Composite Units: The composite units can be defined as the variety of units produced by a business grouped together is proportion to their sales mix. A composite contribution margin per unit is calculated using the proportion of their sales mix. Break-even point and Composite break-even point: The break-even point can be defined as the point where the total sales revenue is equal to the total costs involved. The break-even point is calculated as – Break-even point (in Units) – B r e a k − e v e n p o i n t ( i n U n i t s ) = F i x e d c o s t C o n t r i b u t i o n m a r g i n p e r u n i t Break-even point (in Dollars) – B r e a k − e v e n p o i n t ( i n D o l l a r s ) = F i x e d c o s t C o n t r i b u t i o n m a r g i n r a t i o In composite break-even point, the composite contribution margin per unit is used to find composite break-even point. Weighted Average Contribution per unit: When the composite contribution is divided by sales mix, it is termed as weighted average contribution per unit. Margin of Safety: Margin of safety can be defined as the amount of sales revenue over and above the break-even point. The break-even point is the point of sales revenue where totals costs are equal to total revenue. All the sales above break-even point are termed as margin of safety. The margin of safety is calculated as under – M a r g i n o f s a f e t y = A c t u a l s a l e s – B r e a k − e v e n p o i n t o f s a l e s Degree of operating leverage: The degree of operating leverage can be defined as the measures that explains the relationship of change in operating income due to change in sales. The degree of operating leverage is calculated as under – D e g r e e o f O p e r a t i n g l e v e r a g e = C o n t r i b u t i o n M a r g i n O p e r a t i n g i n c o m e Requirement 1 To calculate: Weighted Average contribution margin

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Answer 1

Question

Chapter 21, Problem P21.53APGA

To determine

Concept Introduction:

Composite Units:

The composite units can be defined as the variety of units produced by a business grouped together is proportion to their sales mix. A composite contribution margin per unit is calculated using the proportion of their sales mix.

Break-even point and Composite break-even point:

The break-even point can be defined as the point where the total sales revenue is equal to the total costs involved. The break-even point is calculated as –

Break-even point (in Units) –

$B r e a k - e v e n p o i n t (i n U n i t s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n p e r u n i t}$

Break-even point (in Dollars) –

$B r e a k - e v e n p o i n t (i n D o l l a r s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n r a t i o}$

In composite break-even point, the composite contribution margin per unit is used to find composite break-even point.

Weighted Average Contribution per unit:

When the composite contribution is divided by sales mix, it is termed as weighted average contribution per unit.

Margin of Safety:

Margin of safety can be defined as the amount of sales revenue over and above the break-even point. The break-even point is the point of sales revenue where totals costs are equal to total revenue. All the sales above break-even point are termed as margin of safety.

The margin of safety is calculated as under –

$M a r g i n o f s a f e t y = A c t u a l s a l e s - B r e a k - e v e n p o i n t o f s a l e s$

Degree of operating leverage:

The degree of operating leverage can be defined as the measures that explains the relationship of change in operating income due to change in sales. The degree of operating leverage is calculated as under –

$D e g r e e o f O p e r a t i n g l e v e r a g e = \frac{C o n t r i b u t i o n M a r g i n}{O p e r a t i n g i n c o m e}$

Requirement 1

To calculate:

Weighted Average contribution margin

To determine

Requirement 2

a.

Break-even point in dozens of plain donuts and custard-filled donuts

b. To prove:

Answer by preparing an income statement

To determine

Requirement 3

Margin of Safety in dollars

To determine

Requirement 4

1.

Degree of operating leverage for 2016

2. To estimate:

New operating Income of total sales increase by 40%

To determine

Requirement 5

To prove:

Answer of requirement 4 by preparing a contribution margin income statement

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Chapter 21, Problem P21.53APGA

To determine

Concept Introduction:

Composite Units:

The composite units can be defined as the variety of units produced by a business grouped together is proportion to their sales mix. A composite contribution margin per unit is calculated using the proportion of their sales mix.

Break-even point and Composite break-even point:

The break-even point can be defined as the point where the total sales revenue is equal to the total costs involved. The break-even point is calculated as –

Break-even point (in Units) –

$B r e a k - e v e n p o i n t (i n U n i t s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n p e r u n i t}$

Break-even point (in Dollars) –

$B r e a k - e v e n p o i n t (i n D o l l a r s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n r a t i o}$

In composite break-even point, the composite contribution margin per unit is used to find composite break-even point.

Weighted Average Contribution per unit:

When the composite contribution is divided by sales mix, it is termed as weighted average contribution per unit.

Margin of Safety:

Margin of safety can be defined as the amount of sales revenue over and above the break-even point. The break-even point is the point of sales revenue where totals costs are equal to total revenue. All the sales above break-even point are termed as margin of safety.

The margin of safety is calculated as under –

$M a r g i n o f s a f e t y = A c t u a l s a l e s - B r e a k - e v e n p o i n t o f s a l e s$

Degree of operating leverage:

The degree of operating leverage can be defined as the measures that explains the relationship of change in operating income due to change in sales. The degree of operating leverage is calculated as under –

$D e g r e e o f O p e r a t i n g l e v e r a g e = \frac{C o n t r i b u t i o n M a r g i n}{O p e r a t i n g i n c o m e}$

Requirement 1

To calculate:

Weighted Average contribution margin

To determine

Requirement 2

a.

Break-even point in dozens of plain donuts and custard-filled donuts

b. To prove:

Answer by preparing an income statement

To determine

Requirement 3

Margin of Safety in dollars

To determine

Requirement 4

1.

Degree of operating leverage for 2016

2. To estimate:

New operating Income of total sales increase by 40%

To determine

Requirement 5

To prove:

Answer of requirement 4 by preparing a contribution margin income statement

Expert Solution & Answer

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Answer 3

Question

Chapter 21, Problem P21.53APGA

To determine

Concept Introduction:

Composite Units:

The composite units can be defined as the variety of units produced by a business grouped together is proportion to their sales mix. A composite contribution margin per unit is calculated using the proportion of their sales mix.

Break-even point and Composite break-even point:

The break-even point can be defined as the point where the total sales revenue is equal to the total costs involved. The break-even point is calculated as –

Break-even point (in Units) –

$B r e a k - e v e n p o i n t (i n U n i t s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n p e r u n i t}$

Break-even point (in Dollars) –

$B r e a k - e v e n p o i n t (i n D o l l a r s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n r a t i o}$

In composite break-even point, the composite contribution margin per unit is used to find composite break-even point.

Weighted Average Contribution per unit:

When the composite contribution is divided by sales mix, it is termed as weighted average contribution per unit.

Margin of Safety:

Margin of safety can be defined as the amount of sales revenue over and above the break-even point. The break-even point is the point of sales revenue where totals costs are equal to total revenue. All the sales above break-even point are termed as margin of safety.

The margin of safety is calculated as under –

$M a r g i n o f s a f e t y = A c t u a l s a l e s - B r e a k - e v e n p o i n t o f s a l e s$

Degree of operating leverage:

The degree of operating leverage can be defined as the measures that explains the relationship of change in operating income due to change in sales. The degree of operating leverage is calculated as under –

$D e g r e e o f O p e r a t i n g l e v e r a g e = \frac{C o n t r i b u t i o n M a r g i n}{O p e r a t i n g i n c o m e}$

Requirement 1

To calculate:

Weighted Average contribution margin

To determine

Requirement 2

a.

Break-even point in dozens of plain donuts and custard-filled donuts

b. To prove:

Answer by preparing an income statement

To determine

Requirement 3

Margin of Safety in dollars

To determine

Requirement 4

1.

Degree of operating leverage for 2016

2. To estimate:

New operating Income of total sales increase by 40%

To determine

Requirement 5

To prove:

Answer of requirement 4 by preparing a contribution margin income statement

Expert Solution & Answer

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Answer 4

Question

Chapter 21, Problem P21.53APGA

To determine

Concept Introduction:

Composite Units:

The composite units can be defined as the variety of units produced by a business grouped together is proportion to their sales mix. A composite contribution margin per unit is calculated using the proportion of their sales mix.

Break-even point and Composite break-even point:

The break-even point can be defined as the point where the total sales revenue is equal to the total costs involved. The break-even point is calculated as –

Break-even point (in Units) –

$B r e a k - e v e n p o i n t (i n U n i t s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n p e r u n i t}$

Break-even point (in Dollars) –

$B r e a k - e v e n p o i n t (i n D o l l a r s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n r a t i o}$

In composite break-even point, the composite contribution margin per unit is used to find composite break-even point.

Weighted Average Contribution per unit:

When the composite contribution is divided by sales mix, it is termed as weighted average contribution per unit.

Margin of Safety:

Margin of safety can be defined as the amount of sales revenue over and above the break-even point. The break-even point is the point of sales revenue where totals costs are equal to total revenue. All the sales above break-even point are termed as margin of safety.

The margin of safety is calculated as under –

$M a r g i n o f s a f e t y = A c t u a l s a l e s - B r e a k - e v e n p o i n t o f s a l e s$

Degree of operating leverage:

The degree of operating leverage can be defined as the measures that explains the relationship of change in operating income due to change in sales. The degree of operating leverage is calculated as under –

$D e g r e e o f O p e r a t i n g l e v e r a g e = \frac{C o n t r i b u t i o n M a r g i n}{O p e r a t i n g i n c o m e}$

Requirement 1

To calculate:

Weighted Average contribution margin

To determine

Requirement 2

a.

Break-even point in dozens of plain donuts and custard-filled donuts

b. To prove:

Answer by preparing an income statement

To determine

Requirement 3

Margin of Safety in dollars

To determine

Requirement 4

1.

Degree of operating leverage for 2016

2. To estimate:

New operating Income of total sales increase by 40%

To determine

Requirement 5

To prove:

Answer of requirement 4 by preparing a contribution margin income statement

Expert Solution & Answer

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See solution

Answer 5

Chapter 21, Problem P21.53APGA

To determine

Concept Introduction:

Composite Units:

The composite units can be defined as the variety of units produced by a business grouped together is proportion to their sales mix. A composite contribution margin per unit is calculated using the proportion of their sales mix.

Break-even point and Composite break-even point:

The break-even point can be defined as the point where the total sales revenue is equal to the total costs involved. The break-even point is calculated as –

Break-even point (in Units) –

$B r e a k - e v e n p o i n t (i n U n i t s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n p e r u n i t}$

Break-even point (in Dollars) –

$B r e a k - e v e n p o i n t (i n D o l l a r s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n r a t i o}$

In composite break-even point, the composite contribution margin per unit is used to find composite break-even point.

Weighted Average Contribution per unit:

When the composite contribution is divided by sales mix, it is termed as weighted average contribution per unit.

Margin of Safety:

Margin of safety can be defined as the amount of sales revenue over and above the break-even point. The break-even point is the point of sales revenue where totals costs are equal to total revenue. All the sales above break-even point are termed as margin of safety.

The margin of safety is calculated as under –

$M a r g i n o f s a f e t y = A c t u a l s a l e s - B r e a k - e v e n p o i n t o f s a l e s$

Degree of operating leverage:

The degree of operating leverage can be defined as the measures that explains the relationship of change in operating income due to change in sales. The degree of operating leverage is calculated as under –

$D e g r e e o f O p e r a t i n g l e v e r a g e = \frac{C o n t r i b u t i o n M a r g i n}{O p e r a t i n g i n c o m e}$

Requirement 1

To calculate:

Weighted Average contribution margin

To determine

Requirement 2

a.

Break-even point in dozens of plain donuts and custard-filled donuts

b. To prove:

Answer by preparing an income statement

To determine

Requirement 3

Margin of Safety in dollars

To determine

Requirement 4

1.

Degree of operating leverage for 2016

2. To estimate:

New operating Income of total sales increase by 40%

To determine

Requirement 5

To prove:

Answer of requirement 4 by preparing a contribution margin income statement

Answer 6

Chapter 21, Problem P21.53APGA

To determine

Concept Introduction:

Composite Units:

The composite units can be defined as the variety of units produced by a business grouped together is proportion to their sales mix. A composite contribution margin per unit is calculated using the proportion of their sales mix.

Break-even point and Composite break-even point:

The break-even point can be defined as the point where the total sales revenue is equal to the total costs involved. The break-even point is calculated as –

Break-even point (in Units) –

$B r e a k - e v e n p o i n t (i n U n i t s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n p e r u n i t}$

Break-even point (in Dollars) –

$B r e a k - e v e n p o i n t (i n D o l l a r s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n r a t i o}$

In composite break-even point, the composite contribution margin per unit is used to find composite break-even point.

Weighted Average Contribution per unit:

When the composite contribution is divided by sales mix, it is termed as weighted average contribution per unit.

Margin of Safety:

Margin of safety can be defined as the amount of sales revenue over and above the break-even point. The break-even point is the point of sales revenue where totals costs are equal to total revenue. All the sales above break-even point are termed as margin of safety.

The margin of safety is calculated as under –

$M a r g i n o f s a f e t y = A c t u a l s a l e s - B r e a k - e v e n p o i n t o f s a l e s$

Degree of operating leverage:

The degree of operating leverage can be defined as the measures that explains the relationship of change in operating income due to change in sales. The degree of operating leverage is calculated as under –

$D e g r e e o f O p e r a t i n g l e v e r a g e = \frac{C o n t r i b u t i o n M a r g i n}{O p e r a t i n g i n c o m e}$

Requirement 1

To calculate:

Weighted Average contribution margin

Answer 7

Chapter 21, Problem P21.53APGA

To determine

Concept Introduction:

Composite Units:

The composite units can be defined as the variety of units produced by a business grouped together is proportion to their sales mix. A composite contribution margin per unit is calculated using the proportion of their sales mix.

Break-even point and Composite break-even point:

The break-even point can be defined as the point where the total sales revenue is equal to the total costs involved. The break-even point is calculated as –

Break-even point (in Units) –

$B r e a k - e v e n p o i n t (i n U n i t s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n p e r u n i t}$

Break-even point (in Dollars) –

$B r e a k - e v e n p o i n t (i n D o l l a r s) = \frac{F i x e d c o s t}{C o n t r i b u t i o n m a r g i n r a t i o}$

In composite break-even point, the composite contribution margin per unit is used to find composite break-even point.

Weighted Average Contribution per unit:

When the composite contribution is divided by sales mix, it is termed as weighted average contribution per unit.

Margin of Safety:

Margin of safety can be defined as the amount of sales revenue over and above the break-even point. The break-even point is the point of sales revenue where totals costs are equal to total revenue. All the sales above break-even point are termed as margin of safety.

The margin of safety is calculated as under –

$M a r g i n o f s a f e t y = A c t u a l s a l e s - B r e a k - e v e n p o i n t o f s a l e s$

Degree of operating leverage:

The degree of operating leverage can be defined as the measures that explains the relationship of change in operating income due to change in sales. The degree of operating leverage is calculated as under –

$D e g r e e o f O p e r a t i n g l e v e r a g e = \frac{C o n t r i b u t i o n M a r g i n}{O p e r a t i n g i n c o m e}$

Requirement 1

To calculate:

Weighted Average contribution margin

Answer 8

To determine

Requirement 2

a.

Break-even point in dozens of plain donuts and custard-filled donuts

b. To prove:

Answer by preparing an income statement

Answer 9

To determine

Requirement 2

a.

Break-even point in dozens of plain donuts and custard-filled donuts

b. To prove:

Answer by preparing an income statement

Answer 10

To determine

Requirement 3

Margin of Safety in dollars

Answer 11

To determine

Requirement 3

Margin of Safety in dollars

Answer 12

To determine

Requirement 4

1.

Degree of operating leverage for 2016

2. To estimate:

New operating Income of total sales increase by 40%

Answer 13

To determine

Requirement 4

1.

Degree of operating leverage for 2016

2. To estimate:

New operating Income of total sales increase by 40%

Answer 14

To determine

Requirement 5

To prove:

Answer of requirement 4 by preparing a contribution margin income statement

Answer 15

To determine

Requirement 5

To prove:

Answer of requirement 4 by preparing a contribution margin income statement

Answer 16

Expert Solution & Answer

Answer 17

Expert Solution & Answer

Answer 18

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Answer 19

Ch. 21 - For Frank’s Funky Sounds, straight-line...Ch. 21 - Prob. 2QC Ch. 21 - Prob. 3QC Ch. 21 - Prob. 4QC Ch. 21 - Prob. 5QC Ch. 21 - On a CVP graph, the total cost line intersects the...Ch. 21 - If a company increases its sales price per unit...Ch. 21 - Prob. 8QC Ch. 21 - Prob. 9QC Ch. 21 - Prob. 10QC

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Requirement 2

a.

Break-even point in dozens of plain donuts and custard-filled donuts

b. To prove:

Answer by preparing an income statement

Requirement 3

Margin of Safety in dollars

Requirement 4

1.

Degree of operating leverage for 2016

2. To estimate:

New operating Income of total sales increase by 40%

Requirement 5

To prove:

Answer of requirement 4 by preparing a contribution margin income statement

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Chapter 21 Solutions

Videos

Requirement 2 a. Break-even point in dozens of plain donuts and custard-filled donuts b. To prove: Answer by preparing an income statement

Requirement 3 Margin of Safety in dollars

Requirement 4 1. Degree of operating leverage for 2016 2. To estimate: New operating Income of total sales increase by 40%

Requirement 5 To prove: Answer of requirement 4 by preparing a contribution margin income statement

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Chapter 21 Solutions

Requirement 2

a.

Break-even point in dozens of plain donuts and custard-filled donuts

b. To prove:

Answer by preparing an income statement

Requirement 3

Margin of Safety in dollars

Requirement 4

1.

Degree of operating leverage for 2016

2. To estimate:

New operating Income of total sales increase by 40%

Requirement 5

To prove:

Answer of requirement 4 by preparing a contribution margin income statement