Give true answer this accounting question Tyrene Products manufactures recreational equipment. One of the company'sproducts, a skateboard, sells for $32. The skateboards are manufactured in anantiquated plant that relies heavily on direct labor workers. Thus, variable costs arehigh, totaling $22.40 per skateboard of which 70% is direct labor cost. Over the pastyear the company sold 45,000 skateboards, with the following operating results:Financial data for Tyrene Products Values in $Sales (45,000 skateboards)Variable expensesContribution marginFixes expensesNet operating income1,440,0001,008,000432,000288,000144,000Management is anxious to maintain and perhaps even improve its present level ofincome from the skateboards.Due to an increase in labor rates, the company estimates that variable costs willincrease by $1.60 per skateboard next year. The selling price per skateboard remainsconstant at $32.00. If the expected change in variable costs takes place, how manyskateboards will have to be sold next year to earn the same net operating income,$144,000, as last year?Number of skateboards:

Step 1: Define Operating leverageOperating leverage is a leverage which represents how well the…

Answered: Tyrene Products manufactures…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 4EB: Roper Furniture manufactures office furniture and tracks cost data across their process. The...

See similar textbooks

Similar questions

Northwood Company manufactures basketballs. The company has a ball that sells for $36. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $21.60 per ball, of which 60% is direct labor cost. Last year, the company sold 59,000 of these balls, with the following results: Sales (59,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $2,124,000 1,274,400 CM Ratio Unit sales to break even 849,600 705,600 $ 144,000 Required: 1-a. Compute last year's CM ratio and the break-even point in balls. (Do not round intermediate calculations.) % balls 4 1-b. Compute the the degree of operating leverage at last year's sales level. (Round your answer to 2 decimal places.) Degree of operating leverage
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 46,000 of these balls, with the following results: Sales (46,000 balls) $ 1,150,000 Variable expenses 690,000 Contribution margin 460,000 Fixed expenses 318,000 Net operating income $ 142,000 Required: 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? CM Ratio 28.00 % Unit sales to break even 45,429 balls 4. Refer again to the data in (2) above. The president feels that the company must…
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball Is manufactured In a small plant that relles heavly on direct labor workers. Thus, varlable expenses are high, totallng $15.00 per ball, of which 60% Is direct labor cost. Last year, the company sold 58,000 of these balls, with the following results: $ 1,450,000 Sales (58,800 balls) variable expenses Contribution margin Fixed expenses 870,000 580,000 374,000 Net operating income 206,000 Required: 1. Compute (a) last year's CM ratio and the break-even polnt in balls, and (b) the degree of operating leverage at last year's sales level. 2. Due to an Increase in labor rates, the company estimates that next year's varlable expenses will Increase by $3.00 per ball. If this change takes place and the selling price per ball remalns constant at $25.00, what will be next year's CM ratio and the break-even polnt in balls? 3. Refer to the data in (2) above. If the expected change in varlable…
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 34,000 of these balls, with the following results: Sales (34,000 balls) $ 850,000 Variable expenses 510,000 Contribution margin 340,000 Fixed expenses 212,000 Net operating income $ 128,000 Required: 1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year’s sales level. 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? 3. Refer to the data in (2)…
Please do part 4, 5, and 6.
As the newly appointed Controller of Lynbrook, Inc. you have been asked to evaluate several scenarios that management is considering to improve the overall profitability of the company. Lynbrook manufactures and sells a product called a Wren, its only product. The company normally produces and sells 60,000 Wrens each year at a selling price of $32 per unit. The company's unit costs at this level of activity are included below: Direct materials $10.00 Direct labor 4.50 Variable manufacturing 2.30 overhead Fixed manufacturing overhead 5.00 ($300,000 total) Variable selling expenses 1.20 Fixed selling expenses 3.50 ($210,000 total) Total cost per unit $26.50 The CFO of Lynbrook would like your response to the following three (3) independent situations to present to the management team early next week. Situation #1 Assume that Lynbrook has sufficient capacity to produce 90,000 Wrens each year without any increase in fixed manufacturing overhead costs. The company could increase its unit…
Liu Incorporated is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 13,000 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 40% is avoidable if the components were bought from the outside supplier. In addition, making one component uses 1 minute on the machine that is the company's current constraint. If the components were bought, this machine time would be freed up for use on another product that requires 2 minutes on the constraining machine and that has a contribution margin of $5.10 per unit. When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the component? (CMA adapted)…
Anglen Company manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,500 trophies each month; current monthly production is 15,000.00 trophies. The company normally charges $105.50 per trophy. Cost data for the current level of production are shown below: Variable costs: Direct materials $ 463,300 Direct labor $ 328,300 Selling and administrative $ 17,840 Fixed costs: Manufacturing $ 407,390 Selling and administrative $ 75,880 The company has just received a special one-time order for 925 trophies at $49.00 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs. Assume that direct labor is a variable cost. Required: Should the company accept this special order? Why? Accepting the order has a financial ________ of _________. Therefore the company _______ accept the order.
Wet Pets Inc. makes 100-gallon plexiglass aquariums. They reported the following financial information for last year: Direct labor: 6,600 hours @ $20 per hr Production manager salary: $55,000 Factory rent: $26,400 Equipment maintenance: $11,000 (considered a variable expense) Equipment depreciation: $11,000 Production for the year: 12,000 units Total Revenue: $1,100,000 Total aquariums sold during the period: 10,000 units Operating Income under absorption costing (after non-production expenses): $224,400 Assume that the fixed costs were the same on a per-unit basis during the prior period. What would Operating Income be under variable costing? (Round per-unit costs to the nearest cent.) Select one: O a. $209,000 b. $207,166 c. None of these options are correct. OO O d. $239,800 O e. $241,626
(Management Accounting) Christian Company manufactures a part for its production cycle. The annual costs per unit for 5,000 units of the part are as follows: Per Unit Direct materials $3.00 Direct labor 5.00 Variable factory overhead 4.00 Fixed factory overhead 2.00 Total costs $14.00 The fixed factory overhead costs are unavoidable. Another company has offered to sell 5,000 units of the same part to Christian Company for $15 per unit. The facilities currently used to make the part could be rented out to another manufacturer for $20,000 a year. Christian Company should ________. A) make the part to save $5,000 B) make the part to save $15,000 C) buy the part and rent facilities to save $5,000 D) buy the part and rent facilities to save $15,000
Sardi Inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 13,100 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows: Direct materials $ 8.90 Direct labor 5.90 Variable manufacturing overhead 1.70 Fixed manufacturing overhead 3.70 Unit product cost $ 20.20 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 20% is avoidable if the component were bought from the outside supplier. In addition, making the component uses 2 minutes on the machine that is the company's current constraint. If the component were bought, time would be freed up for use on another product that requires 4 minutes on this machine and that has a contribution margin of $5.30 per unit. When deciding whether to make or buy the component, what cost of making the component should be compared to the…
Aces inc, a manufacturer of tennis rackets, began operations this year. The company produced 6,200 rackets and sold 5,100. Each racket was sold at a price of $92. Fixed overhead costs are $81,840, and fixed selling and administrative costs are $65,400. The company also reports the following per unit variable costs for the year: Variable product costs Variable selling and administrative expenses $ 25.20 $ 2.20 Prepare an income statement under varlable costing. ACES INC. Variable Costing Income Statement Net income (loss)

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

SEE MORE TEXTBOOKS