(Quiz 2.2) Please help me answer the last question (multiple choice) if you can, all in bold! Thank you!! Units Produced Total Lumber Cost Total Utilities Cost Total Machine Depreciation Cost 7,000 shelves $70,000 $9,550 $135,000 14,000 shelves 140,000 17,600 135,000 28,000 shelves 280,000 33,700 135,000 35,000 shelves 350,000 41,750 135,000 2. For each cost, determine the fixed portion of the cost, and the per-unit variable cost. If there is no amount or an amount is zero, enter "0". Recall that, for N = Number of Units Produced, Total Costs = (Variable Cost Per Unit x N) + Fixed Cost. Complete the following table with your answers. Round variable portion of cost (per unit) answers to two decimal places. Cost Fixed Portion of Cost Variable Portion of Cost (per Unit) Lumber 0 10 Utilities 1500 1.15 Depreciation 135000 0 Question Content Area High-Low Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions (1) through (3) that follow. Units Produced Total Cost January 4,360 units $65,600 February 275 6,250 March 1,000 15,000 April 6,775 136,250 May 1,750 32,500 June 3,015 48,000 1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs = (Variable Cost Per Unit x Number of Units Produced) + Fixed Cost. Complete the following table. Total Fixed Cost Variable Cost per Unit 750 20 2. With your Total Fixed Cost and Variable Cost per Unit from the high-low method, compute the total cost for the following values of N (Number of Units Produced). Number of Units Produced Total Cost 3,500 70750 4,360 87950 6,775 136250 Contribution Margin Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 80,800 units during the year. Cover-to-Cover Company Biblio Files Company Contribution margin ratio (percent) 20 40 Unit contribution margin 1 2 Break-even sales (units) 20200 50500 Break-even sales (dollars) 101000 252500 Income Statement - Cover-to-Cover Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 Sales $404,000 Variable costs: Manufacturing expense $242,400 Selling expense 20,200 Administrative expense 60,600 (323,200) Contribution margin $80,800 Fixed costs: Manufacturing expense $5,000 Selling expense 4,000 Administrative expense 11,200 (20,200) Operating income $60,600 Income Statement - Biblio Files Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 Sales $404,000 Variable costs: Manufacturing expense $161,600 Selling expense 16,160 Administrative expense 64,640 (242,400) Contribution margin $161,600 Fixed costs: Manufacturing expense $83,000 Selling expense 8,000 Administrative expense 10,000 (101,000) Operating income $60,600 Sales Mix Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Type of Bookshelf Sales Price per Unit Variable Cost per Unit Basic $5.00 $1.75 Deluxe 9.00 8.10 The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called “Combined,” the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $330,330. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table. Type of Bookshelf Percent of Sales Mix Break-Even Sales in Units Break-Even Sales in Dollars Basic Deluxe Question Content Area Target Profit 1. If Cover-to-Cover Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be? $504,000 2. If Biblio Files Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be? $454,000 3. What would explain the difference between your answers for (1) and (2)? a. Biblio Files Company has a higher contribution margin ratio, and so more of each sales dollar is available to cover fixed costs and provide operating income. b. Cover-to-Cover Company’s contribution margin ratio is lower, meaning that it’s more efficient in its operations. c. The companies have goals that are not in the relevant range. d. The answers are not different; each company has the same required sales amount for the coming year to achieve the desired target profit.
(Quiz 2.2) Please help me answer the last question (multiple choice) if you can, all in bold! Thank you!!
Units Produced |
Total Lumber Cost |
Total Utilities Cost |
Total Machine Depreciation Cost |
| 7,000 shelves | $70,000 | $9,550 | $135,000 |
| 14,000 shelves | 140,000 | 17,600 | 135,000 |
| 28,000 shelves | 280,000 | 33,700 | 135,000 |
| 35,000 shelves | 350,000 | 41,750 | 135,000 |
2. For each cost, determine the fixed portion of the cost, and the per-unit variable cost. If there is no amount or an amount is zero, enter "0". Recall that, for N = Number of Units Produced, Total Costs = (Variable Cost Per Unit x N) + Fixed Cost. Complete the following table with your answers. Round variable portion of cost (per unit) answers to two decimal places.
Cost |
Fixed Portion of Cost |
Variable Portion of Cost (per Unit) |
| Lumber | 0 | 10 |
| Utilities | 1500 | 1.15 |
| Depreciation | 135000 | 0 |
Question Content Area
High-Low
Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its
| Units Produced | Total Cost | ||
| January | 4,360 | units | $65,600 |
| February | 275 | 6,250 | |
| March | 1,000 | 15,000 | |
| April | 6,775 | 136,250 | |
| May | 1,750 | 32,500 | |
| June | 3,015 | 48,000 |
1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs = (Variable Cost Per Unit x Number of Units Produced) + Fixed Cost. Complete the following table.
| Total Fixed Cost | Variable Cost per Unit |
| 750 | 20 |
2. With your Total Fixed Cost and Variable Cost per Unit from the high-low method, compute the total cost for the following values of N (Number of Units Produced).
| Number of Units Produced |
Total Cost |
| 3,500 | 70750 |
| 4,360 | 87950 |
| 6,775 | 136250 |
Contribution Margin
Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 80,800 units during the year.
| Cover-to-Cover Company |
Biblio Files Company |
|
| Contribution margin ratio (percent) | 20 | 40 |
| Unit contribution margin | 1 | 2 |
| Break-even sales (units) | 20200 | 50500 |
| Break-even sales (dollars) | 101000 | 252500 |
Income Statement - Cover-to-Cover
| Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 |
||
| Sales | $404,000 | |
| Variable costs: | ||
| Manufacturing expense | $242,400 | |
| Selling expense | 20,200 | |
| Administrative expense | 60,600 | (323,200) |
| Contribution margin | $80,800 | |
| Fixed costs: | ||
| Manufacturing expense | $5,000 | |
| Selling expense | 4,000 | |
| Administrative expense | 11,200 | (20,200) |
| Operating income | $60,600 |
Income Statement - Biblio Files
| Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 |
||
| Sales | $404,000 | |
| Variable costs: | ||
| Manufacturing expense | $161,600 | |
| Selling expense | 16,160 | |
| Administrative expense | 64,640 | (242,400) |
| Contribution margin | $161,600 | |
| Fixed costs: | ||
| Manufacturing expense | $83,000 | |
| Selling expense | 8,000 | |
| Administrative expense | 10,000 | (101,000) |
| Operating income | $60,600 |
Sales Mix
Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings.
| Type of Bookshelf |
Sales Price per Unit |
Variable Cost per Unit |
| Basic | $5.00 | $1.75 |
| Deluxe | 9.00 | 8.10 |
The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called “Combined,” the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $330,330. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table.
| Type of Bookshelf | Percent of Sales Mix | Break-Even Sales in Units | Break-Even Sales in Dollars |
| Basic | |||
| Deluxe |
Question Content Area
Target Profit
1. If Cover-to-Cover Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be?
$504,000
2. If Biblio Files Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be?
$454,000
3. What would explain the difference between your answers for (1) and (2)?
a. Biblio Files Company has a higher contribution margin ratio, and so more of each sales dollar is available to cover fixed costs and provide operating income.
b. Cover-to-Cover Company’s contribution margin ratio is lower, meaning that it’s more efficient in its operations.
c. The companies have goals that are not in the relevant range.
d. The answers are not different; each company has the same required sales amount for the coming year to achieve the desired target profit.
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Thank you for the help! I was wondering if you could also answer the other bold question not far above it about the sales mix and break-even sales?
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