Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows: Break-even point in Sales ( units ) = Fixed Costs Contribution Margin per unit the total fixed costs and the total variable costs for the current year.

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Answer 1

Question

Chapter 19, Problem 19.2BPR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

the total fixed costs and the total variable costs for the current year.

2(A)

To determine

the unit variable cost for the current year.

3.

To determine

To compute: the break-even sales (units) for the current year.

4.

To determine

To compute: the break-even sales (units) under the proposed program for the following year.

5.

To determine

the amount of sales (units) if the company desires a target profit of $692,500.

6.

To determine

the maximum income from operations possible with the expanded plant.

7.

To determine

the income or loss from operations for the following year if the proposal is accepted and the sales remains same.

8.

To determine

To explain: whether to recommend for accepting the proposal.

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Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+ 10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

Answer 2

Question

Chapter 19, Problem 19.2BPR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

the total fixed costs and the total variable costs for the current year.

2(A)

To determine

the unit variable cost for the current year.

3.

To determine

To compute: the break-even sales (units) for the current year.

4.

To determine

To compute: the break-even sales (units) under the proposed program for the following year.

5.

To determine

the amount of sales (units) if the company desires a target profit of $692,500.

6.

To determine

the maximum income from operations possible with the expanded plant.

7.

To determine

the income or loss from operations for the following year if the proposal is accepted and the sales remains same.

8.

To determine

To explain: whether to recommend for accepting the proposal.

Expert Solution & Answer

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Answer 3

Question

Chapter 19, Problem 19.2BPR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

the total fixed costs and the total variable costs for the current year.

2(A)

To determine

the unit variable cost for the current year.

3.

To determine

To compute: the break-even sales (units) for the current year.

4.

To determine

To compute: the break-even sales (units) under the proposed program for the following year.

5.

To determine

the amount of sales (units) if the company desires a target profit of $692,500.

6.

To determine

the maximum income from operations possible with the expanded plant.

7.

To determine

the income or loss from operations for the following year if the proposal is accepted and the sales remains same.

8.

To determine

To explain: whether to recommend for accepting the proposal.

Expert Solution & Answer

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Answer 4

Question

Chapter 19, Problem 19.2BPR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

the total fixed costs and the total variable costs for the current year.

2(A)

To determine

the unit variable cost for the current year.

3.

To determine

To compute: the break-even sales (units) for the current year.

4.

To determine

To compute: the break-even sales (units) under the proposed program for the following year.

5.

To determine

the amount of sales (units) if the company desires a target profit of $692,500.

6.

To determine

the maximum income from operations possible with the expanded plant.

7.

To determine

the income or loss from operations for the following year if the proposal is accepted and the sales remains same.

8.

To determine

To explain: whether to recommend for accepting the proposal.

Expert Solution & Answer

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Answer 5

Chapter 19, Problem 19.2BPR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

the total fixed costs and the total variable costs for the current year.

2(A)

To determine

the unit variable cost for the current year.

3.

To determine

To compute: the break-even sales (units) for the current year.

4.

To determine

To compute: the break-even sales (units) under the proposed program for the following year.

5.

To determine

the amount of sales (units) if the company desires a target profit of $692,500.

6.

To determine

the maximum income from operations possible with the expanded plant.

7.

To determine

the income or loss from operations for the following year if the proposal is accepted and the sales remains same.

8.

To determine

To explain: whether to recommend for accepting the proposal.

Answer 6

Chapter 19, Problem 19.2BPR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

the total fixed costs and the total variable costs for the current year.

Answer 7

Chapter 19, Problem 19.2BPR

1.

To determine

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

the total fixed costs and the total variable costs for the current year.

Answer 8

2(A)

To determine

the unit variable cost for the current year.

Answer 9

2(A)

To determine

the unit variable cost for the current year.

Answer 10

3.

To determine

To compute: the break-even sales (units) for the current year.

Answer 11

3.

To determine

To compute: the break-even sales (units) for the current year.

Answer 12

4.

To determine

To compute: the break-even sales (units) under the proposed program for the following year.

Answer 13

4.

To determine

To compute: the break-even sales (units) under the proposed program for the following year.

Answer 14

5.

To determine

the amount of sales (units) if the company desires a target profit of $692,500.

Answer 15

5.

To determine

the amount of sales (units) if the company desires a target profit of $692,500.

Answer 16

6.

To determine

the maximum income from operations possible with the expanded plant.

Answer 17

6.

To determine

the maximum income from operations possible with the expanded plant.

Answer 18

7.

To determine

the income or loss from operations for the following year if the proposal is accepted and the sales remains same.

Answer 19

7.

To determine

the income or loss from operations for the following year if the proposal is accepted and the sales remains same.

Answer 20

8.

To determine

To explain: whether to recommend for accepting the proposal.

Answer 21

8.

To determine

To explain: whether to recommend for accepting the proposal.

Answer 22

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Answer 33

Ch. 19 - Describe how total variable costs and unit...Ch. 19 - Which of the following costs would be classified...Ch. 19 - Describe how total fixed costs and unit fixed...Ch. 19 - In applying the high-low method of cost estimation...Ch. 19 - If fixed costs increase, what would be the impact...Ch. 19 - Prob. 6DQ Ch. 19 - If the unit cost of direct materials is decreased,...Ch. 19 - Both Austin Company and Hill Company had the same...Ch. 19 - Prob. 9DQ Ch. 19 - Prob. 10DQ

Solution Summary: The author explains the formula to determine the total fixed costs and total variable costs for the current year.

the unit variable cost for the current year.

To compute: the break-even sales (units) for the current year.

To compute: the break-even sales (units) under the proposed program for the following year.

the amount of sales (units) if the company desires a target profit of $692,500.

the maximum income from operations possible with the expanded plant.

the income or loss from operations for the following year if the proposal is accepted and the sales remains same.

To explain: whether to recommend for accepting the proposal.

Chapter 19 Solutions