The Armour Company had the following revenue and costs in the most recently completed fiscal year:Total revenueTotal fixed costsTotal variable costsTotal units produced and sold.b. How many units must be produced and sold for the company to have a net income of $1,000,000 for the year?Number of units$10,000,000$ 2,000,000$ 6,000,0001,000,000units

Cost volume profit analysis is the technique used by management for decision making. The methods…

Answered: The Armour Company had the following…

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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Ellie Manufacturing Company produces three products: A, B, and C. The income statement for the most recent year is as follows: $200,000 Sales Less: Variable cost Contribution margin Less fixed cost: Manufacturing Selling and administrative Sales 34,000 Operating income $39,000 The sales, contribution margin ratios, and direct fixed expenses for the three types of products are as follows: Sales Less: Variable expenses Contribution margin Less: Direct fixed expenses Product margin Less: Common expenses $ $20,000 14,000 $ $ A $60,000 Contribution margin ratio Direct fixed expenses of products Required: Prepare income statements segmented by products. Include a column for the entire firm in the statement. Ellie Manufacturing Company Segmented Income Statement For the Most Recent Year A B 127,000 $73,000 $40,000 30% $8,000 $5,000 35% C B $ C Total $100,000 40% $4,000
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Aaron's chairs is in the process of preparing a production costbudget for August. Actual costs in July for 120 chairs were:Materials cost $4,730Labor cost 2,940Rent 1,500Depreciation 2,500Other fixed costs 3,200Materials and labor are the only variable costs. If productionand sales are budgeted to change to 120 chairs in August,how much is the expected total variable cost on the Augustbudget?
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sales per unit $15 $100 variable expenses per unit $9 $20 units sold annualy 20,000 5,000 Hawaiian Tahitian Joy Fantasy 15 Selling price per unit Variable expense per unit Number of units sold annually $ 100 20 5,000 20,000 Fixed expenses total $475,800 per year. Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole
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Whirly Corporation's contribution format income statement for the most recent month is shown below: Per Unit $ 33.00 18.00 $ 15.00 Sales (8,800 units) Variable expenses Contribution margin Fixed expenses Net operating income Required: (Consider each case independently): Total $ 290,400 158,400 132,000 54,100 $ 77,900 1. What would be the revised net operating income per month if the sales volume increases by 40 units? 2. What would be the revised net operating income per month if the sales volume decreases by 40 units? 3. What would be the revised net operating income per month if the sales volume is 7,800 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income
Assume the following information for a company that produced 10,000 units and sold 9,000 units during its first year of operations: Per Unit Per Year Selling price $ 200 Direct materials $ 69 Direct labor $ 50 Variable manufacturing overhead $ 12 Sales commission $ 8 Fixed manufacturing overhead $ 300,000 Using variable costing, what is the company's contribution margin? Multiple Choice • $549,000 • $423,000 • $351,000 • $621,000
Help Save & Exit Submit Below is the contribution format income statement for a company based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin $ 55,000 33,000 22,000 14,960 $ 7,040 Fixed expenses Net operating income If the variable cost per unit increases by $1, spending on advertising increases by $1,450, and unit sales increase by 190 units, what would be the new net operating income? (All answers are whole numbers 1000 for one thousand. Negative numbers should be added with a minus sign, e.g., -1000 for a decrease or loss of one thousand.) unless specified otherwise. You should NOT include the $ sign or a comma. E.g., you should type Net operating income after the changes %24
The contribution format income statement for Huerra Company for last year is given below. Total $1,006,000 603,600 Unit $ 50.30 30.18 402,400 20.12 322,400 16.12 Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 40% Net income 80,000 32,000 $ 48,000 4.00 1.60 $2.40 The company had average operating assets of $502,000 during the year. Required: 1. Compute the company's margin, turnover, and return on investment (ROI) for the period. For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (1) above. 2. Using Lean Production, the company is able to reduce the average level of inventory by $93,000. 3. The company achieves a cost savings of $7,000 per year by using less costly materials. 4. The company…
Knox Corporation manufactures an item. The cost structure is: Manufacturing $100 $800,000 Variable cost per unit Total fixed cost Selling & Administrative $30 $203,000 In its first year of operations, Knox Corporation produced 70,000 items and sold 64,000 at $200 each. Part 1: What is the contribution margin at the end of the first year of operations under the variable costing method? Part 2: Which costing method (variable or absorption) will generate a higher net operating income in Knox Corporation's first year of operations and by how much? Hint: See page 6-21 Illustration 6A- for Variable Costing model and page 6-20 Illustration 6A guidance on Absorption Costing model.
Whirly Corporation's contribution format income statement for the most recent month is shown below: Per Unit $ 33.00 19.00 $ 14.00 Sales (8,500 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 280,500 161,500 119,000 54,700 $ 64,300 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 70 units? 2. What would be the revised net operating income per month if the sales volume decreases by 70 units? 3. What would be the revised net operating income per month if the sales volume is 7,500 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

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