Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 10, Problem 8E
The sales price per unit is $13 for the Voyageur Company’s only product. The variable cost per unit is $5. In 2016, the company sold 80,000 units, which was 10,000 units above the break-even point.
Compute the following:
- 1. Total fixed expenses. (Hint: First compute the contribution margin per unit.)
- 2. Total variable expense at the break-even volume.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Based on the below examples (1&2), how can I figure out which contribution margin is needed to calculate the required Break-even? Between (Contribution Margin Per Unit) or (Contribution Margin Ratio).
Example (1) (Why we didn't take CM/unit, but instead, CMR is calculated?)
Northern Pacific Fixtures Corporation sells a single product for $28 per unit. If variable expenses are 65% of sales and fixed expenses total $9,800, the break-even point is?
Example (2) (this one I know how to calculate).
Mishoe Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.
Sales (1,000 units)......................
$50,000
Variable expenses......................
32,500
Contribution margin.....................
17,500
Fixed expenses..........................
12,250
Net operating income..................
$5,250
The break-even point in unit sales is closest…
A firm manufactures a product that sells for $16 per unit. Variable cost per unit is $8 and fixed cost per period is $1680. Capacity per period is 2200 units.
(a) Develop an algebraic statement for the revenue function and the cost function.
(b) Determine the number of units required to be sold to break even.
(c) Compute the break-even point as a percent of capacity.
(d) Compute the break-even point in sales dollars.
(a) The revenue function is TR =
(Type an expression using x as the variable. Do not include the $ symbol in your answer.)
The cost function is TC =
(Type an expression using x as the variable. Do not include the $ symbol in your answer.)
(b) The number of units required to be sold to break even is|
units.
(Round up to the nearest whole number.)
(c) The break-even point as a percent of capacity is%.
(Round to two decimal places as needed.)
(d) The break-even point in sales dollars is $
(Round to the nearest cent as needed.)
Nala Nala Corporation sells its product for $195.70 per unit. In 2015 the company had total sales in units of 6,000. The total costs were the following:
Variable cost of sales $457,800
Fixed cost of sales 100,000
Variable selling & administrative costs 108,500
Fixed selling & administrative costs 512,400
What is the best estimate of the total contribution margin?
Chapter 10 Solutions
Principles of Cost Accounting
Ch. 10 - What is the difference between absorption costing...Ch. 10 - Distinguish between product costs and period...Ch. 10 - What effect will applying variable costing have on...Ch. 10 - What are the advantages and disadvantages of using...Ch. 10 - Prob. 5QCh. 10 - What is the difference between gross margin and...Ch. 10 - Why are there objections to using absorption...Ch. 10 - What are common costs?Ch. 10 - How is a contribution margin determined, and why...Ch. 10 - What are considered direct costs in segment...
Ch. 10 - What is cost-volume-profit analysis?Ch. 10 - Prob. 12QCh. 10 - What steps are required in constructing a...Ch. 10 - What is the difference between the contribution...Ch. 10 - What impact does income tax have on the break-even...Ch. 10 - Define differential analysis, differential...Ch. 10 - Prob. 17QCh. 10 - Prob. 18QCh. 10 - What are distribution costs?Ch. 10 - What is the purpose of the analysis of...Ch. 10 - In cost analysis, what determines which costs...Ch. 10 - Yellowstone Fabricators uses a process cost system...Ch. 10 - Using the information presented in E10-1, prepare...Ch. 10 - The chief executive officer of Acadia, Inc....Ch. 10 - The following production data came from the...Ch. 10 - A company had income of 50,000, using variable...Ch. 10 - The fixed overhead budgeted for Ranier Industries...Ch. 10 - Columbia Products Inc. has two divisions, Salem...Ch. 10 - The sales price per unit is 13 for the Voyageur...Ch. 10 - Teton, Inc. sells its only product for 50 per...Ch. 10 - A new product is expected to have sales of...Ch. 10 - Augusta Industries manufactures and sells two...Ch. 10 - A company has sales of 1,000,000, variable costs...Ch. 10 - Prob. 13ECh. 10 - A company has prepared the following statistics...Ch. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Redwood Industries needs 20,000 units of a certain...Ch. 10 - Prob. 18ECh. 10 - Biscayne Industries has determined the cost of...Ch. 10 - Roosevelt Enterprises has determined the cost of...Ch. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Arctic Software Inc. has two product lines. The...Ch. 10 - Prob. 7PCh. 10 - The production of a new product required Zion...Ch. 10 - Grand Canyon Manufacturing Inc. produces and sells...Ch. 10 - Prob. 10PCh. 10 - Emerald Island Company is considering building a...Ch. 10 - Royale Aluminum desires an after-tax income of...Ch. 10 - Deuce Sporting Goods manufactures a high-end model...Ch. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 1MCCh. 10 - Denali Company manufactures household products...
Additional Business Textbook Solutions
Find more solutions based on key concepts
Assume you are a CFO of a company that is attempting to race additional capital to finance an expansion of its ...
Financial Accounting, Student Value Edition (4th Edition)
BE1-7 Indicate which statement you would examine to find each of the following items: income statement (IS), ba...
Financial Accounting: Tools for Business Decision Making, 8th Edition
This year, Prewer Inc. received a 160,000 dividend on its investment consisting of 16 percent of the outstandin...
Principles Of Taxation For Business And Investment Planning 2020 Edition
Plantwide and Departmental Overhead Allocation; Activity-Based Costing; Segmented Income Statements Koontz Comp...
Introduction To Managerial Accounting
Place the letter of the appropriate accounting cost in Column 2 in the blank next to each decision category in ...
Fundamentals Of Cost Accounting (6th Edition)
18. What is the calculation for return on assets (ROA)? Explain what ROA measures.
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Management believes it can sell a new product for $6.50. The fixed costs of production are estimated to be $5,500, and the variable costs are $2.50 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Round your answers to the nearest dollar. Enter zero if necessary. Use a minus sign to enter losses, if any. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Losses) 0 $ $ $ $ $ 500 $ $ $ $ $ 1,000 $ $ $ $ $ 1,500 $ $ $ $ $ 2,000 $ $ $ $ $ 2,500 $ $ $ $ $ 3,000 $ $ $ $ $ Determine the break-even level using the above table and use the Exhibit 19.5 to confirm the break-even level of output. Round your answers for the break-even level to the nearest whole number. Round your answers for the fixed costs, variable costs, total costs,…arrow_forwardDrake Company produces a single product. Last year's income statement is as follows: Sales (21,000 units) $1,278,900 Less: Variable costs 879,900 Contribution margin $399,000 Less: Fixed costs 259,800 Operating income $139,200 Required: Question Content Area 1. Compute the break-even point in units and sales revenue. In your computations, round the contribution margin per unit to the nearest cent and round the contribution margin ratio to four decimal places. Round your final answers to the nearest whole unit or dollar. Break-even units units Break-even dollars 2. What was the margin of safety in dollars for Drake Company last year? Round your final answer to the nearest whole dollar.arrow_forwardA firm manufactures a product that sells for $25 per unit. Variable cost per unit is $2 and fixed cost per period is $1840. Capacity per period is 2000 units. (a) Develop an algebraic statement for the revenue function and the cost function. (b) Determine the number of units required to be sold to break even. (c) Compute the break-even point as a percent of capacity. (d) Compute the break-even point in sales dollars.arrow_forward
- Colton Dry Cleaners has determined the following about its costs: Total variable expenses are $42,000, total fixed expenses are $30,000, and the sales revenue needed to break even is $50,000. Determine the company’s current 1) sales revenue and 2) operating income. (Hint: First, find the contribution margin ratio; then prepare the contribution margin income statement.)arrow_forward1. Yambs Company manufactures and sells a single product. Following data were given: Sales (15,000 units) 600,000.00 Less: Variable Cost 420,000.00 Contribution Margin 180,000.00 Less: Fixed Cost 150,000.00 Profit 30,000.00 Required: Determine the following: a. Selling Price per Unit b. What is the monthly break-even point in units sold and in sales pesos? Without doing computations, what is the total contribution margin at BEP? b. Variable Cost per Unit c. CM Ratio C. 2. Prove that CMRXMSR=NPR 3. Barack Co. BEP in sales are P528,000. The variable cost to sales is 60%, while the profit ratio is 8% Determine the following: 1. Fixed cost 2. Actual Sales 3. Profit 4. Margin of Safety 5. Margin of Safety Ratio 4. Mahjong Co. produces and sells two products, tables and chairs. Following is next month's income budget Sales in units Chairs Tables Total 750 009 Sales P 1,200.00 P 187.50 P 1,387.50 1,050.00 112.50 1,162.50 CM 150.00 75.00 225.00 90.00 135.00 IN Required: How many units of…arrow_forwardRitchie Manufacturing Company makes a product that it sells for $180 per unit. The company incurs variable manufacturing costs of $100 per unit. Variable selling expenses are $17 per unit, annual fixed manufacturing costs are $460,000, and fixed selling and administrative costs are $195,200 per year. Required Determine the break-even point in units and dollars using each of the following approaches: a. Use the equation method. b. Use the contribution margin per unit approach. c. Use the contribution margin ratio approach. d. Prepare a contribution margin income statement for the break-even sales volume. Complete this question by entering your answers in the tabs below. Req A to C Req D Determine the break-even point in units and dollars using the equation method, the contribution margin per unit approach and the contribution margin ratio approach. a. Break-even point in units a. Break-even point in dollars b. Contribution margin per unit b. Break-even point in units b. Break-even point…arrow_forward
- Stancil Dry Cleaners has determined the following about its costs: Total variable expenses are$42,000,total fixed expenses are $24,000, and the sales revenue needed to break even is $48,000. Determine the company's current 1) sales revenue and 2) operating income. (Hint: First, find the contribution margin ratio; then prepare the contribution margin income statement.) Use the contribution margin income statement and the shortcut contribution margin approaches to determine Stancil's current (1) sales revenue and (2) operating income. Begin by computing the contribution margin ratio. (Enter the result as a whole number.) The contribution margin ratio is %.arrow_forwardStancil Dry Cleaners has determined the following about its costs: Total variable expenses are$42,000,total fixed expenses are $24,000, and the sales revenue needed to break even is $48,000. Determine the company's current 1) sales revenue and 2) operating income. (Hint: First, find the contribution margin ratio; then prepare the contribution margin income statement.) Use the contribution margin income statement and the shortcut contribution margin approaches to determine Stancil's current (1) sales revenue and (2) operating income. Begin by computing the contribution margin ratio. (Enter the result as a5 whole number.) The contribution margin ratio is 50 %. Prepare the contribution margin income statement at the calculated sales level. NOTE: the other picture is to show the options.arrow_forwardSharp Company makes and sells pencil sharpeners. The variable cost of each sharpener is $20. The sharpeners are sold for $30 each. Fixed operating expenses amount to $40,000. a. Determine the break-even point in units and sales dollars. b-1. Determine the sales volume in units and dollars that is required to attain a profit of $12,000. b-2. Prepare an income statement using the contribution margin format to verify your answer. c. Determine the margin of safety between sales required to attain a profit of $12,000 and break-even sales.arrow_forward
- Crane Manufacturing Ltd. has provided you with the following CVP income statement. Sales (1,460 units) Variable costs: Cost of goods sold Selling expenses Administrative expenses Contribution margin Fixed costs: Cost of goods sold Selling expenses Administrative expenses Operating income $1,022,000 454,060 81,760 67,160 419, 20 153,300 52,560 33,580 $179,580 a. Calculate the contribution margin ratio. b. Calculate the break-even point in sales dollars and number of units.arrow_forwardPlease fill out this chart witharrow_forwardFrom the following data, you are required to calculate- 1)P/V Ratio 2) Break even sales with the help of P/V Ratio Fixed expenses- 90000 variable cost per unit: direct material=Rs.5 direct labour=Rs.2 direct overhead= 100% of direct labour selling price= Rs.12arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Cost-Volume-Profit (CVP) Analysis and Break-Even Analysis Step-by-Step, by Mike Werner; Author: Accounting Step by Step;https://www.youtube.com/watch?v=D0MOfse9OWk;License: Standard Youtube License