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Part 2 – CVP Analysis The condensed income statement of the Happy Valley Inn is as follows" Fixed Costs $900,000 1,050,000 150,000 $2,100,000 Department Variable Costs Department Income S3,300,000 200,000 150,000 $3,650,000 900,000 1,400,000 1,350,000 472,500 877,500 Revenue S6,000,000 2,500,000 500,000 $9,000,000 S1,800,000 1,250,000 200,000 $3,250,000 Room Food and Bev Other Total Other Variable Other Fixed Costs Pre-Tax Income Tax Net Income 1) What is the contribution ratio for the Happy Valley Inn? 2) What is the break-even level of Sales for the Happy Valley Inn? 3) What level of sales are needed to earn S1,000,000 in net income? 4) What level of Room Sales are needed to earn S1,000,000 in net income? 5) What would be the projected net income at $10,000,000 in Sales?

Part 2 – CVP Analysis The condensed income statement of the Happy Valley Inn is as follows" Fixed Costs $900,000 1,050,000 150,000 $2,100,000 Department Variable Costs Department Income S3,300,000 200,000 150,000 $3,650,000 900,000 1,400,000 1,350,000 472,500 877,500 Revenue S6,000,000 2,500,000 500,000 $9,000,000 S1,800,000 1,250,000 200,000 $3,250,000 Room Food and Bev Other Total Other Variable Other Fixed Costs Pre-Tax Income Tax Net Income 1) What is the contribution ratio for the Happy Valley Inn? 2) What is the break-even level of Sales for the Happy Valley Inn? 3) What level of sales are needed to earn S1,000,000 in net income? 4) What level of Room Sales are needed to earn S1,000,000 in net income? 5) What would be the projected net income at $10,000,000 in Sales?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Part 2 – CVP Analysis The condensed income statement of the Happy Valley Inn is as follows" Variable Costs $1,800,000 1,250,000 200,000 $3,250,000 Fixed Costs Department Income $3,300,000 200,000 150,000 S3,650,000 900,000 1,400,000 1,350,000 472,500 Department Revenue S6,000,000 2,500,000 500,000 $9,000,000 Room $900,000 1,050,000 150,000 $2,100,000 Food and Bev Other Total Other Variable Other Fixed Costs Pre-Tax Income Tax Net Income 877,500 1) What is the contribution ratio for the Happy Valley Inn? 2) What is the break-even level of Sales for the Happy Valley Inn? 3) What level of sales are needed to earn $1,000,000 in net income? 4) What level of Room Sales are needed to earn S1,000,000 in net income? 5) What would be the projected net income at $10,000,000 in Sales?
Transcribed Image Text:Part 2 – CVP Analysis The condensed income statement of the Happy Valley Inn is as follows" Variable Costs $1,800,000 1,250,000 200,000 $3,250,000 Fixed Costs Department Income $3,300,000 200,000 150,000 S3,650,000 900,000 1,400,000 1,350,000 472,500 Department Revenue S6,000,000 2,500,000 500,000 $9,000,000 Room $900,000 1,050,000 150,000 $2,100,000 Food and Bev Other Total Other Variable Other Fixed Costs Pre-Tax Income Tax Net Income 877,500 1) What is the contribution ratio for the Happy Valley Inn? 2) What is the break-even level of Sales for the Happy Valley Inn? 3) What level of sales are needed to earn $1,000,000 in net income? 4) What level of Room Sales are needed to earn S1,000,000 in net income? 5) What would be the projected net income at $10,000,000 in Sales?
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