Jm. 155. SalesCost of goods soldGross profitOperating expensesLoss from operations,(1,750,000)It is estimated that 25% of the cost of goods sold represents fixed factory overhead costs and that 15% of the operating expenses are fixed. Because Fruit Cola is onlyone of many products, the fixed costs will not be materially affected if the product is discontinued.$12,750,0008,500,000$4,250,0006,000,000a. Prepare a differential analysis dated January 5 to determine whether Fruit Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount iszero, enter "0". Use a minus sign to indicate a lossRevenuesCosts:Variable cost of goods soldVariable operating expensesFixed costsIncome (Loss)Differential AnalysisContinue Fruit Cola (Alt. 1) or Discontinue Fruit Cola (Alt. 2)January 5Continue Fruit Cola (Alternative 1) Discontinue Fruit Cola (Alternative 2) Differential Effect on Income (Alternative 2)12.110,000-12,750,0006315,000 V1,100,00011,475,000 X-1.750.000OV14,500,000 X3,005.000✔6.375.000

The differential analysis is performed to compare the different alternatives available with the…

Answered: Sales Cost of goods sold Gross profit…

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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Problem 1: Kooper sells several products. Information of average revenue and costs is as follows Selling price per unit Variable cost per unit Direct material Direct labor Selling costs Annual fixed costs 28.5$ 1.45$ Manufacturing overhead 0.85$ 2.50$ 135,000$ 6.0$ Suppose that the company decides to lower the selling price by 14.25% but continues to sell the same quantity, which is 16,000 units. The operating income will be reduced by how much?
Saved Assume a company makes only three products, A, B, and C. Product A-Product B 700 Product C Estimated customer demand in units 800 Selling price per unit Variable cost per unit Machine-hours per unit 54.80 $ 65 $445 S 35. $ 26 $ 20 1.25 2.5 3.0 The company has only 1,900 machine-hours ovailable. What is the highest total contribution morgin that the company con eorn if it makes optimal use of its constrained resource? Multiple Cholcel $38.200 $39.200 $36.200 $37200
PROBLEM SOLVING 1. ABC Mfg. Co. buy and sells its lone product on which the following data are given: Sales volume per annum Unit selling price Production cost per unit: Direct materials Direct labor Variable factory overhead Fixed factory overhead (P25,000/20,000 units) Variable operating expense per unit Fixed operating expenses (P10,000/20,000 units) P1.00 0.50 a. Should the order be accepted? Why? 25,000 units P10.00 P3.50 2.50 2.00 1.25 A special order is received for P2,000 units from a remote market at P7.90, FOB destination. Packing and shipping costs are estimated at P1,200. Decision making: (show computation) b. What is the BEP price or sales cut-off price for the special order?
Problem #2 Brother Company sells its products for $66 each. The current production level is 25,000 units. Only 20,000 units are expected to be sold. Units manufacturing costs are: Direct materials Direct manufacturing labor Variable manufacturing costs Total fixed manufacturing costs Marketing expenses $ 12.00 18.00 9.00 180,000.00 $6.00 per unit plus $60,000 per year Required: 1. Compute the ending finished goods inventory under both absorption and variable costing. 2. Compute the cost of goods sold under both absorption and variable costing. 3. Prepare the income statement for both absorption and variable costing.
Product: Complan Revenue per unit Total Variable Costs of Goods Sold Total Fixed Costs of Goods Sold B D ASSUMPTIONS Denver Santa Fe $30 $900,000 $30 $2,520,000 $1,650,000 $0 $150,000 $200,000 $320,000 $300,000 2 Total Variable Selling and Administration Expenses Total Fixed Selling and Administration Expenses Quarterly volume of units sold in the fourth quarter 20Y3 200,000 200,000 Projected Contribution Margin based Income Statement For Fourth quarter 20Y2 Sales Total Variable costs Contribution margin Denver $ Santa Fe $ An $6,000,000 $6,000,000 Co $1,050,000 $2,720,000 Co $4,950,000 $3,280,000 Co $1,970,000 $300,000 Cor $2,980,000 $2,980,000 Cor Total Fixed costs Net income 3 Calculate the followings: Variable Cost per unit Contribution Margin per unit Break Even units (use Roundup formula) Break Even sales (Break even units x Selling price per unit) Margin of Safety percentage Operating Leverage Denver Santa Fe $5.25 $24.75 79,596.00 $2,387,880 60.20% 1.66 Project Description Part…
Question No.2 Menlo Company manufactures and sells a single product. The company’s sales and expenses for last quarter are as follows: Unit Cost $30 $12 $18 Total Cost $450,000 $180,000 $270,000 $216,000 $054,000 Sales. Less variable expenses.. Contribution margin. Less fixed expenses. Net operating income. Required: What is the B.E.P in units sold and in sales dollars? What is the total contribution at B.E.P? How many units must sold each quarter to earn a target profit of $90,000? Use the contribution margin method. Verify your answer by preparing a contribution format income statement at the target sales level. Refer to original data, compute the margin of safety in both dollars and %age terms. What is the company CM ratio? If sales increase by $50,000 per quarter by how much would you expect quarterly net operating income to increase?
Question 1 Following is the contribution margin income statement of a single product company: Total Per unit Sales $1,200,000 $80 |Less variable expenses $840,000 $56 Contribution margin 360,000 $24 Less fixed expenses 300,000 Net operating income $60,000 Required: 1. Calculate break-even point in units and dollars. 2. What is the contribution margin at break-even point? 3. Compute the number of units to be sold to earn a profit of $36,000. 4. Compute the margin of safety using original data. 5. Compute CM ratio. 6. Compute the expected increase in monthly net operating if sales increase by $160,000 and fixed expenses do not change. Question 2 Part A Since 1993, Debbie Osborne has run a small market stall in Croydon, selling flowers to the public six days a week. Her main costs are an operating license fee paid to the local council, the weekly hire of a van, her wages and the costs of the flowers. Debbie estimates that her fixed costs amount to £400 for the week. On average the…
Morwenna, Inc. reports the following information for August: Sales Revenue Variable Cost of Goods Sold Fixed Cost of Goods Sold Variable Selling and Administrative Costs Fixed Selling and Administrative Costs $900,000 150,000 60,000 100,000 60,000 Calculate the operating income for August using absorption costing. OA. $1,060,000 O B. $370,000 OC. $530,000 D. $250,000
Fill in the missing amounts in each of the following eight case situations. Treat each case independently. (Hint: One way to find the missing amounts would be to prepare a contribution margin income statement for each case, enter the known data, and then compute the missing items.) a. Assume that only one product is being sold in each of the following four case situations: (Negative amounts should be indicated by a minus sign. Enter your contribution margin answers as per unit dollar values. Enter your answers rounded to the nearest whole number.) Fixed Expenses Net Income Contribution Margin Variable Case Units Sold Sales Expenses (Loss) 51,000 30,500 14,000 $ 168,000 $6 per unit 24 2 103,200 $18 per unit 40% 92,700 13,000 12 10,300 329,000 $36 per unit 89,000 (12,000) 4 b. Assume that more than one product is being sold in each of the following four case situations: (Negative amounts should be indicated by a minus sign.) Average Contribution Net Income (Loss) Variable Fixed Case…
Annual sales volume Unit selling price Variable expense per unit Contribution margin per unit Velcro 101,000 $1.65 $ 1.25 $0.40 Metal 202,000 $1.50 Total fixed expenses are $404,000 per period. Of the total fixed expenses, $20,000 could be avoided if the Velcro product is dropped, $80,000 if the Metal product is dropped, and $60,000 if the Nylon product is dropped. The remaining fixed expenses of $244,000 consist of common fixed expenses such as administrative salaries and rent on the factory building that could be avoided only by going out of business. $ 0.70 $0.80 The company's managers would like to compute the break-even point in dollar sales for the company as a whole, and the break-even point in unit sales for each product. They are considering two methods for computing each product's break-even point in unit sales: Required 1 Method number 1. Include each product's traceable fixed costs and an allocated share of the common fixed costs in the numerator of each break-even…
MERSİN ÜNIVERSIT.. $250,000 $136,364 O Perry Company's break-even point is 20,000 units. Its product sells for $25 and has a $10 variable cost per unit. What is the company's total fixed cost ?amount $180,000 O Fixed costs cannot be computed with the information provided. O $120,000 O $200,000 O $300,000 إرسال Google A -, Mersin Universitesi Ja-y t Coogle hp HEWLE TT-PAC KARD
Sudex produces two types of its products. Product 1 Product 2 Units produced and sold 4,150 10,200 Selling price per unit P15 P13 Variable costs per unit 9 The company's fixed costs totaled 72,000, of which 15,200 can be directly traced to Product 1 and 40,200 can be directly traced to Product 2. The effect on the firm's profits if Product 2 is dropped would be a: a.10,800 increase b.35,800 increase c.35,800 decrease d.10,800 decrease

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