TastyKreme and Krispy Kake are both producers of baked goods, but each has followed a different production strategy. Thedifferences in their strategies resulted in differences in their cost structure, as shown in the following table:Estimated sales in unitsUnit priceVariable cost per unitTotal fixed costsTastyKreme Krispy Kake20,0006.003.00$ 30,000Required:1. Compute the operating income and degree of operating leverage (DOL) for each company. (Round "Degree of operating leverage"to 1 decimal place.)1. Operating income15,0008.003.00$ 45,0002. Assuming sales volume for each company will decline by 10% and that their cost structures will not change, compute the percentageand dollar amount of the change in operating income for each company. (Negative values should be indicated by a minus sign.)Degree of operating leverage2. Percentage change in operating incomeDollar change in operating incomeTastyKreme%Krispy Kake%

Lets understand the basics.Degree of operating leverage indicates percentage change in operating…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Required: i) Calculate the unit cost for the chocolate cake and butter cake using the variable costing method and absorption costing method. ii) Solve operating income using variable costing. ii) Solve operating income using absorption costing.
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The following data are for Elm Leaf Apparel: East Sales volume (units): Product XX Product YY Sales price: Product XX Product YY Variable cost per unit: Product XX Product YY 6,300 3,300 $12 $15 $7 $9 West 5,300 7,100 $13 $14 $7 $9 a. Determine the contribution margin for Product YY. $fill in the blank 1 b. Determine the contribution margin for the West Region. $fill in the blank 2
RelyaTech Corporation manufactures a number of products at its highly automated factory. The products are very popular, with demand far exceeding the factory's capacity. To maximize profit, management should rank products based on their selling price gross margin contribution margin per unit of the constrained resource contribution margin
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Baxtell Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $ 27 7 4 9 370,800 183,200 During the year, the company produced 30,900 units and sold 22,900 units. The selling price of the company's product is $73 per unit. Required: 1. Assume that the company uses absorption costing. a. Compute the unit product cost. Unit product cost b. Prepare an income statement for the year. (Do not leave any empty spaces; Input a O wherever it is required.) Absorption Costing Income Statement Cost of goods sold:
Subject :- Accounting
1. The following is a data transaction from PT Colorpop's records as the basis for making a Statement of Comprehensive Income for the period ended 31 December 2020: Rent Revenue $ 44,000 Interest Expense $ 20,000 Unrealized gain on non-trading equity securities, net of tax $ 35,000 Selling expenses $ 140,000 Income tax $ 30,600 Administrative expenses $ 185,000 Cost of goods sold $ 500,000 Net sales $ 954,000 Loss on sale of plant assets $ 10,000 Loss from Fixed Assets Revaluation, net of tax $2,000 Instructions: Create a Statement of Comprehensive Income using a two-statement approach! Calculate the value of Ending Per Share for 2020 if the number of shares outstanding is 100,000 shares.
Nutterco, Inc., produces two types of nut butter: peanut butter and cashew butter. Of the two,peanut butter is the more popular. Cashew butter is a specialty line using smaller jars and fewerjars per case. Data concerning the two products follow: Annual overhead costs are listed below. These costs are classified as fixed or variable with respect to the appropriate activity driver. Required:1. Prepare a traditional segmented income statement, using a unit-level overhead rate based ondirect labor hours. Using this approach, determine whether the cashew butter product lineshould be kept or dropped.2. Prepare an activity-based segmented income statement. Repeat the keep-or-drop analysisusing an ABC approach.
Michie Company's management accountant prepared the following income statement relating to its second year of operations using the absorption costing format: Michie Company Income Statement (Absorption Costing) Year Ended December 31, Year 2 Sales Cost of goods sold: Beginning inventory Variable and fixed manufacturing costs Cost of goods available for sale Less ending inventory Total cost of goods sold Gross margin Less operating costs: Variable selling and administrative costs Fixed selling and administrative costs Net income (50,000 x $ 20.00) (10,000 $ 10.00*) (45,000 x $ 10.00*) (55,000 $10.00) (5,000 * $ 10.00) $ 1,000,000 $ 100,000 450,000 550,000 50,000 (500,000) $ 500,000 (50,000 x $ 2.00) $ 100,000 150,000 Variable manufacturing costs of $8.00 plus fixed manufacturing costs of $2.00. (250,000) $ 250,000
Degree of Operating Leverage (DOL) TastyKreme and Krispy Kake are are both producers ofbaked goods, but each has followed a different production strategy. The differences in their strategiesresulted in differences in their cost structure, as shown in the following table:TastyKreme Krispy KakeEstimated sales in units 20,000 15,000Unit price 6.00 8.00Variable cost per unit 3.00 3.00Total fixed costs $30,000 $45,000[LO 9-5][LO 9-5][LO 9-5]Final PDF to printerblo17029_ch09_314-354.indd 344 02/19/18 09:08 AM344 Part Two Planning and Decision MakingRequired1. Compute the operating income and degree of operating leverage for each company.2. Assuming sales volume for each company will decline by 10% and that their cost structures will notchange, compute the percentage and dollar amount of the change in operating income for each company.

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