Radar Company sells bikes for $510 each. The company currently sells 4,200 bikes per year and could make as many as 4,580 bikes per year. The bikes cost $255 each to make: $180 in variable costs per bike and $75 of fixed costs per bike. Radar received an offer from a potential customer who wants to buy 380 bikes for $490 each. Incremental fixed costs to make this order are $46,000. No other costs will change if this order is accepted. Compute Radar's additional income (ignore taxes) if it accepts this order. Incremental Incremental Incremental Income from New Business Amount per Fixed Unit Costs Contribution margin Incremental income (loss) from new business The company should

Radar Company sells bikes for $510 each. The company currently sells 4,200 bikes per year and could make as many as 4,580 bikes per year. The bikes cost $255 each to make: $180 in variable costs per bike and $75 of fixed costs per bike. Radar received an offer from a potential customer who wants to buy 380 bikes for $490 each. Incremental fixed costs to make this order are $46,000. No other costs will change if this order is accepted. Compute Radar's additional income (ignore taxes) if it accepts this order. Incremental Incremental Incremental Income from New Business Amount per Fixed Unit Costs Contribution margin Incremental income (loss) from new business The company should

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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Your organization sells tables for $200 each. The fixed cost is $25,000 per annum with current demand at 700 tables per annum. Each table has a direct material cost of $65 and direct labour cost of $83. Required: A. I) what is profit based on the current demand? i) How many tables should be sold to get a profit of $5,000? A. The organization is considering two alternative proposals. i. Reducing selling price by 15% which is expected to increase demand by 10% ii. Increase selling price by 5% which is expected to reduce demand by 10% What will be the profits or loss under each alternative proposal?
Answer the following questions. 1. Douglas Computers makes 5,900 units of a circuit board, CB76 at a cost of $220 each. Variable cost per unit is $170 and fixed cost per unit is $50. Peach Electronics offers to supply 5,900 units of CB76 for $200. If Douglas buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the remaining $30 per unit. Should Douglas accept Peach's offer? Explain. 1. Douglas Computers makes 5,900 units of a circuit board, CB76 at a cost of $220 each. Variable cost per unit is $170 and fixed cost per unit is $50. Peach Electronics offers to supply 5,900 units of CB76 for $200. If Douglas buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the remaining $30 per unit. Should Douglas accept Peach's offer? Explain. Begin by calculating the relevant cost per unit. (If a box is not used in the table, leave the box empty; do not enter a zero.) Make Buy Relevant costs: Unit relevant cost Douglas…
Big Seats has the capacity to produce 100,000 sofas per year but only produces 80,000 sofas per year. The sale price is $1,000 each. Direct materials equals $100 per sofa, direct labor equals $200 per sofa, and allocated overhead equals $100,000 per year. Buy & Large offers to buy an additional 2,000 sofas but is only willing to pay $800 per sofa. What is the additional operating income (loss) of accepting the offer? ENTER NEGATIVE NUMBERS WITH A "_" SIGN. DO NOT USE PARENTHESES. EXAMPLE: -1000
Hawk Homes, Inc., makes one type of birdhouse that it sells for $29.40 each. Its variable cost is $13.20 per house, and its fixed costs total $14,013.00 per year. Hawk currently has the capacity to produce up to 2,700 birdhouses per year, so its relevant range is 0 to 2,700 houses. Required:1. Prepare a contribution margin income statement for Hawk assuming it sells 1,280 birdhouses this year. 2. Without any calculations, determine Hawk’s total contribution margin if the company breaks even. 3. Calculate Hawk’s contribution margin per unit and its contribution margin ratio. 4. Calculate Hawk’s break-even point in number of units and in sales revenue. 5. Suppose Hawk wants to earn $25,000 this year. Determine how many birdhouses it must sell to generate this amount of profit.
A company looking to produce a table. The design is made using the costs: $550 in steel, $121 in wood and $46 in other materials. The steel has inflation rate of 5% per year and the wood has fixed price and doesn't change with inflation. If a customer were to buy 20 tables per year at $5000 per table for the next 11 years, what is the NPV of this purchase if MARRC is 25% and inflation is 3.5%? If the customer defers the payment until the end of year 11, what is the value of this payment in actual dollars so the NPV remains the same?
Go Fly A Kite is considering making and selling custom kites in two sizes. The small kites would be priced at $10.50 and the large kites would be $23.50. The variable cost per unit is $5.05 and $11.10, respectively. Jill, the owner, feels that she can sell 2,600 of the small kites and 1,700 of the large kites each year. The fixed costs would be $2,100 a year and the depreciation expense is $900. The tax rate is 21 percent. What is the annual operating cash flow?
Hawk Homes, Ic., makes one type of birdhouse that it sells for $30.00 each. Its variable cost is $13.50 per house, and its fixed costs total $14,239.50 per year. Hawk currently has the capacity to produce up to 2,800 birdhouses per year, so its relevant range is 0 to 2,800 houses. Required: 1. Prepare a contribution margin income statement for Hawk assuming it sells 1,110 birdhouses this year. 2. Without any calculations, determine Hawk's total contribution margin if the company breaks even. 3. Calculate Hawk's contribution margin per unit and its contribution margin ratio. 4. Calculate Hawk's break-even point in number of units and in sales revenue. 5. Suppose Hawk wants to earn $21,000 this year. Determine how many birdhouses it must sell to generate this amount of profit. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Prepare a contribution margin income statement for Hawk assuming it sells 1,110 birdhouses…
Can you help with the CVP Drill #6?
Night Shades Inc. (NSI) manufactures biotech sunglasses. These sunglasses sell for $150 each, and cost $70 each to produce. Night Shades Inc. has fixed costs of $100,000. a. Calculate Night Shades' Breakeven point. b. how much profit (loss) will Night Shades have if it sells 500 sunglasses? 4,000 sunglasses? c. Night Shades' manager expects an operating profit of $200,000, How many sunglasses must be sold to attain this profit?
Orange is currently buying 50,000 motherboard from MotherBoard, Inc. at a price of P65 per board. Orange is considering making its own boards. The costs to make the board are as follows: Direct Materials P32 per unit, Direct labor P10 per unit, Variable Factory Overhead P16.00, Fixed Costs for the plant would increase by P75,000. Which option should be selected and why? a. Make - P350,000 increase in profits b. Make - P275,000 increase in profits c. Buy - P75,000 more in profits d. Buy - P275,000 more in profits
Kent Co. manufactures a product that sells for $50.00 and has variable costs of $24.00 per unit. Fixed costs are $260,000. Kent can buy a new production machine that will increase fixed costs by $11,400 per year, but will decrease variable costs by $3.50 per unit. Compute the contribution margin per unit if the machine is purchased.
Required: 1. Complete the following table. 2. Suppose Sandy Bank sells its canoes for $590 each. Calculate the contribution margin per canoe and the contribution margin ratio. 3. This year Sandy Bank expects to sell 760 canoes for $590 each. Prepare a contribution margin income statement for the company. 4. Calculate Sandy Bank's break-even point in units and in sales dollars. Sandy Bank sells its canoes for $590 each. 5. Suppose Sandy Bank wants to earn $76,000 profit this year. Calculate the number of canoes that must be sold to achieve this target. Sandy Bank sells its canoes for $590 each. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the following table. Note: Round your "Cost per Unit" answers to 2 decimal places. Number of Canoes Produced and Sold Total costs Variable Costs Fixed Costs Total Costs Cost per Unit Required 3 Required 4 Variable Cost per Unit Fixed Cost per Unit Total Cost per Unit $ $ $ 500 Required 5 780 0 0.00