Req A1Req F1 Req F2Market research estimates that volume could be increased to 7,000 units, which is well within production capacity limitationsif the price were cut from $408 to $363 per unit. Assuming that the cost behavior patterns implied by the data in the table arecorrect.Reg A2Sales priceQuantityRevenueVariable manufacturing costsVariable marketing costsContribution marginReq BFixed manufacturing costsFixed marketing costsIncomeReq CA1. What would be the impact on monthly sales, costs, and income? (Select option "increase" or "decrease", keeping beforeprice reduction as the base. Select "none" if there is no effect.)Req DBefore PriceReductionReq E1Req E2After PriceReductionImpactShow less Davis Kitchen Supply produces stoves for commercial kitchens. The costs to manufacture and market the stoves at the company'snormal volume of 6,000 units per month are shown in the following table.Unit manufacturing costsVariable materialsVariable laborVariable overheadFixed overheadTotal unit manufacturing costsUnit marketing costsVariableFixedTotal unit marketing costsTotal unit costs.$ 416616511661$ 17477$ 251Unless otherwise stated, assume that no connection exists between the situation described in each question; each is independent.Unless otherwise stated, assume a regular selling price of $408 per unit. Ignore income taxes and other costs that are not mentionedin the table or in the question itself.Required:a. Market research estimates that volume could be increased to 7,000 units, which is well within production capacity limitations if theprice were cut from $408 to $363 per unit. Assuming that the cost behavior patterns implied by the data in the table are correct.a-1. What would be the impact on monthly sales, costs, and income?

Lets understand the basics.When management have options to increase production by decreasing price…

Answered: Unit manufacturing costs Variable…

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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7. Under variable costing, which of the following costs are assigned to inventory? Variable Selling & Administrative Costs Variable Factory Overhead Costs (A) Yes No (B) No Yes (C) Yes Yes (D) No No 8. Which of the following would appear on both the budgeted income statement and on the schedule of expected cash disbursements for operating expenses? (A) Depreciation expense (B) Rent expense (C) Sales commission expense (D) Both B and C 9. Which of the following is not an underlying assumption of the cost-volume-profit graph? (A) Expenses are categorized into fixed and variable (B) Revenues and expenses are linear over the relevant range (C) Efficiency and productivity will be unchanged (D) Sales mix will not be constant
Chapter 3- CVP Cost-volume-profit (CVP) analysis requires an understanding of cost behavior: variable and fixed costs. Cost behavior differs from the GAAP-based financial reporting focus: product and period costs. The two ways to categorize costs results in TWo different income statements: Absorption costing income statement: S-C-GM-SA-NI (Key assumption: Split costs into product and period costs) Variable costing income statement: S-VE-CM-FE-NI (Key assumption: Split costs into variable and fixed) 1. 2. Absorption Costing Income Statement Variable Costing Income Statement Sales $500,000 Sales $500,000 Less: Variable expenses Less: Cost of goods sold: Variable (DM+DL+VOH) Fixed (FOH) Gross margin 100,000 Product costs 100,000 60,000 S&A costs 110,000 340,000 Contribution margin 290,000 Less: Fixed expenses Less: Selling & administrative Variable 110,000 Product costs 60,000 Fixed 140,000 S&A costs 140,000 Taxable income $90,000 Taxable income $90,000 LINK THE LINEAR COST FUNCTION TO…
A company manufactures a single product, product Y. It hasdocumented levels of demand at certain selling prices for thisproduct as follows: Demand Selling price per unit Cost per unit Units £ £ 1100 48 24 1200 46 21 1300 45 20 1400 42 19 Required:Using a tabular approach, calculate the marginal revenues andmarginal costs for product Y at the different levels of demand, andso determine the selling price at which the company profits aremaximized.
The contribution margin ratio is calculated as: a. None of the given answers b. Selling price per unit - the variable cost per unit C. The selling price per unit ratio /variable cost per unit ratio d. The selling price per unit/variable cost per unit e. (total sales/total sales) - variable cost ratio pe here to search hp f6 10 # 3 4 6. R Y G H. J S
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:
a. 1. Prepare an estimated income statement, comparing operating results if 29,600 and 32,800 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank. a. 2. Prepare an estimated income statement, comparing operating results if 29,600 and 32,800 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank. b. What is the reason for the difference in operating income reported for the two levels of production by the absorption costing income statement? The increase in income from operations under absorption costing is caused by the allocation of overhead cost over a number of units. Thus, the cost of goods sold is . The difference can also be explained by the amount of overhead cost included in the inventory.
Please answer part A thanks
The _________ is considered part of the cost of the product in absorption costing, but not in variable costing. Group of answer choices Variable Overhead Fixed Overhead Variable Selling & Administrative Fixed Selling and Administrative In the absorption income statement, Sales less Cost of Goods Sold is the calculation for: Group of answer choices Contribution margin Gross margin Net Income Operating Income
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An analyst is constructing a simple model to determine the gross and net profit of a product, given its profit per unit, quantity sold, and the total costs assigned to the product. The calculation for gross profit is Profit per Unit times Quantity. The calculation for Net Profit is Gross Profit minus Total Costs. A B 1. 2 Profit per Unit 8 3 Quantity |10,100 4 Gross Profit 5 6 Total Costs 6,100 7 8 Net Profit With the values for Profit per Unit, Quantity, and Total Costs shown above, what should the model return for the following calculated cells? Cell Value Gross Profit Net Profit
Which one of the following is not considered an assumption of cost-volume-profit analysis? a. Costs can be divided into variable and fixed components O b. Costs are nonlinear Fixed cost per unit is not constant О с. O d. Sales mix of products sold does not change e. Selling price per unit does not change with volume O O 0 O O
How is operating income affected if the number of units sold exceeds the number of units produced? Select one: a. Operating income would be higher under a variable costing income statement. b. Operating income would be lower under a variable costing income statement. c. Operating income would be higher under an absorption costing income statement. d. Operating income would be the same under both a variable costing and absorption costing income PreviousSave AnswersNext

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