KESlate was a professional classical guitar player until a motorcycle accident at left him disabled After long months of therapy, he hired an experienced luthier and started a small shopto make and sell Spanish guitars. The guitars sell for $700 each, and the fixed monthly operating costs are as follows:Rent and utilitiesWages and benefits to luthierOther expenses$810$2,500$480Slate's accountant told him about contribution margin ration, and Slate understood clearly that for every dollar of sales. $0 50 went to cover his fixed costs, and anything above thatpoint was profitSlate is planning to increase the sales price to $820 What impact will the increase in sales price have on the breakeven point in units? (Round your answer up to the nearestwhole guitar)OA. It will stay the sameOB. It will go up from 8 to 11 unitsOC. It will go down from 11 to 8 unitsOD. It will go down from 10 to 8 unitsacros

To calculate the impact of the increase in sales price on the breakeven point in units, we first…

Answered: Slate was a professional classical…

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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Dr. MaGoo performs laser surgery to correct eye vision. He charges $800 for eye surgery (for a pair of eyes): Variable cost per eye surgery (per pair of eyes) are: Medical Supplies $35.00 Nurses time 65.00 Utilities for the machine 10.50 Variable marketing and administrative costs 24.50 The income tax rate is 30% Fixed overhead cost is $100,000 per year. Fixed selling and administrative costs are $25,000 per year. Dr. MaGoo performed 400 corrective eye surgeries last year. a. What is the contribution margin per eye surgery? b. Suppose that Dr. MaGoo wants to make a profit (after tax) of $100,000, how many eye surgeries must be sold? (Round to nearest dollar for tax calculation) c. Suppose that Dr. MaGoo has another option available, which uses a scalpel (cut and sew option) rather than the laser (laser option). This option reduces the fixed costs by $49,950 per year and increases variable cost by $150 per surgery. Assume 333 is the number…
Claire needs to borrow $7000 to pay for NHL season tickets for her family. She borrows from a credit union with 48 monthly payments of $187.91 each. Suppose the credit union uses the rule of 78 and imposes an early payoff penalty of 1% of the original finance charge per month of early payment. For example, if Claire pays the loan off 9 months early, then the penalty will be 9% of the original finance charge. Find the least value of k that would result in any savings for Claire. The least value of k that would result in any savings for Claire is.
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Jarvie loves to bike. In fact, he has always turned down better-paying jobs to work in bicycle shops where he gets an employee discount. At Jarvie’s current shop, Bad Dog Cycles, each employee is allowed to purchase four bicycles a year at a discount. Bad Dog has an average gross profit percentage on bicycles of 25 percent. During the current year, Jarvie bought the following bikes: Description Retail Price Cost Employee Price Specialized road bike $ 3,900 $ 2,500 $ 2,730 Rocky Mountain mountain bike 4,500 3,900 3,600 Trek road bike 3,400 2,100 2,380 Yeti mountain bike 5,900 5,240 4,720 What amount is Jarvie required to include in taxable income from these purchases?
Jarvie loves to bike. In fact, he has always turned down better-paying jobs to work in bicycle shops where he gets an employee discount. At Jarvie’s current shop, Bad Dog Cycles, each employee is allowed to purchase four bicycles a year at a discount. Bad Dog has an average gross profit percentage on bicycles of 25 percent. During the current year, Jarvie bought the following bikes: Description Retail Price Cost Employee Price Specialized road bike $ 7,400 $ 5,100 $ 5,920 Rocky Mountain mountain bike 4,200 3,500 3,360 Trek road bike 4,700 4,200 3,290 Yeti mountain bike 4,200 3,120 3,360 What amount is Jarvie required to include in taxable income from these purchases?
Joe Smith has owned and operated Smith's Tool and Die for 40 years. Currently, he is only making one part, RL-5 which is a small electrical relay. He has a 2-year contract to provide 30,000 parts per month to Ford Motor. Unfortunately, Joe got quite sick and his son, Mike, has had to come in and run the business. Mike is disappointed when he finds the following monthly information about the RL-5 part Per unit 30,000 units Sales Price: $ 22.00 660,000 Variable manufacturing costs $ 14.00 420,000 Variable selling costs $ 2.00 60,000 Fixed manufacturing overhead 150,000 Fixed administrative/selling costs 60,000 Operating income (30,000) Smith’s Tool and Die has the capacity to produce 100,000 units of the RL-5 part per month. Mike comes to you to see what can be done about the current losses Smith’s Tool and Die is…
simon's cost for a new computer with accessories was $3120. he made a down payment of $550 in finance the balance on a 24 month fixed payment installment loan. The monthly payments are $111.73. Instead of making his 18th payment, Simon decides to pay the total remaining balance and terminate the loan. How much is interest will Simon save? Simon will save $___ in interest. round to nearest cent
Three years ago, Dorothy Taylor started a business that creates and delivers holiday and birthday gift baskets to students at the local university. Dorothy sells the baskets for $33 each, and her variable costs are $23 per basket. She incurs $11,600 in fixed costs each year. (a) How many baskets will Dorothy have to sell this year if she wants to earn $28,000 in operating income? (Round answer to O decimal places, eg. 5,275) baskets
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Russell Preston delivers parts for several local auto parts stores. He charges clients $0.75 per mile driven. Russell has determined that if he drives 3,480 miles in a month, his average operating cost is $0.55 per mile. If he drives 4,640 miles in a month, his average operating cost is $0.50 per mile. Russell has used the high-low method to determine that his monthly cost equation is total cost = $696 + $0.35 per mile. Required: 1. Determine how many miles Russell needs to drive to break even. 2. Assume Russell drove 2,040 miles last month. Without making any additional calculations, determine whether he earned a profit or a loss last month. 3. Determine how many miles Russell must drive to earn $1,000 in profit. 4. a. Prepare a contribution margin income statement assuming Russell drove 2,040 miles last month. b. Use the information provided in Req 4a to calculate Russell's degree of operating leverage. Complete this question by entering your answers in the tabs below. Req 1 Req 2…
Floyd owns an antique shop. During the year, he and his wife, Amanda, who works as a real estate broker, attend a 3-day antique show in Boston. The following facts are related to the trip: Train per person $ 110 Hotel daily rate—double occupancy * 115 Meals—$37 per day per person 37 Incidentals—$14 per day per person 14 *The hotel rate for double occupancy is $20 more than the single occupancy rate. What amount can Floyd and Amanda deduct as travel expense, rounded to the nearest dollar?

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