra- word ylinsbi а. 2 tion 6A.5.) ved boblom b. ingome statements for each year using absorption costing. (Use the format from Illustra-
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