Cost-Volume-Profit Analysis: It is a method followed to analyze the relationship between the sales, costs, and the related profit or loss at various levels of units sold. In other words, it shows the effect of the changes in the cost and the sales volume on the operating income of the company. To construct: a cost-volume-profit chart indicating the break-even sales for last year.

Question

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Answer 1

Question

Chapter 19, Problem 19.4APR

1.

To determine

Cost-Volume-Profit Analysis: It is a method followed to analyze the relationship between the sales, costs, and the related profit or loss at various levels of units sold. In other words, it shows the effect of the changes in the cost and the sales volume on the operating income of the company.

To construct: a cost-volume-profit chart indicating the break-even sales for last year.

1.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for last year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 1

Figure (1)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $75,000 (fixed cost) on the vertical axis to the second point at $512,500 $[$75,000+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,000 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $250,000. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

2(A)

To determine

The income from operations for last year

2(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 2

Figure (2)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$425,000[$75,000+$350,000]$ for 2,000 units sold. The fixed cost is $75,000. The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $425,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$75,000($500,000−$425,000)$ .

2(B)

To determine

The maximum income from operations realized during the year.

2(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sale is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$512,500[$75,000+$437,500]$ for 2,500 units sold. The fixed cost is $75,000. The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $512,500 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$112,500($625,000−$512,500)$ .

2(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

2(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Fixed costs	75,000
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(425,000)
Income from operations		75,000

Table (1)

Working note:

Determine the number of units sold.

Sales =$500,000

Selling price per unit =$250 per unit

$(Number of units sold)=Sales(Selling price per unit)= $500,000$250 per unit=2,000 units$ (3)

2(B)

To determine

the maximum income from operations that could have been realized during the year.

2(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Fixed costs	75,000
Variable costs $[2,500 units×$175 per unit]$	437,500	(512,500)
Income from operations		112,500

Table (2)

3.

To determine

To construct: a cost-volume-profit chart indicating the break-even sales for the current year.

3.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for the current year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 3

Figure (3)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $$108,750[$75,000+$33,750]$ (total fixed cost) on the vertical axis to the second point at $546,250 $[$108,750+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,450 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $362,500. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

4(A)

To determine

the income from operations for sales 2,000 units

4(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 4

Figure (4)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$458,750[$108,750+$350,000]$ for 2,000 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $458,750 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$41,250($500,000−$458,750)$ .

4(B)

To determine

The maximum income from operations that could have been realized during the year.

4(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sales is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$546,250[$108,750+$437,500]$ for 2,500 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $546,250 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$78,750($625,000−$546,250)$ .

4(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

4(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(458,750)
Income from operations		41,250

Table (3)

4(B)

To determine

the maximum income from operations that could have been realized during the year.

4(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,500 units×$175 per unit]$	437,500	(546,250)
Income from operations		78,750

Table (4)

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Answer 2

Question

Chapter 19, Problem 19.4APR

1.

To determine

Cost-Volume-Profit Analysis: It is a method followed to analyze the relationship between the sales, costs, and the related profit or loss at various levels of units sold. In other words, it shows the effect of the changes in the cost and the sales volume on the operating income of the company.

To construct: a cost-volume-profit chart indicating the break-even sales for last year.

1.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for last year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 1

Figure (1)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $75,000 (fixed cost) on the vertical axis to the second point at $512,500 $[$75,000+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,000 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $250,000. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

2(A)

To determine

The income from operations for last year

2(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 2

Figure (2)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$425,000[$75,000+$350,000]$ for 2,000 units sold. The fixed cost is $75,000. The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $425,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$75,000($500,000−$425,000)$ .

2(B)

To determine

The maximum income from operations realized during the year.

2(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sale is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$512,500[$75,000+$437,500]$ for 2,500 units sold. The fixed cost is $75,000. The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $512,500 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$112,500($625,000−$512,500)$ .

2(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

2(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Fixed costs	75,000
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(425,000)
Income from operations		75,000

Table (1)

Working note:

Determine the number of units sold.

Sales =$500,000

Selling price per unit =$250 per unit

$(Number of units sold)=Sales(Selling price per unit)= $500,000$250 per unit=2,000 units$ (3)

2(B)

To determine

the maximum income from operations that could have been realized during the year.

2(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Fixed costs	75,000
Variable costs $[2,500 units×$175 per unit]$	437,500	(512,500)
Income from operations		112,500

Table (2)

3.

To determine

To construct: a cost-volume-profit chart indicating the break-even sales for the current year.

3.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for the current year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 3

Figure (3)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $$108,750[$75,000+$33,750]$ (total fixed cost) on the vertical axis to the second point at $546,250 $[$108,750+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,450 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $362,500. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

4(A)

To determine

the income from operations for sales 2,000 units

4(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 4

Figure (4)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$458,750[$108,750+$350,000]$ for 2,000 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $458,750 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$41,250($500,000−$458,750)$ .

4(B)

To determine

The maximum income from operations that could have been realized during the year.

4(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sales is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$546,250[$108,750+$437,500]$ for 2,500 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $546,250 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$78,750($625,000−$546,250)$ .

4(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

4(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(458,750)
Income from operations		41,250

Table (3)

4(B)

To determine

the maximum income from operations that could have been realized during the year.

4(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,500 units×$175 per unit]$	437,500	(546,250)
Income from operations		78,750

Table (4)

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Answer 3

Question

Chapter 19, Problem 19.4APR

1.

To determine

Cost-Volume-Profit Analysis: It is a method followed to analyze the relationship between the sales, costs, and the related profit or loss at various levels of units sold. In other words, it shows the effect of the changes in the cost and the sales volume on the operating income of the company.

To construct: a cost-volume-profit chart indicating the break-even sales for last year.

1.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for last year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 1

Figure (1)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $75,000 (fixed cost) on the vertical axis to the second point at $512,500 $[$75,000+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,000 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $250,000. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

2(A)

To determine

The income from operations for last year

2(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 2

Figure (2)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$425,000[$75,000+$350,000]$ for 2,000 units sold. The fixed cost is $75,000. The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $425,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$75,000($500,000−$425,000)$ .

2(B)

To determine

The maximum income from operations realized during the year.

2(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sale is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$512,500[$75,000+$437,500]$ for 2,500 units sold. The fixed cost is $75,000. The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $512,500 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$112,500($625,000−$512,500)$ .

2(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

2(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Fixed costs	75,000
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(425,000)
Income from operations		75,000

Table (1)

Working note:

Determine the number of units sold.

Sales =$500,000

Selling price per unit =$250 per unit

$(Number of units sold)=Sales(Selling price per unit)= $500,000$250 per unit=2,000 units$ (3)

2(B)

To determine

the maximum income from operations that could have been realized during the year.

2(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Fixed costs	75,000
Variable costs $[2,500 units×$175 per unit]$	437,500	(512,500)
Income from operations		112,500

Table (2)

3.

To determine

To construct: a cost-volume-profit chart indicating the break-even sales for the current year.

3.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for the current year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 3

Figure (3)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $$108,750[$75,000+$33,750]$ (total fixed cost) on the vertical axis to the second point at $546,250 $[$108,750+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,450 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $362,500. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

4(A)

To determine

the income from operations for sales 2,000 units

4(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 4

Figure (4)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$458,750[$108,750+$350,000]$ for 2,000 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $458,750 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$41,250($500,000−$458,750)$ .

4(B)

To determine

The maximum income from operations that could have been realized during the year.

4(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sales is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$546,250[$108,750+$437,500]$ for 2,500 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $546,250 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$78,750($625,000−$546,250)$ .

4(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

4(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(458,750)
Income from operations		41,250

Table (3)

4(B)

To determine

the maximum income from operations that could have been realized during the year.

4(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,500 units×$175 per unit]$	437,500	(546,250)
Income from operations		78,750

Table (4)

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Answer 4

Question

Chapter 19, Problem 19.4APR

1.

To determine

Cost-Volume-Profit Analysis: It is a method followed to analyze the relationship between the sales, costs, and the related profit or loss at various levels of units sold. In other words, it shows the effect of the changes in the cost and the sales volume on the operating income of the company.

To construct: a cost-volume-profit chart indicating the break-even sales for last year.

1.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for last year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 1

Figure (1)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $75,000 (fixed cost) on the vertical axis to the second point at $512,500 $[$75,000+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,000 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $250,000. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

2(A)

To determine

The income from operations for last year

2(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 2

Figure (2)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$425,000[$75,000+$350,000]$ for 2,000 units sold. The fixed cost is $75,000. The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $425,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$75,000($500,000−$425,000)$ .

2(B)

To determine

The maximum income from operations realized during the year.

2(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sale is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$512,500[$75,000+$437,500]$ for 2,500 units sold. The fixed cost is $75,000. The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $512,500 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$112,500($625,000−$512,500)$ .

2(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

2(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Fixed costs	75,000
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(425,000)
Income from operations		75,000

Table (1)

Working note:

Determine the number of units sold.

Sales =$500,000

Selling price per unit =$250 per unit

$(Number of units sold)=Sales(Selling price per unit)= $500,000$250 per unit=2,000 units$ (3)

2(B)

To determine

the maximum income from operations that could have been realized during the year.

2(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Fixed costs	75,000
Variable costs $[2,500 units×$175 per unit]$	437,500	(512,500)
Income from operations		112,500

Table (2)

3.

To determine

To construct: a cost-volume-profit chart indicating the break-even sales for the current year.

3.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for the current year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 3

Figure (3)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $$108,750[$75,000+$33,750]$ (total fixed cost) on the vertical axis to the second point at $546,250 $[$108,750+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,450 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $362,500. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

4(A)

To determine

the income from operations for sales 2,000 units

4(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 4

Figure (4)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$458,750[$108,750+$350,000]$ for 2,000 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $458,750 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$41,250($500,000−$458,750)$ .

4(B)

To determine

The maximum income from operations that could have been realized during the year.

4(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sales is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$546,250[$108,750+$437,500]$ for 2,500 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $546,250 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$78,750($625,000−$546,250)$ .

4(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

4(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(458,750)
Income from operations		41,250

Table (3)

4(B)

To determine

the maximum income from operations that could have been realized during the year.

4(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,500 units×$175 per unit]$	437,500	(546,250)
Income from operations		78,750

Table (4)

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Answer 5

Chapter 19, Problem 19.4APR

1.

To determine

Cost-Volume-Profit Analysis: It is a method followed to analyze the relationship between the sales, costs, and the related profit or loss at various levels of units sold. In other words, it shows the effect of the changes in the cost and the sales volume on the operating income of the company.

To construct: a cost-volume-profit chart indicating the break-even sales for last year.

1.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for last year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 1

Figure (1)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $75,000 (fixed cost) on the vertical axis to the second point at $512,500 $[$75,000+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,000 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $250,000. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

2(A)

To determine

The income from operations for last year

2(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 2

Figure (2)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$425,000[$75,000+$350,000]$ for 2,000 units sold. The fixed cost is $75,000. The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $425,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$75,000($500,000−$425,000)$ .

2(B)

To determine

The maximum income from operations realized during the year.

2(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sale is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$512,500[$75,000+$437,500]$ for 2,500 units sold. The fixed cost is $75,000. The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $512,500 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$112,500($625,000−$512,500)$ .

2(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

2(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Fixed costs	75,000
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(425,000)
Income from operations		75,000

Table (1)

Working note:

Determine the number of units sold.

Sales =$500,000

Selling price per unit =$250 per unit

$(Number of units sold)=Sales(Selling price per unit)= $500,000$250 per unit=2,000 units$ (3)

2(B)

To determine

the maximum income from operations that could have been realized during the year.

2(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Fixed costs	75,000
Variable costs $[2,500 units×$175 per unit]$	437,500	(512,500)
Income from operations		112,500

Table (2)

3.

To determine

To construct: a cost-volume-profit chart indicating the break-even sales for the current year.

3.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for the current year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 3

Figure (3)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $$108,750[$75,000+$33,750]$ (total fixed cost) on the vertical axis to the second point at $546,250 $[$108,750+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,450 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $362,500. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

4(A)

To determine

the income from operations for sales 2,000 units

4(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 4

Figure (4)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$458,750[$108,750+$350,000]$ for 2,000 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $458,750 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$41,250($500,000−$458,750)$ .

4(B)

To determine

The maximum income from operations that could have been realized during the year.

4(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sales is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$546,250[$108,750+$437,500]$ for 2,500 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $546,250 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$78,750($625,000−$546,250)$ .

4(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

4(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(458,750)
Income from operations		41,250

Table (3)

4(B)

To determine

the maximum income from operations that could have been realized during the year.

4(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,500 units×$175 per unit]$	437,500	(546,250)
Income from operations		78,750

Table (4)

Answer 6

Chapter 19, Problem 19.4APR

1.

To determine

Cost-Volume-Profit Analysis: It is a method followed to analyze the relationship between the sales, costs, and the related profit or loss at various levels of units sold. In other words, it shows the effect of the changes in the cost and the sales volume on the operating income of the company.

To construct: a cost-volume-profit chart indicating the break-even sales for last year.

1.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for last year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 1

Figure (1)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $75,000 (fixed cost) on the vertical axis to the second point at $512,500 $[$75,000+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,000 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $250,000. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

Answer 7

Chapter 19, Problem 19.4APR

1.

To determine

Cost-Volume-Profit Analysis: It is a method followed to analyze the relationship between the sales, costs, and the related profit or loss at various levels of units sold. In other words, it shows the effect of the changes in the cost and the sales volume on the operating income of the company.

To construct: a cost-volume-profit chart indicating the break-even sales for last year.

Answer 8

1.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for last year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 1

Figure (1)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $75,000 (fixed cost) on the vertical axis to the second point at $512,500 $[$75,000+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,000 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $250,000. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

Answer 9

1.

Expert Solution

Answer 10

1.

Expert Solution

Answer 11

Expert Solution

Answer 12

2(A)

To determine

The income from operations for last year

2(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 2

Figure (2)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$425,000[$75,000+$350,000]$ for 2,000 units sold. The fixed cost is $75,000. The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $425,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$75,000($500,000−$425,000)$ .

Answer 13

2(A)

To determine

The income from operations for last year

Answer 14

2(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 2

Figure (2)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$425,000[$75,000+$350,000]$ for 2,000 units sold. The fixed cost is $75,000. The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $425,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$75,000($500,000−$425,000)$ .

Answer 15

2(A)

Expert Solution

Answer 16

2(A)

Expert Solution

Answer 17

Expert Solution

Answer 18

2(B)

To determine

The maximum income from operations realized during the year.

2(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sale is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$512,500[$75,000+$437,500]$ for 2,500 units sold. The fixed cost is $75,000. The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $512,500 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$112,500($625,000−$512,500)$ .

Answer 19

2(B)

To determine

The maximum income from operations realized during the year.

Answer 20

2(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sale is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$512,500[$75,000+$437,500]$ for 2,500 units sold. The fixed cost is $75,000. The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $512,500 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$112,500($625,000−$512,500)$ .

Answer 21

2(B)

Expert Solution

Answer 22

2(B)

Expert Solution

Answer 23

Expert Solution

Answer 24

2(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

2(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Fixed costs	75,000
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(425,000)
Income from operations		75,000

Table (1)

Working note:

Determine the number of units sold.

Sales =$500,000

Selling price per unit =$250 per unit

$(Number of units sold)=Sales(Selling price per unit)= $500,000$250 per unit=2,000 units$ (3)

Answer 25

2(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

Answer 26

2(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Fixed costs	75,000
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(425,000)
Income from operations		75,000

Table (1)

Working note:

Determine the number of units sold.

Sales =$500,000

Selling price per unit =$250 per unit

$(Number of units sold)=Sales(Selling price per unit)= $500,000$250 per unit=2,000 units$ (3)

Answer 27

2(A)

Expert Solution

Answer 28

2(A)

Expert Solution

Answer 29

Expert Solution

Answer 30

2(B)

To determine

the maximum income from operations that could have been realized during the year.

2(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Fixed costs	75,000
Variable costs $[2,500 units×$175 per unit]$	437,500	(512,500)
Income from operations		112,500

Table (2)

Answer 31

2(B)

To determine

the maximum income from operations that could have been realized during the year.

Answer 32

2(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Fixed costs	75,000
Variable costs $[2,500 units×$175 per unit]$	437,500	(512,500)
Income from operations		112,500

Table (2)

Answer 33

2(B)

Expert Solution

Answer 34

2(B)

Expert Solution

Answer 35

Expert Solution

Answer 36

3.

To determine

To construct: a cost-volume-profit chart indicating the break-even sales for the current year.

3.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for the current year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 3

Figure (3)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $$108,750[$75,000+$33,750]$ (total fixed cost) on the vertical axis to the second point at $546,250 $[$108,750+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,450 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $362,500. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

Answer 37

3.

To determine

To construct: a cost-volume-profit chart indicating the break-even sales for the current year.

Answer 38

3.

Expert Solution

Explanation of Solution

Construct a cost-volume-profit chart indicating the break-even sales for the current year.

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 3

Figure (3)

The volume in units of sales is shown on the horizontal axis. The maximum relevant range is 2,500 units. The sales and the total costs (fixed cost and variable cost) in dollars is shown on the vertical axis. The maximum relevant range of sales and total costs is $700,000.

The total sales line is drawn right upward by connecting the first point at $0 to the second point at $625,000 $[2,500 units×$250 per unit]$ for 2,500 units sold (maximum relevant range on the horizontal axis).

The total cost line is drawn right upward by connecting the first point at $$108,750[$75,000+$33,750]$ (total fixed cost) on the vertical axis to the second point at $546,250 $[$108,750+$437,500]$ at the end of the relevant range. The variable cost is $$437,500(2,500 units×$175 per unit)$ .

The break-even point is the intersection point where the total sales line and total cost line meet. The vertical dotted line drawn downward from the intersection point reaches at 1,450 units. It indicates the break-even sales (units). The horizontal line drawn to the left towards the vertical axis reaches at $362,500. It indicates the break-even sales (dollars).

The operating profit area is the area where the total sales line exceeds the total cost line. However, the operating loss area is the area where the total cost exceeds the total sales line.

Answer 39

3.

Expert Solution

Answer 40

3.

Expert Solution

Answer 41

Expert Solution

Answer 42

4(A)

To determine

the income from operations for sales 2,000 units

4(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 4

Figure (4)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$458,750[$108,750+$350,000]$ for 2,000 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $458,750 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$41,250($500,000−$458,750)$ .

Answer 43

4(A)

To determine

the income from operations for sales 2,000 units

Answer 44

4(A)

Expert Solution

Explanation of Solution

FINANCIAL+MANG.-W/ACCESS PRACTICE SET, Chapter 19, Problem 19.4APR , additional homework tip 4

Figure (4)

Last year, the number of units sold is 2,000 units (3). The total sales is $500,000. The total cost is $$458,750[$108,750+$350,000]$ for 2,000 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$350,000(2,000 units×$175 per unit)$ . A dotted line is drawn from the total sales at $500,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,000 units.

Similarly, a dotted line is drawn from the total cost at $458,750 on the vertical axis towards the right and a dotted line is drawn upward for the 2,000 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,000 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$41,250($500,000−$458,750)$ .

Answer 45

4(A)

Expert Solution

Answer 46

4(A)

Expert Solution

Answer 47

Expert Solution

Answer 48

4(B)

To determine

The maximum income from operations that could have been realized during the year.

4(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sales is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$546,250[$108,750+$437,500]$ for 2,500 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $546,250 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$78,750($625,000−$546,250)$ .

Answer 49

4(B)

To determine

The maximum income from operations that could have been realized during the year.

Answer 50

4(B)

Expert Solution

Explanation of Solution

The maximum relevant range for number of units to be sold is 2,500 units. Thus, the total sales is $$625,000[2,500 units×$250 per unit]$ . The total cost is $$546,250[$108,750+$437,500]$ for 2,500 units sold. The total fixed cost is $$108,750[$75,000+$33,750]$ . The variable cost is $$437,500(2,500 units×$175 per unit)$ . A dotted line is drawn from the total sales at $625,000 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of sales at 2,500 units.

Similarly, a dotted line is drawn from the total cost at $546,250 on the vertical axis towards the right and a dotted line is drawn upward for the 2,500 units sold from the horizontal axis. The two dotted line meet at a point which indicates the point of total cost at 2,500 units.

The dotted line from sales is above the dotted line for total cost. This indicates the income from operations. Thus, the area in between the two dotted lines is the income from operations of $$78,750($625,000−$546,250)$ .

Answer 51

4(B)

Expert Solution

Answer 52

4(B)

Expert Solution

Answer 53

Expert Solution

Answer 54

4(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

4(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(458,750)
Income from operations		41,250

Table (3)

Answer 55

4(A)

To determine

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

Answer 56

4(A)

Expert Solution

Explanation of Solution

Verify the answers using the mathematical approach to cost-volume-profit analysis.

Determine the income from operations for the last year.

Determine the income from operations for 2,000 units
Particulars	Amount ($)	Amount ($)
Sales		500,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,000 units(3)×$175 per unit]$	350,000	(458,750)
Income from operations		41,250

Table (3)

Answer 57

4(A)

Expert Solution

Answer 58

4(A)

Expert Solution

Answer 59

Expert Solution

Answer 60

4(B)

To determine

the maximum income from operations that could have been realized during the year.

4(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,500 units×$175 per unit]$	437,500	(546,250)
Income from operations		78,750

Table (4)

Answer 61

4(B)

To determine

the maximum income from operations that could have been realized during the year.

Answer 62

4(B)

Expert Solution

Explanation of Solution

Determine the income from operations for 2,500 units
Particulars	Amount ($)	Amount ($)
Sales $[2,500 units×$250 per unit]$		625,000
Less: Total Fixed costs $[$75,000+$33,750]$	108,750
Variable costs $[2,500 units×$175 per unit]$	437,500	(546,250)
Income from operations		78,750

Table (4)

Answer 63

4(B)

Expert Solution

Answer 64

4(B)

Expert Solution

Answer 65

Expert Solution

Answer 66

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 analyzes the relationship between sales, costs, and related profit or loss at various levels of units sold. The break-even point is where the total sales line and total cost line meet.

Explanation of Solution

The income from operations for last year

Explanation of Solution

The maximum income from operations realized during the year.

Explanation of Solution

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

Explanation of Solution

the maximum income from operations that could have been realized during the year.

Explanation of Solution

To construct: a cost-volume-profit chart indicating the break-even sales for the current year.

Explanation of Solution

the income from operations for sales 2,000 units

Explanation of Solution

The maximum income from operations that could have been realized during the year.

Explanation of Solution

To verify: the answers using the mathematical approach to cost-volume-profit analysis.

Explanation of Solution

the maximum income from operations that could have been realized during the year.

Explanation of Solution

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