SalesCost of goods soldGross profitExpenses:$186,000,000(102,000,000)$84,000,000Selling expenses$16,000,000Administrative expenses5,200,000Total expenses(21,200,000)Operating income$62,800,000The division of costs between variable and fixed is as follows:Cost of goods soldSelling expensesAdministrativeexpensesVariableFixed70%30%75%25%50%50%Management is considering a plant expansion program for the following year that will permit anincrease of $11,160,000 in yearly sales. The expansion will increase fixed costs by $3,000,000 butwill 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 costsTotal fixed costs86,000,000 ✓37,700,000 X2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.Unit variable costUnit contribution margin86 V✓1003. Compute the break-even sales (units) for the current year.377,000 X units4. Compute the break-even sales (units) under the proposed program for the following year.417,000 X units5. Determine the amount of sales (units) that would be necessary under the proposed programto realize the $62,800,000 of operating income that was earned in the current year.1,040,000 x units6. Determine the maximum operating income possible with the expanded plant.

CVP analysis, which stands for Cost-Volume-Profit analysis, is a managerial accounting technique…

Answered: Sales Cost of goods sold $186,000,000…

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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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: EstimatedFixedCost EstimatedVariableCost(perunitsold) Production costs: Direct materials $13 Direct labor 9 Factory overhead $210,100 6 Selling expenses: Sales salaries and commissions 43,700 3 Advertising 14,800 Travel 3,300 Miscellaneous selling expense 3,600 3 Administrative expenses: Office and officers' salaries 42,700 Supplies 5,300 1…
Please help me
In the cost-volume- profit graph (above), what is represented by the point marked "A"? Question 1 options: Breakeven point Fixed expenses Operating income area Operating loss area
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: EstimatedFixed Cost Estimated Variable Cost(per unit sold) Production costs: Direct materials $13 Direct labor 9 Factory overhead $212,900 6 Selling expenses: Sales salaries and commissions 44,200 3 Advertising 15,000 Travel 3,300 Miscellaneous selling expense 3,700 3 Administrative expenses: Office and officers' salaries 43,200 Supplies 5,300 1…
4) Assume sales and demand are 1,000 units, how much will the company make on the sale of the next two units if demand expands to 1,002 units. Discuss which amounts on the income statement will change if the company makes and sells two more units. Please discuss your calculations and reference to Figure 1.

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