Breakeven point: It is that point at which the company expects no profit or no loss. At this point, the company’s total revenues and total costs are equal. Variable and Fixed costs: Variable costs are those costs which are incurred only when units are produced like direct material, direct labor, etc, while the fixed costs are incurred irrespective of the production like salaries, rent, etc. Net operating income: It refers to the amount earned after meeting all the costs, i.e., fixed and variable costs. Contribution margin ratio: It is computed as the percentage of sales. The contribution is arrived at after deducting the variable costs from the sales. Its mathematical formula is (net sales − variable costs) / net sales. It reflects the left-over earnings to pay the fixed costs. Requirement: 1 The missing values of different companies.

Question

Want to see the full answer?

Answer 1

Question

Chapter 21, Problem P21.54APGA

To determine

Concept Introduction:

Breakeven point: It is that point at which the company expects no profit or no loss. At this point, the company’s total revenues and total costs are equal.

Variable and Fixed costs: Variable costs are those costs which are incurred only when units are produced like direct material, direct labor, etc, while the fixed costs are incurred irrespective of the production like salaries, rent, etc.

Net operating income: It refers to the amount earned after meeting all the costs, i.e., fixed and variable costs.

Contribution margin ratio: It is computed as the percentage of sales. The contribution is arrived at after deducting the variable costs from the sales. Its mathematical formula is (net sales − variable costs) / net sales. It reflects the left-over earnings to pay the fixed costs.

Requirement: 1

The missing values of different companies.

Requirement:2

To determine

The Company which has the lowest breakeven point.

Requirement:3

To determine

The causes of low breakeven point.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Problem 3-2B Preparing adjusting and subsequent journal entries P1 P2 P3 P4 Natsu Company's annual accounting period ends on October 31. The following information concerns the adjusting entries that need to be recorded as of that date. Entries can draw from the following partial chart of accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Building; Accumulated Depreciation- Building; Salaries Payable; Unearned Revenue; Rent Revenue; Salaries Expense; Office Supplies Expense; Insurance Expense; and Depreciation Expense-Building. a. b. c. d. e. f. The Office Supplies account started the fiscal year with a $600 balance. During the fiscal year, the company purchased supplies for $4,570, which was added to the Office Supplies account. The supplies available at October 31 totaled $800. The Prepaid Insurance account had a $12,000 debit balance at October 31 before adjusting for the costs of any expired coverage for the fiscal year. An analysis of prepaid insurance shows…

Problem 3-1B Identifying adjusting entries with explanations P1 P2 P3 P4 For journal entries 1 through 12, indicate the explanation that most closely describes it. You can use explanations more than once. A. To record payment of a prepaid expense. B. To record this period's use of a prepaid expense. C. To record this period's depreciation expense. D. To record receipt of unearned revenue. E. To record this period's earning of prior unearned revenue. F. To record an accrued expense. G. To record payment of an accrued expense. H. To record an accrued revenue. I. To record receipt of accrued revenue. 1. Interest Receivable 3,500 7. Cash 1,500 Interest Revenue 3,500 Accounts Receivable (from services) 1,500 2. Salaries Payable 9,000 8. Salaries Expense 7,000 Cash 9,000 Salaries Payable 7,000 3. Depreciation Expense 8,000 9. Cash 1,000 Accumulated Depreciation. 8,000 Interest Receivable 1,000 4. Cash 9,000 10. Unearned Revenue 9,000 Prepaid Rent Cash 3,000 3,000 5. Insurance Expense 4,000…

None