U-Too Everwear Corporation can manufacture mountain climbing shoes for $31.15 per pair in variable raw material costs and $22.50 per pair in variable labor expenses. The shoes sell for $156 per pair. Last year, production was 120,000 pairs. Fixed costs were $1,235,000. a. What were total production costs? b. What is the marginal cost per pair? c. What is the average cost per pair? d. If the company is considering a one-time order for an extra 5,000 pairs, what is the minimum acceptable total revenue from the order?

U-Too Everwear Corporation can manufacture mountain climbing shoes for $31.15 per pair in variable raw material costs and $22.50 per pair in variable labor expenses. The shoes sell for $156 per pair. Last year, production was 120,000 pairs. Fixed costs were $1,235,000. a. What were total production costs? b. What is the marginal cost per pair? c. What is the average cost per pair? d. If the company is considering a one-time order for an extra 5,000 pairs, what is the minimum acceptable total revenue from the order?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...

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Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals 146,000. Each door handle sells for 12 and has variable cost of 9; each trim kit sells for 8 and has variable cost of 5. Required: 1. What are the contribution margin per unit and the contribution margin ratio for door handles and for trim kits? 2. If Polaris sells 20,000 door handles and 40,000 trim kits, what is the operating income? 3. How many door handles and how many trim kits must be sold for Polaris to break even? 4. CONCEPTUAL CONNECTION Assume that Polaris has the opportunity to rearrange its plant to produce only trim kits. If this is done, fixed costs will decrease by 35,000, and 70,000 trim kits can be produced and sold. Is this a good idea? Explain.
K-Too Everwear Corporation can manufacture mountain climbing shoes for $11 per pair in variable raw material costs and $13.34 per pair in variable labor expense. The shoes sell for $126 per pair. Last year, production was 180,000 pairs. Fixed costs were $780,000. a. What were total production costs? b. What is the marginal cost per pair? c. What is the average cost? d. If the company is considering a one-time order for an extra 13, 000 pairs, what is the minimum acceptable total revenue from the order?
Nik is a company that manufactures running shoes. It has a fixed cost of $300,000.00. Additionally, it costs $30 to produce each pair. They are sold at $80 a pair. A.Write the cost function, C, of producing x running shoes. B.Write the revenue function, R, from the sale of x running shoes. C.Suppose Nik produces too many running shoes- more than they can sell in the stores. How would this impact profits? Is there anything the managers can do to cut their losses? D.Suppose that we can sell all of the units that we produce. How many running shoes would Nik have to produce/sell in order for the company to make a profit? E.Determine the break-even point. Describe what this means. Graph the lines with at least three points each.
A firm has fixed costs of $25,000 associated with the manufacture of lawn mowers that cost $480 per mower to produce. The firm sells all the mowers it produces at $580 each. Find the cost, revenue and profit equations. Find the break-even quantity. (Let x be the number of mowers.)C(x) = R(x) = P(x) = break even quantity= ? mowers
Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $77 and have variable costs of $47 each. The motorcycle helmets are priced at $220 and have variable costs of $145 each. Total fixed cost for Head-First as a whole equals $57,000 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Head-First expects to sell 4,850 bicycle helmets and 1,940 motorcycle helmets. Required: 1. Form a package of bicycle and motorcycle helmets based on the sales mix expected for the coming year. 2. Calculate the break-even point in units for bicycle helmets and for motorcycle helmets. 3. Check your answer by preparing a contribution margin income statement.
Cox Electric makes electronic components and has estimated the following for a new design of one of Its products. Fixed Cost = $15,000 Material Cost per Unit = $0.19 Labor Cost per Unit = $0.14 MY NOTES ASK YOUR TEACHI Revenue per Unit = $0.69 Note that fixed cost is incurred regardless of the amount produced. Per-unit material and labor cost together make up the variable cost per unit. Assuming that Cox Electric sells all that it produce profit is calculated by subtracting the fixed cost and total variable cost from total revenue. If Cox Electric makes 43,100 units of the new product, what is the resulting profit (In whole dollars)? $
Value Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 32,000 parts is $90,000, which includes fixed costs of $30,000 and variable costs of $60,000. The company can buy this part from an external supplier for $5 per unit and avoid 10% of the fixed costs. If Value Electronics decides to outsource the production of the part, how will it impact its operating income? A. Operating income increases by $97,000. B. Operating income decreases by $100,000. C. Operating income decreases by $97,000. D. Operating income increases by $100,000.
Grace Co. can further process Product B to produce Product C. Product B is currently selling for $24 per pound and costs $16 per pound to produce. Product C would sell for $39 per pound and would require an additional cost of $9 per pound to produce. What is the differential revenue of producing and selling Product C? a.$23 per pound b.$39 per pound c.$30 per pound d.$15 per pound
Atlantic Manufacturing produces and sells children’s bikes at an average price of $80. Its costs are as follows: direct materials = $15; direct labour = $7; variable overhead = $3; sales commission is 5% of price. Its fixed monthly costs are $50,000. Required: 1. Using the above cost data, set up a monthly cost equation. Y=___+___x 2. What is the company’s contribution margin percentage? (Round your answer to 2 decimal places.) Contribution Margin %
Winter Sports manufactures snowboards. Its cost of making 1,800 bindings is as follows in the data table. Suppose Livingston will sell bindings to Winter Sports for $14 each. Winter Sports would pay $1 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.60 per binding.
An investment banker is analyzing two companies that specialize in the production and sale of candied yams. Traditional Yams uses a labor-intensive approach, and Auto-Yams uses a mechanized system. CVP income statements for the two companies are shown below. Sales Variable costs Contribution margin Fixed costs Net income Traditional Yams $397,000 329,000 68,000 18,000 $50,000 Auto-Yams $397,000 162,000 235,000 185,000 $50,000 The investment banker is interested in acquiring one of these companies. However, she is concerned about the impact that each company's cost structure might have on its profitability.
An investment banker is analyzing two companies that specialize in the production and sale of candied yams. Sheridan Yams uses a labor-intensive approach, and Sunland Yams uses a mechanized system. CVP income statements for the two companies are shown below. Sales Variable costs Contribution margin Fixed costs Net income Sheridan Yams $394,000 310,000 84,000 34,000 $50,000 Sunland Yams $394,000 156,000 238,000 188,000 $50,000 The investment banker is interested in acquiring one of these companies. However, she is concerned about the impact that each company's cost structure might have on its profitability.