The cost structure of two firms competing in the same industry is represented by the following cost formulas: Company X =$2,096,000+ $47/unit; Company Z = $1,016,000+ $92/unit. The selling price is $140 per unit for both companies.Required:1. Calculate the indifference point between the two cost structures, that is, the amount of unit sales that produce the same operatingincome for Company X and Company Z.2. If sales volume were expected to increase by 25% over the next two years, which cost structure would you prefer?1. Indifference point volume2. Preferred cost structureunits

To compute the indifference point of Company X and Company Z, we equate their cost formula:Company X…

Answered: Required: 1. Calculate the indifference…

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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Which of the following would produce no change in the contribution margin per unit? Select one: a. A 14% increase in variable cost. b.A 7% increase in selling price. CA 15% decrease in selling price. d. None of the given of answers. A 23% increase in the number of units sold.
I ONLY NEED #4, 5, & 6 Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: Estimated Fixed Cost Estimated Variable Cost (per unit sold) Production costs: Direct materials — $26 Direct labor — 17 Factory overhead $265,400 13 Selling expenses: Sales salaries and commissions 55,200 6 Advertising 18,700 — Travel 4,100 —…
Strategic Cost Management Give what is required of the problem. What is the correct answer to numbers 1, 2, 3 and 4?
Now suppose that annual unit sales, variable cost, and unit price are equal to their respective expected values—that is, there is no uncertainty. Determine the company's annual profit for this scenario. Round answer to a whole number, if needed.$
Please solve accurately. Thank you
1. Assume a company sells three different products. The contribution margin ratio of the first product is 20 percent. The contribution margin ratio of the second product is 50 percent. The contribution margin ratio of the third product is 80 percent. What is the range of the company's overall contribution margin ratio?
Required: Consider each part independently 1A. Determine the division’s expected ROI using Dupont formula. What is the division’s expected Residual Income? 1B. How many units must Smart sell to earn P100,000 Residual Income? 1C. The manager has the opportunity to sell additional 15,000 units at P29.50. Variable cost per unit would be the same but fixed cost would be increased by P50,000. An additional investment of P150,000 would be required. If the manager of Smart Division accepts the special order, by how much and in what direction will residual income change? increasing or decreasing direction? Answer 1a to 1c with solution pls
2. What is the expected contribution margin ratio? Round to the nearest whole percent. 3. Determine the break-even sales in units and dollars. 4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales? 5. What is the expected margin of safety in dollars and as a percentage of sales? (Round to the nearest whole percent.) 6. Determine the operating leverage. Round to one decimal place.
The following are data from a production, calculate; a. The Break-even point in terms of sales value and in units. b. The production demand is at 20,000 units. What is the current production profit? c. If the management decides to lower down its selling price by 50% given the same demand, will this be a sound decision? Justify. Monthly Fixed Factory Overhead Cost = P600,000 Monthly Fixed Selling Overhead Cost = P120,000 Variable Manufacturing Cost per Unit = P220 Variable Selling Cost per Unit = P30 Variable Distribution Cost per Units = P50 Selling Price per unit = P400
You are an industry analyst that specializes in an industry where the market inverse demand is P = 100 - 2Q. The external marginal cost of producing the product is MCExternal = 8Q, and the internal cost is MCInternal = 18Q.Instructions: Enter your responses rounded to the nearest two decimal places.a. What is the socially efficient level of output? unitsb. Given these costs and market demand, how much output would a competitive industry produce? unitsc. Given these costs and market demand, how much output would a monopolist produce? unitsd. Which of the following are actions the government could take to induce firms in this industry to produce the socially efficient level of output.Instructions: For correct answers place a check mark. check all that apply Nonrival consumptionunanswered Pollution taxesunanswered Pollution permitsunanswered

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Required: 1. Calculate the indifference point between the two cost structures, that is, the amount of unit sales that produce the same operating income for Company X and Company Z. 2. If sales volume were expected to increase by 25% over the next two years, which cost structure would you prefer?