Weighted Average Contribution Margin: Weighted Average Contribution Margin is calculated for two products with the help of following formula: W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n = ( C o n t r i b u t i o n m a r g i n o f P r o d u c t A * W e i g h t o f p r o d u c t A ) + ( C o n t r i b u t i o n m a r g i n o f P r o d u c t B * W e i g h t o f p r o d u c t B ) Contribution margin: Contribution margin is the difference between sales price and variable costs. It is calculated with the help of following formula : C o n t r i b u t i o n M a r g i n = S a l e s p r i c e – V a r i a b l e c o s t s Breakeven point for two products: Breakeven point is the level of output at which the sales is equal to the total cost and there is no profit or loss. Breakeven point in units for two products together is calculated with the help of following formulas: B r e a k e v e n p o i n t ( U n i t s ) = T o t a l F i x e d C o s t W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n Margin of Safety: Margin of safety is sales over and above the breakeven level. Margin of safety can be calculated as dollar amount and in units as follows: 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 s a l e s 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 s a l e s ) A c t u a l S a l e s Degree of operating leverage: The Degree of operating leverage shows the relation between change in net operating income and change in sales. The formulas for degree of operating leverage are as follows: 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 C h a n g e i n o p e r a t i n g i n c o m e = C h a n g e s i n s a l e s × 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 Requirement-1: The Weighted Average Contribution Margin

Question

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Answer 1

Question

Chapter 21, Problem P21.65BPGB

To determine

Concept Introduction:

Weighted Average Contribution Margin: Weighted Average Contribution Margin is calculated for two products with the help of following formula:

$\begin{array}{l} W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n = (C o n t r i b u t i o n m a r g i n o f P r o d u c t A * W e i g h t o f p r o d u c t A) \\ + (C o n t r i b u t i o n m a r g i n o f P r o d u c t B * W e i g h t o f p r o d u c t B) \end{array}$

Contribution margin: Contribution margin is the difference between sales price and variable costs. It is calculated with the help of following formula:

$C o n t r i b u t i o n M a r g i n = S a l e s p r i c e - V a r i a b l e c o s t s$

Breakeven point for two products: Breakeven point is the level of output at which the sales is equal to the total cost and there is no profit or loss. Breakeven point in units for two products together is calculated with the help of following formulas:

$B r e a k e v e n p o i n t (U n i t s) = \frac{T o t a l F i x e d C o s t}{W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n}$

Margin of Safety: Margin of safety is sales over and above the breakeven level. Margin of safety can be calculated as dollar amount and in units as follows:

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

$M a r g i n o f s a f e t y (%) = \frac{(A c t u a l S a l e s - B r e a k e v e n s a l e s)}{A c t u a l S a l e s}$

Degree of operating leverage: The Degree of operating leverage shows the relation between change in net operating income and change in sales. The formulas for degree of operating leverage are as follows:

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

$C h a n g e i n o p e r a t i n g i n c o m e = C h a n g e s i n s a l e s \times D e g r e e o f o p e r a t i n g l e v e r a g e$

Requirement-1:

The Weighted Average Contribution Margin

To determine

Requirement -2:

The Breakeven point for each product in dozens and prove it showing the contribution margin income statement

To determine

Requirement -3:

The Delectable’s Margin of safety in dollars

To determine

Requirement -4:

The Operating leverage for Delectable and new operating income of total sales increases by 20%

To determine

Requirement -5:

To prove: The calculation of new operating income above using the contribution margin income statement

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What are the required sales?

Luma Corp. had net credit sales of $2,400,000 in 2023. The beginning accounts receivable balance was $180,000, and the ending balance was $210,000. (a) What is the receivables turnover? (b) What is the average collection period in days?

What is the desired profit for the year?

Answer 2

Question

Chapter 21, Problem P21.65BPGB

To determine

Concept Introduction:

Weighted Average Contribution Margin: Weighted Average Contribution Margin is calculated for two products with the help of following formula:

$\begin{array}{l} W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n = (C o n t r i b u t i o n m a r g i n o f P r o d u c t A * W e i g h t o f p r o d u c t A) \\ + (C o n t r i b u t i o n m a r g i n o f P r o d u c t B * W e i g h t o f p r o d u c t B) \end{array}$

Contribution margin: Contribution margin is the difference between sales price and variable costs. It is calculated with the help of following formula:

$C o n t r i b u t i o n M a r g i n = S a l e s p r i c e - V a r i a b l e c o s t s$

Breakeven point for two products: Breakeven point is the level of output at which the sales is equal to the total cost and there is no profit or loss. Breakeven point in units for two products together is calculated with the help of following formulas:

$B r e a k e v e n p o i n t (U n i t s) = \frac{T o t a l F i x e d C o s t}{W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n}$

Margin of Safety: Margin of safety is sales over and above the breakeven level. Margin of safety can be calculated as dollar amount and in units as follows:

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

$M a r g i n o f s a f e t y (%) = \frac{(A c t u a l S a l e s - B r e a k e v e n s a l e s)}{A c t u a l S a l e s}$

Degree of operating leverage: The Degree of operating leverage shows the relation between change in net operating income and change in sales. The formulas for degree of operating leverage are as follows:

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

$C h a n g e i n o p e r a t i n g i n c o m e = C h a n g e s i n s a l e s \times D e g r e e o f o p e r a t i n g l e v e r a g e$

Requirement-1:

The Weighted Average Contribution Margin

To determine

Requirement -2:

The Breakeven point for each product in dozens and prove it showing the contribution margin income statement

To determine

Requirement -3:

The Delectable’s Margin of safety in dollars

To determine

Requirement -4:

The Operating leverage for Delectable and new operating income of total sales increases by 20%

To determine

Requirement -5:

To prove: The calculation of new operating income above using the contribution margin income statement

Expert Solution & Answer

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Answer 3

Question

Chapter 21, Problem P21.65BPGB

To determine

Concept Introduction:

Weighted Average Contribution Margin: Weighted Average Contribution Margin is calculated for two products with the help of following formula:

$\begin{array}{l} W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n = (C o n t r i b u t i o n m a r g i n o f P r o d u c t A * W e i g h t o f p r o d u c t A) \\ + (C o n t r i b u t i o n m a r g i n o f P r o d u c t B * W e i g h t o f p r o d u c t B) \end{array}$

Contribution margin: Contribution margin is the difference between sales price and variable costs. It is calculated with the help of following formula:

$C o n t r i b u t i o n M a r g i n = S a l e s p r i c e - V a r i a b l e c o s t s$

Breakeven point for two products: Breakeven point is the level of output at which the sales is equal to the total cost and there is no profit or loss. Breakeven point in units for two products together is calculated with the help of following formulas:

$B r e a k e v e n p o i n t (U n i t s) = \frac{T o t a l F i x e d C o s t}{W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n}$

Margin of Safety: Margin of safety is sales over and above the breakeven level. Margin of safety can be calculated as dollar amount and in units as follows:

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

$M a r g i n o f s a f e t y (%) = \frac{(A c t u a l S a l e s - B r e a k e v e n s a l e s)}{A c t u a l S a l e s}$

Degree of operating leverage: The Degree of operating leverage shows the relation between change in net operating income and change in sales. The formulas for degree of operating leverage are as follows:

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

$C h a n g e i n o p e r a t i n g i n c o m e = C h a n g e s i n s a l e s \times D e g r e e o f o p e r a t i n g l e v e r a g e$

Requirement-1:

The Weighted Average Contribution Margin

To determine

Requirement -2:

The Breakeven point for each product in dozens and prove it showing the contribution margin income statement

To determine

Requirement -3:

The Delectable’s Margin of safety in dollars

To determine

Requirement -4:

The Operating leverage for Delectable and new operating income of total sales increases by 20%

To determine

Requirement -5:

To prove: The calculation of new operating income above using the contribution margin income statement

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 21, Problem P21.65BPGB

To determine

Concept Introduction:

Weighted Average Contribution Margin: Weighted Average Contribution Margin is calculated for two products with the help of following formula:

$\begin{array}{l} W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n = (C o n t r i b u t i o n m a r g i n o f P r o d u c t A * W e i g h t o f p r o d u c t A) \\ + (C o n t r i b u t i o n m a r g i n o f P r o d u c t B * W e i g h t o f p r o d u c t B) \end{array}$

Contribution margin: Contribution margin is the difference between sales price and variable costs. It is calculated with the help of following formula:

$C o n t r i b u t i o n M a r g i n = S a l e s p r i c e - V a r i a b l e c o s t s$

Breakeven point for two products: Breakeven point is the level of output at which the sales is equal to the total cost and there is no profit or loss. Breakeven point in units for two products together is calculated with the help of following formulas:

$B r e a k e v e n p o i n t (U n i t s) = \frac{T o t a l F i x e d C o s t}{W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n}$

Margin of Safety: Margin of safety is sales over and above the breakeven level. Margin of safety can be calculated as dollar amount and in units as follows:

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

$M a r g i n o f s a f e t y (%) = \frac{(A c t u a l S a l e s - B r e a k e v e n s a l e s)}{A c t u a l S a l e s}$

Degree of operating leverage: The Degree of operating leverage shows the relation between change in net operating income and change in sales. The formulas for degree of operating leverage are as follows:

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

$C h a n g e i n o p e r a t i n g i n c o m e = C h a n g e s i n s a l e s \times D e g r e e o f o p e r a t i n g l e v e r a g e$

Requirement-1:

The Weighted Average Contribution Margin

To determine

Requirement -2:

The Breakeven point for each product in dozens and prove it showing the contribution margin income statement

To determine

Requirement -3:

The Delectable’s Margin of safety in dollars

To determine

Requirement -4:

The Operating leverage for Delectable and new operating income of total sales increases by 20%

To determine

Requirement -5:

To prove: The calculation of new operating income above using the contribution margin income statement

Expert Solution & Answer

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Answer 5

Chapter 21, Problem P21.65BPGB

To determine

Concept Introduction:

Weighted Average Contribution Margin: Weighted Average Contribution Margin is calculated for two products with the help of following formula:

$\begin{array}{l} W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n = (C o n t r i b u t i o n m a r g i n o f P r o d u c t A * W e i g h t o f p r o d u c t A) \\ + (C o n t r i b u t i o n m a r g i n o f P r o d u c t B * W e i g h t o f p r o d u c t B) \end{array}$

Contribution margin: Contribution margin is the difference between sales price and variable costs. It is calculated with the help of following formula:

$C o n t r i b u t i o n M a r g i n = S a l e s p r i c e - V a r i a b l e c o s t s$

Breakeven point for two products: Breakeven point is the level of output at which the sales is equal to the total cost and there is no profit or loss. Breakeven point in units for two products together is calculated with the help of following formulas:

$B r e a k e v e n p o i n t (U n i t s) = \frac{T o t a l F i x e d C o s t}{W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n}$

Margin of Safety: Margin of safety is sales over and above the breakeven level. Margin of safety can be calculated as dollar amount and in units as follows:

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

$M a r g i n o f s a f e t y (%) = \frac{(A c t u a l S a l e s - B r e a k e v e n s a l e s)}{A c t u a l S a l e s}$

Degree of operating leverage: The Degree of operating leverage shows the relation between change in net operating income and change in sales. The formulas for degree of operating leverage are as follows:

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

$C h a n g e i n o p e r a t i n g i n c o m e = C h a n g e s i n s a l e s \times D e g r e e o f o p e r a t i n g l e v e r a g e$

Requirement-1:

The Weighted Average Contribution Margin

To determine

Requirement -2:

The Breakeven point for each product in dozens and prove it showing the contribution margin income statement

To determine

Requirement -3:

The Delectable’s Margin of safety in dollars

To determine

Requirement -4:

The Operating leverage for Delectable and new operating income of total sales increases by 20%

To determine

Requirement -5:

To prove: The calculation of new operating income above using the contribution margin income statement

Answer 6

Chapter 21, Problem P21.65BPGB

To determine

Concept Introduction:

Weighted Average Contribution Margin: Weighted Average Contribution Margin is calculated for two products with the help of following formula:

$\begin{array}{l} W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n = (C o n t r i b u t i o n m a r g i n o f P r o d u c t A * W e i g h t o f p r o d u c t A) \\ + (C o n t r i b u t i o n m a r g i n o f P r o d u c t B * W e i g h t o f p r o d u c t B) \end{array}$

Contribution margin: Contribution margin is the difference between sales price and variable costs. It is calculated with the help of following formula:

$C o n t r i b u t i o n M a r g i n = S a l e s p r i c e - V a r i a b l e c o s t s$

Breakeven point for two products: Breakeven point is the level of output at which the sales is equal to the total cost and there is no profit or loss. Breakeven point in units for two products together is calculated with the help of following formulas:

$B r e a k e v e n p o i n t (U n i t s) = \frac{T o t a l F i x e d C o s t}{W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n}$

Margin of Safety: Margin of safety is sales over and above the breakeven level. Margin of safety can be calculated as dollar amount and in units as follows:

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

$M a r g i n o f s a f e t y (%) = \frac{(A c t u a l S a l e s - B r e a k e v e n s a l e s)}{A c t u a l S a l e s}$

Degree of operating leverage: The Degree of operating leverage shows the relation between change in net operating income and change in sales. The formulas for degree of operating leverage are as follows:

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

$C h a n g e i n o p e r a t i n g i n c o m e = C h a n g e s i n s a l e s \times D e g r e e o f o p e r a t i n g l e v e r a g e$

Requirement-1:

The Weighted Average Contribution Margin

Answer 7

Chapter 21, Problem P21.65BPGB

To determine

Concept Introduction:

Weighted Average Contribution Margin: Weighted Average Contribution Margin is calculated for two products with the help of following formula:

$\begin{array}{l} W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n = (C o n t r i b u t i o n m a r g i n o f P r o d u c t A * W e i g h t o f p r o d u c t A) \\ + (C o n t r i b u t i o n m a r g i n o f P r o d u c t B * W e i g h t o f p r o d u c t B) \end{array}$

Contribution margin: Contribution margin is the difference between sales price and variable costs. It is calculated with the help of following formula:

$C o n t r i b u t i o n M a r g i n = S a l e s p r i c e - V a r i a b l e c o s t s$

Breakeven point for two products: Breakeven point is the level of output at which the sales is equal to the total cost and there is no profit or loss. Breakeven point in units for two products together is calculated with the help of following formulas:

$B r e a k e v e n p o i n t (U n i t s) = \frac{T o t a l F i x e d C o s t}{W e i g h t e d A v e r a g e C o n t r i b u t i o n M a r g i n}$

Margin of Safety: Margin of safety is sales over and above the breakeven level. Margin of safety can be calculated as dollar amount and in units as follows:

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

$M a r g i n o f s a f e t y (%) = \frac{(A c t u a l S a l e s - B r e a k e v e n s a l e s)}{A c t u a l S a l e s}$

Degree of operating leverage: The Degree of operating leverage shows the relation between change in net operating income and change in sales. The formulas for degree of operating leverage are as follows:

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

$C h a n g e i n o p e r a t i n g i n c o m e = C h a n g e s i n s a l e s \times D e g r e e o f o p e r a t i n g l e v e r a g e$

Requirement-1:

The Weighted Average Contribution Margin

Answer 8

To determine

Requirement -2:

The Breakeven point for each product in dozens and prove it showing the contribution margin income statement

Answer 9

To determine

Requirement -2:

The Breakeven point for each product in dozens and prove it showing the contribution margin income statement

Answer 10

To determine

Requirement -3:

The Delectable’s Margin of safety in dollars

Answer 11

To determine

Requirement -3:

The Delectable’s Margin of safety in dollars

Answer 12

To determine

Requirement -4:

The Operating leverage for Delectable and new operating income of total sales increases by 20%

Answer 13

To determine

Requirement -4:

The Operating leverage for Delectable and new operating income of total sales increases by 20%

Answer 14

To determine

Requirement -5:

To prove: The calculation of new operating income above using the contribution margin income statement

Answer 15

To determine

Requirement -5:

To prove: The calculation of new operating income above using the 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

Requirement -2: The Breakeven point for each product in dozens and prove it showing the contribution margin income statement

Requirement -3: The Delectable’s Margin of safety in dollars

Requirement -4: The Operating leverage for Delectable and new operating income of total sales increases by 20%

Requirement -5: To prove: The calculation of new operating income above using the contribution margin income statement

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Chapter 21 Solutions

Requirement -2:

The Breakeven point for each product in dozens and prove it showing the contribution margin income statement

Requirement -3:

The Delectable’s Margin of safety in dollars

Requirement -4:

The Operating leverage for Delectable and new operating income of total sales increases by 20%

Requirement -5:

To prove: The calculation of new operating income above using the contribution margin income statement