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A.
Break-even Analysis: It refers to an analysis of 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, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:
To compute: Company M’s break-even number of accounts.
B.
To compute: the average weekday profit
C.
To compute: the average weekend day profit
D.
To compute: Company M’s revised break-even number of accounts.
E.
To Explain: Whether the company will still remain profitable for an average weekday under the scenario in (D).
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Chapter 19 Solutions
Financial & Managerial Accounting
- Wild-Water Works Water Park provides for a fun day by offering a variety of rides. Wild-Water Works Water Park sells tickets at $74 per person as a one-day entrance fee. Variable costs per person are $34 and fixed cost amount to $222,300 per month.Wild-Water Works Water Park expects to sell 7,900 tickets. Find break-even first, then compute the margin of safety in tickets and sales in dollars.arrow_forward↑ Suppose River Valley Lodge incurs $70,000 of fixed costs each month Compute the (a) total fixed cost and (b) fixed cost per guest if the hotel has 14,000 guests next month. Compare the fixed cost per guest at the higher occupancy rate to the fixed cost per guest when only 1,500 guests stay during the month. (a) Compute the total fixed cost if the hotel has 14,000 guests next month. Total fixed costs to wide changes in volume, therefore, total fixed costs will (b) Compute the fixed cost per guest if the hotel has 14,000 guests next month. First, identify the formula to compute the fixed cost per guest, then compute the foxed cost per guest at (1) 14,000 guests and at (2) 1.500 guests (Round the fixed cost per quest to the nearest cent.) Fixed cost per quest Nextarrow_forwardCullumber provides shuttle service between 4 hotels near a medical center and an international airport. Cullumber uses two 10- passenger vans to offer 12 round trips per day. A recent month's activity in the form of a cost-volume-profit income statement is as follows. Sales (1,370 passengers) Variable costs Fuel Tolls and parking Maintenance Contribution margin Fixed costs Salaries Depreciation (straight-line) Insurance Net income Break-even point Break-even point $3,836 $ 2,359 655 12,300 1,100 1,000 $34,250 6,850 Calculate the break-even point in (1) sales dollars and (2) number of passengers. 27,400 14,400 $13,000 passengersarrow_forward
- Playpals Park competes with Slide World by providing a variety of rides. Playpals Park sells tickets at $70 per person as a one-day entrance fee. Variable costs are $28 per person, and fixed costs are $258,300 per month. Under these conditions the breakeven point in tickets is 6,150 and in sales dollars is $430,500. Suppose Playpals Park increases fixed costs from $258,300 per month to $304,500 per month. Compute the new breakeven point in tickets and in sales dollars. Begin by selecting the formula labels and then entering the amounts to compute the number of tickets Playpals must sell to break even if its fixed costs are increased to $304,500. (Abbreviation used: CM = contribution margin. Complete all answer boxes. For items with a zero value, enter "0".) ) = = G Required sales in unitsarrow_forwardAnu’s Amusement Center has collected the following data for operations for the year. Total revenues $ 2,016,000 Total fixed costs $ 694,400 Total variable costs $ 1,134,000 Total tickets sold 63,000 Required: a. What is the average selling price for a ticket? b. What is the average variable cost per ticket? c. What is the average contribution margin per ticket? (Do not round intermediate calculations.) d. What is the break-even point? (Do not round intermediate calculations.) e. Anu has decided that unless the operation can earn at least $222,600 in operating profits, she will close it down. What number of tickets must be sold for Anu’s Amusements to make a $222,600 operating profit for the year on ticket sales? (Do not round intermediate calculations.)arrow_forwardSuppose a Best Western motel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room motel, average daily room rents of $50, and average variable costs of $10 for each room rented. It operates 365 days per year. The amount of net income on rooms that will be generated if the motel is half full throughout the entire year is: a. $(1,192,500) b. $1,590,000 c. $2,737,500 d. $990,000arrow_forward
- Anu's Amusement Center has collected the following data for operations for the year. Total revenues $ 1,914,000 Total fixed costs 500,500 Total variable costs 1,188,000 Total tickets sold 66,000 Required: a. What is the average selling price for a ticket? b. What is the average variable cost per ticket? c. What is the average contribution margin per ticket? (do not round intermediate calculations.) d. What is the break-even point? (Do not round intermediate calculations.) e. Anu has decided that unless the operation can earn at least $253,000 in operating profits, she will close it down. What number of tickets must be sold for Anu's Amusements to make a $253,000 operating profit for the year on ticket sales? (do not round intermediate calculations) a. Average selling price __________ per…arrow_forwardThe Sandhill Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rent at $120 a night. Operating costs are as follows: Salaries $5400 per month Utilities $1300 per month Depreciation $1100 per month Maintenance $2520 per month Maid service $33 per room Other costs $63 per room a/ Determine the inn’s break-even point in number of rented rooms per month. b/Determine the inn’s break-even point in dollars.arrow_forwardThe Soma Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $56 a night. Operating costs are as follows. Salaries Utilities Depreciation Maintenance Maid service Other costs $10,600 per month 2.600 per month 1,400 per month 700 per month 7 31 per room 2 Determine the inn's break-even point in (1) number of rented rooms per month and (2) dlars. per room Break-even point in rooms Break-even pointarrow_forward
- Analyze Pacific Airways Pacific Airways provides air travel services between Los Angeles and Seattle. Cost information per flight is as follows: Each flight has a capacity of 150 seats, with an average of 125 seats sold per flight at an average ticket price of 180. Assume Pacific Airways is considering a new service that would provide tickets at half price. Passengers would need to fly standby to receive the discount, but would be provided a flight for a given day of travel. An analysis revealed that an average of 8 existing passengers would use the new discounted tickets for travel. In addition, 15 new passengers would be attracted to the offer. a. Determine the contribution margin per passenger for the full-priced ticket. b. Determine the break-even number of seats sold per flight. c. Determine the contribution margin per passenger for discounted tickets. d. Should Pacific Airways offer the discounted ticket plan? Answer the question by computing the incremental contribution margin per flight for the plan.arrow_forwardThe Cullumber Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $100 a night. Operating costs are as follows: Salaries $7,500 per month Utilities $1,000 per month Depreciation $1,100 per month Maintenance $2,940 per month Maid service $24 per room Other costs $46 per room Determine the inn’s break-even point in number of rented rooms per month. Break-even point enter the break-even point in number of rented rooms rooms Determine the inn’s break-even point in dollars. Break-even point in $enter the break-even point in dollarsarrow_forwardPlease do not give image formatarrow_forward
- Financial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
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