Concept explainers
Videos
1)a.
Whether the cost of instruction is fixed or variable cost
1)a.
Explanation of Solution
The cost of instruction is fixed cost as the total cost remains constant irrespectively of number of students attends the courses
b.
Determine the profit
b.
Explanation of Solution
Given information:
Number of students are 20. The salary of instructor is $6,000 per course taught. The F services offer course of instruction $700 per student to the employees of N incorporation
c.
Determine the profit with 10% of increase in enrolment and percentage of profitability.
c.
Explanation of Solution
Given information:
Number of students are 22. The salary of instructor is $6,000 per course taught. The F services offer course of instruction $700 per student to the employees of N incorporation
Excel spreadsheet:
Excel workings:
Percentage change in profits:
Hence, the percentage change in profitability is 17.5%.
Percentage change in revenue:
Hence, the percentage change in profitability is 10%.
d.
Determine the profit with 10% of decrease in enrolment and percentage of profitability.
d.
Explanation of Solution
Given information:
Number of students are 18. The salary of instructor is $6,000 per course taught. The F services offer course of instruction at $700 per student to the employees of N incorporation
Excel spreadsheet:
Excel workings:
Percentage change in revenue and profitability:
Hence, the percentage change in profitability is 17.5%.
Hence, the percentage change in profitability is 10%.
e.
The reason for 10% shift in enrollment produces more than 10% shift in profitability and the term identifies this phenomenon.
e.
Explanation of Solution
The term which identifies these phenomena is operating leverage. This causes the percentage change in profitability to higher than the percentage change in revenue.
This is because that the fixed cost remains same and covered and there is no variable cost. So each additional dollar of revenue pays directly to the profitability.
2)f.
Whether the cost of instruction is fixed or variable cost
2)f.
Explanation of Solution
Given information:
The instructor needs $300 per person attending the class. The F services offer course of instruction at $700 per student to the employees of N incorporation
The cost of instruction is variable cost as the total cost varies respectively of number of students attends the courses
g.
Determine the profit
g.
Explanation of Solution
Given information:
Number of students are 20. The instructor needs $300 per person attending the class. The F services offer course of instruction at $700 per student to the employees of N incorporation
h.
Determine the profit with 10% of increase in enrolment and percentage of profitability.
h.
Explanation of Solution
Given information:
Number of students are 22. The instructor needs $300 per person attending the class. The F services offer course of instruction at $700 per student to the employees of N incorporation
Excel spreadsheet:
Percentage change in revenue and profitability:
Hence, the percentage change in profitability is 10%.
Hence, the percentage change in revenue is 10%.
i.
Determine the profit with 10% of decrease in enrolment and percentage of profitability.
i.
Explanation of Solution
Given information:
Number of students are 18. The instructor needs $300 per person attending the class. The F services offer course of instruction at $700 per student to the employees of N incorporation
Excel spreadsheet:
Percentage change in revenue and profit:
Hence, the percentage change in profitability is 10%.
Hence, the percentage change in revenue is 10%.
j.
The reason for 10% shift in enrollment produces relative 10% shift in profitability.
j.
Explanation of Solution
The change in profit is relative to change in revenue because the revenue as well as cost changes relatively to the change in number of students attending the course.
3)k.
The total cost and the cost per student
3)k.
Explanation of Solution
Given information:
The cost of the work book is $30 and selling price is $50. The numbers of students are 18, 20, or 22. The company printed 20 copies of books.
The formula to calculate the cost per students:
Compute the total cost:
Compute the cost per student:
l.
Whether the cost of work book is fixed or variable cost
l.
Explanation of Solution
The cost of work book is fixed cost as the cost incurred is before the sale of work book. Therefore, sales of number of work book will not affect the total cost.
Thus, it is fixed cost.
m.
The risk of holding inventory as it applies to workbooks
m.
Explanation of Solution
The risk faced by the company is that it produces very few or too many books. If the company produces too many books then the expenses will more due to wastage.
When the company produces less numbers then the will not get the opportunity to earn any additional profits.
It will also incur costs like maintenances, interest and storage.
n.
Whether just in time can reduce the cost and risk of holding inventory
n.
Explanation of Solution
JIT-Just in time produces only when there is any demand of goods. There will not be any risk on over or under production.
There will not be any stock piling of inventory as it will avoid the cost of storage, interest and maintenance
Want to see more full solutions like this?
Chapter 11 Solutions
Survey Of Accounting
- p4-8arrow_forward! Required information [The following information applies to the questions displayed below.] Franklin Training Services (FTS) provides instruction on the use of computer software for the employees of its corporate clients. It offers courses in the clients' offices on the clients' equipment. The only major expense FTS incurs is instructor salaries; it pays instructors $6,000 per course taught. FTS recently agreed to offer a course of instruction to the employees of Novak Incorporated at a price of $700 per student. Novak estimated that 20 students would attend the course. Base your answers on the preceding information. Required a. Relative to the number of students in a single course, is the cost of instruction a fixed or a variable cost? b. Determine the profit, assuming that 20 students attend the course. c. Determine the profit, assuming a 10 percent increase in enrollment (i.e., enrollment increases to 22 students). What is the percentage change in profitability? d. Determine the…arrow_forwardPlease do not give image formatarrow_forward
- Required Information [The following information applies to the questions displayed below.] UR Safe Systems Installs home security systems. Two of its systems, the ICU 100 and the ICU 900, have these characteristics: Design Specifications Video cameras Video monitors Motion detectors Floodlights Alarms Wiring Installation 1,050 feet 21 hour The ICU 100 sells for $860 Installed, and the ICU 900 sells for $1,570 Installed. 1. Current profit margin 2. ICU 100 2 2 3 1 5 650 feet 11 hour Required: 1. What are the current gross profit margin percentages on both systems? 2. UR Safe's management believes that it must drop the price on the ICU 100 to $800 and on the ICU 900 to $1,440 to remain competitive in the market. Recalculate gross profit margin percentages for both products at these price levels and then compute the target cost needed for each product to maintain the current gross profit margin percentages. Profit margin Target cost (For all requirements, round your percentage answers to…arrow_forwardQuestion 3 Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn set from an outside vendor for $30 per set. Modern Furniture’s chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the firm money. Additional information shows that if Modern furniture’s were to manufacture the cushions, the materials cost would be $16 and the labor cost would be $10 per set and that it would have to purchase cutting and sewing equipment, which would add $25,000 to annual fixed costs. NOTE: No need to enter comma between numbers Required Computation for 10,000 units What amount should have been inccrued if company produce 10,000 units What amount should have been inccrued if company purhcase 10,000 units from outside What amount company save if company make 10,000 cushionsarrow_forwardSubject: acountingarrow_forward
- QUESTION 1 ABC Company is a maker of chairs for schools and universities They have provided you with the following financial information. You are required to prepare a contribution margin income statement Selling price per chair $338 Materials per chair Labor cost per chair $60 $40 $1,000 Rent Salary of a Security guard Salary of the manager How many units would they have to sell to breakeven? $1,000 $1,000arrow_forwardV5arrow_forwardMake vs. Buy Decisions: Insourcing or Outsourcing AMD AMD manufactures one of its major components, silicon wafers, at the same production facility where it assembles the microprocessors. One of its vendors has offered AMD to manufacture silicon wafers at a price of $2.00 each. Cost information for internally producing one silicon wafer is as follows: Production Costs for 1 million units $ 750,000 500,000 1,500,000 $ 2,750,000 Direct materials Direct Mfg. Labor Mfg. Overhead Total cost + ↓ Cost per unit $0.75 0.50 1.50 $2.75 1 11 1 1 1 51 1 1 1 1 1 1 1 1 1 1 1 # 31 1arrow_forward
- Case Analysis 2: Speed Racer in Victoria makes bicycles for people of all ages. The frames division makes and paints the frames and supplies them to the assembly division where the bicycles are assembled. Speed Racer is a successful and profitable corporation that attributes much of its success to its decentralized operating style. Each division manager is compensated on the basis of division operating income. The assembly division currently acquires all its frames from the frames division. The assembly division manager could purchase similar frames in the market for $480. The frames division is currently operating at 80% of its capacity of 4,000 frames (units) and has the following details: Voltage Regulator Direct materials ($150 per unit x 320 units) $480,000 Direct manufacturing labour ($60 per unit x 3,200 units) 192,000 Variable manufacturing overhead costs ($30 per unit × 3,200 units) 96,000 Fixed manufacturing overhead costs $624,000 All the…arrow_forwardCase Analysis 2: Speed Racer in Victoria makes bicycles for people of all ages. The frames division makes and paints the frames and supplies them to the assembly division where the bicycles are assembled. Speed Racer is a successful and profitable corporation that attributes much of its success to its decentralized operating style. Each division manager is compensated on the basis of division operating income. The assembly division currently acquires all its frames from the frames division. The assembly division manager could purchase similar frames in the market for $480. The frames division is currently operating at 80% of its capacity of 4,000 frames (units) and has the following details: Voltage Regulator Direct materials ($150 per unit x 320 units) $480,000 Direct manufacturing labour ($60 per unit x 3,200 units) 192,000 Variable manufacturing overhead costs ($30 per unit × 3,200 units) 96,000 Fixed manufacturing overhead costs $624,000 All…arrow_forwardCase Analysis 2: Speed Racer in Victoria makes bicycles for people of all ages. The frames division makes and paints the frames and supplies them to the assembly division where the bicycles are assembled. Speed Racer is a successful and profitable corporation that attributes much of its success to its decentralized operating style. Each division manager is compensated on the basis of division operating income. The assembly division currently acquires all its frames from the frames division. The assembly division manager could purchase similar frames in the market for $480. The frames division is currently operating at 80% of its capacity of 4,000 frames (units) and has the following details: Voltage Regulator Direct materials ($150 per unit x 320 units) $480,000 Direct manufacturing labour ($60 per unit x 3,200 units) 192,000 Variable manufacturing overhead costs ($30 per unit × 3,200 units) 96,000 Fixed manufacturing overhead costs $624,000 All the…arrow_forward
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning