Problem 2 (Eliminate or Retain a Product Line) Crystal Sports Equipment manufactures round, rectangular, and octagonal trampolines. Data on sales and expenses for the past month follow: Total P1,000,000 410,000 590,000 Round P140,000 60,000 80,000 Trampoline Rectangular Octagonal P500,000 200,000 300,000 Sales. Less variable expenses. Contribution margin. Less fixed expenses: Advertising – traceable Depreciation of special equipment Line supervisors' salaries... General factory overhead* Total fixed expenses Net operating income (loss). P360,000 150,000 210,000 216,000 95,000 19,000 200,000 530,000 P 60,000 41,000 20,000 6,000 28,000 95,000 P(15,000) 110,000 40,000 7,000 100,000 257,000 P 43,000 65,000 35,000 6,000 72,000 178,000 P 32,000 * A common fixed cost that is allocated on the basis of sales pesos.

Problem 2 (Eliminate or Retain a Product Line) Crystal Sports Equipment manufactures round, rectangular, and octagonal trampolines. Data on sales and expenses for the past month follow: Total P1,000,000 410,000 590,000 Round P140,000 60,000 80,000 Trampoline Rectangular Octagonal P500,000 200,000 300,000 Sales. Less variable expenses. Contribution margin. Less fixed expenses: Advertising – traceable Depreciation of special equipment Line supervisors' salaries... General factory overhead* Total fixed expenses Net operating income (loss). P360,000 150,000 210,000 216,000 95,000 19,000 200,000 530,000 P 60,000 41,000 20,000 6,000 28,000 95,000 P(15,000) 110,000 40,000 7,000 100,000 257,000 P 43,000 65,000 35,000 6,000 72,000 178,000 P 32,000 * A common fixed cost that is allocated on the basis of sales pesos.

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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Change in Contribution Margin Head Pops Inc. manufactures two models of solar-powered, noise-canceling headphones: Sun Sound and Ear Bling models. The company is operating at less than full capacity. Market research indicates that 29,400 additional Sun Sound and 32,300 additional Ear Bling headphones could be sold. The operating income by unit of product is as follows: Sales price Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed manufacturing costs Operating income Head Pops Inc. Analysis Line Item Description Unit volume increase x Contribution margin per unit Increase in profitability Sun Sound Ear Bling Headphones Headphones $29.80 $46.50 (16.70) (26.00) $13.10 $20.50 (6.00) $7.10 (2.70) $4.40 Prepare an analysis indicating the increase or decrease in total profitability if 29,400 additional Sun Sound and 32,300 additional Ear Bling headphones are produced and sold, assuming that there is sufficient capacity for…
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Compute the missing amounts. Operating Data Contribution margin Controllable fixed costs i Controllable margin Sales Variable costs eTextbook and Media Women's Shoes $280,800 104,000 176800 (1) 624,000 343200 (2) Men's Shoes 135200 41600 93,600 468,000 332,800 (3) Children's Shoes $187,200 88400 (5) 98,800 447200 260,000 (6) Attemnts: unlimited