OProblem Set: Module 41. EX.06.012. PR.06.02A ALGO3. BE.06.02.ALGO4. BE.06.03.ALGOcengagenow.com●Portmann Company, operating at full capacity, sold 1,000,000units at a price of $188 per unit during the current year. Itsincome statement is as follows:SalesCost of goods soldGross profitExpenses:Selling expensesAdministrative expensesTotal expensesCost of goods soldSelling expensesAdministrative expensesTotal variable costsTotal fixed costs$16,000,00010,600,000Operating incomeThe division of costs between variable and fixed is as follows:FixedUnit variable costUnit contribution margin+ 40Variable70%75%50%$188,000,000(101,000,000)$87,000,000(26,600,000)$60,400,000Management is considering a plant expansion program for thefollowing year that will permit an increase of $11,280,000 inyearly sales. The expansion will increase fixed costs by$5,000,000 but will not affect the relationship between salesand variable costs.Required:1. Determine the total variable costs and the total fixed costsfor the current year.units30%25%50%2. Determine (a) the unit variable cost and (b) the unitcontribution margin for the current year.3. Compute the break-even sales (units) for the current year.units4. Compute the break-even sales (units) under the proposedprogram for the following year.units5. Determine the amount of sales (units) that would benecessary under the proposed program to realize the$60,400,000 of operating income that was earned in thecurrent year.6. Determine the maximum operating income possible withthe expanded plant.7. If the proposal is accepted and sales remain at the currentlevel, what will the operating income or loss be for thefollowing year?СО

“Since you have posted a question with multiple sub parts, we will provide the solution only to the…

Answered: Portmann Company, operating at full…

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

Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units x $45 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income Additional Information $ 3,600,000 2,000,000 1,600,000 490,000 $ 1,110,000 a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $1.75 per unit in variable selling and administrative expenses. b. The company's product cost of $25 per unit consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($700,000 / 100,000 units) Required: $ 5 per unit $ 10 per unit $ 3 per unit $ 7 per unit Prepare an income statement for the company under variable costing. TREZ Company
A condensed income statement by product line for Master Energy Co. indicated the following for the Master Energy product line for the past year: Revenues and Costs Dollar Amount Sales $12,300,000 Cost of goods sold 8,250,000 Gross profit 4,250,000 Operating expenses 6,010,000 Loss from operations (1,960,000) It is estimated that 25% of the cost of goods sold represents fixed factory overhead costs and that 15% of the operating expenses are fixed. Because Master Energy is only one of many products, the fixed costs will not be materially affected if the product is discontinued. Prepare a differential analysis dated March 31st to determine whether Master Energy should be continued (Alternative 1) or discontinued (Alternative 2). Should Master Energy be retained? Explain.
Sierra Company incurs the following costs to produce and sell its only product. Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses 10 9. %24 24 $87,750 $ 315,000 During this year, 29,250 units were produced and 25,250 units were sold. The Finished Goods inventory account at the end of this year shows a balance of $84,000 for the 4,000 unsold units. Required: 1-a. Calculate this year's ending balance in Finished Goods inventory two ways-using variable costing and using absorption costing. 1-b. Does it appear that the company is using variable costing or absorption costing to assign costs to the 4,000 units in its Finished Goods inventory? 2. Assume that the company wishes to prepare this year's financial statements for its stockholders. a. Is Finished Goods inventory of $84,000 the correct amount to include on the…
The Southern Corporation manufactures a single product and has the following cost structure: Variable costs per unit: Production $ 33 Selling and administrative $ 16 Fixed costs per year: Production $ 130,830 Selling and administrative $ 107,280 Last year, 6,230 units were produced and 6,030 units were sold. There was no beginning inventory. The carrying value on the balance sheet of the ending inventory of finished goods under variable costing would be:
Bluegill Company sells 7,500 units at $160 per unit. Fixed costs are $60,000 and income from operations is $300,000. Determine the following: Round the contribution margin ratio to two decimal places. a. Variable cost per uhit b. Unit contribution margin per unit c. Contribution margin ratio %24
Drake Company produces a single product. Last year's income statement is as follows: Sales (25,000 units) $1,532,500 Less: Variable costs 1,027,500 Contribution margin $505,000 Less: Fixed costs 273,600 Operating income $231,400 Required: 1. Compute the break-even point in units and sales revenue. In your computations, round the contribution margin per unit to the nearest cent and round the contribution margin ratio to four decimal places. Round your final answers to the nearest whole unit or dollar. Break-even units units Break-even dollars $ 2. What was the margin of safety in dollars for Drake Company last year? Round your final answer to the nearest whole dollar. 3. Suppose that Drake Company is considering an investment in new technology that will increase fixed costs by $216,600 per year, but will lower variable costs to 50 percent of sales. Units sold will remain unchanged. Prepare a budgeted income statement assuming Drake makes this…
Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. BUCKLEY COMPANY Income Statements for Year 2 Segment A B C Sales $ 330,000 $ 480,000 $ 500,000 Cost of goods sold (242,000 ) (184,000 ) (190,000 ) Sales commissions (30,000 ) (44,000 ) (44,000 ) Contribution margin 58,000 252,000 266,000 General fixed operating expenses (allocation of president’s salary) (92,000 ) (92,000 ) (92,000 ) Advertising expense (specific to individual divisions) (6,000 ) (20,000 ) 0 Net income (loss) $ (40,000 ) $ 140,000 $ 174,000 Required Prepare a schedule of relevant sales and costs for Segment A. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Options for required A table are: Advertising…
ed Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Sales ($60 per unit) Year 1 $ Year 2 $ 1,920,000 3,960,000 Cost of goods sold ($45 per unit) 1,440,000 2,970,000 Gross profit 480,000 990,000 Selling and administrative expenses ok Income t 338,000 474,000 $ 142,000 $ 516,000 Additional Information a. Sales and production data for these first two years follow. Year 1 Year 2 nces Units Units produced 49,000 49,000 Units sold 32,000 66,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $45 per unit product cost using absorption costing consists of the following. Direct materials Direct labor $ 12 19 Variable overhead Fixed overhead ($539,000/49,000 units) 3 11 Total product cost per unit $ 45 c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and…
Magpie Corporation uses the total cost method of product pricing. Below is cost information for the production and sale of 64,400 units of its sole product. Magpie desires a profit equal to a 19% return on invested assets of $619,000. Fixed factory overhead cost $36,000 Fixed selling and administrative costs 7,500 Variable direct materials cost per unit 4.72 Variable direct labor cost per unit 1.88 Variable factory overhead cost per unit 1.13 Variable selling and administrative cost per unit 4.50 The cost per unit for the production and sale of Magpie's product is
Darby Company, operating at full capacity, sold 129,600 units at a price of $123 per unit during the current year. Its income statement is as follows: Sales $15,940,800 Cost of goods sold 5,658,000 Gross profit $10,282,800 Expenses: Selling expenses $2,829,000 Administrative expenses 1,681,000 Total expenses 4,510,000 Income from operations $5,772,800 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $1,476,000 in yearly sales. The expansion will increase fixed costs by $196,800, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs $fill in the blank 1…
Darby Company, operating at full capacity, sold 124,200 units at a price of $84 per unit during the current year. Its income statement is as follows: Sales $10,432,800 Cost of goods sold 3,696,000 Gross profit $6,736,800 Expenses: Selling expenses $1,848,000 Administrative expenses 1,120,000 Total expenses 2,968,000 Income from operations $3,768,800 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $924,000 in yearly sales. The expansion will increase fixed costs by $123,200, but will not affect the relationship between sales and variable costs. 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs $fill in the blank 1 Total fixed…
Jenna Corporation sells a single product. Management has provided the following data for two levels of monthly sales volume. The company sells the product for $172.50 per unit. Sales Volume in Units 4,000 5,000 Cost of Sales (COS) $307,600 $384,500 Selling, General & Administrative Costs (SG&A) $321,200 $337,000 Selling Price Per Unit $173 Total costs for these cost categories and may include both Fixed and Variable costs. HINT: See high-low analysis. 1. Calculate the total contribution margin when 4,300 units are sold. 2. What is the breakeven point in Sales dollars if Advertising (a fixed SG&A cost) is increased by $40,000? Please show calculations.

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