Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 3, Problem 14EA
Marshall & Company produces a single product and recently calculated their break-even point as shown.
What would Marshall’s target margin of safety be in units and dollars if they required a $14,000 margin of safety?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Windows is a small company that installs windows. Its cost structure is as follows:
LOADING...
(Click
the icon to view the cost structure.)
Traylor
Windows' breakeven revenues is
$1,870,000
and breakeven units is
3,400.
Calculate the margin of safety in units and dollars and the margin of safety percentage if
Traylor
Windows expects to sell
3,600
windows in the year.
Begin with calculating the margin of safety in dollars.
Determine the formula to calculate the margin of safety in dollars. Then, enter the amounts and calculate the margin of safety in dollars.
Budgeted revenue
-
Breakeven revenue
=
Margin of safety in dollars
-
=
Next, determine the formula, enter the amounts, and calculate the margin of safety in units.
Budgeted units
-
Breakeven units
=
Margin of safety in units
-
=
Finally, calculate the margin of safety percentage if…
CVP analysis, margin of safety. Suppose Morrison Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000.
Required:
Compute the contribution margin percentage.
Compute the selling price if variable costs are $16 per unit.
Suppose 75,000 units are sold. Compute the margin of safety in units and dollars.
What does this tell you about the risk of Morrison making a loss? What are the most likely reasons for this risk to increase?
Suppose Morrison Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000.
Q1. Compute the contribution margin percentage.
Q2. Compute the selling price if variable costs are $16 per unit.
Q3. Suppose 75,000 units are sold. Compute the margin of safety in units and dollars.
Q4. What does this tell you about the risk of Morrison making a loss? What are the most likely reasons for this risk to increase?
Chapter 3 Solutions
Principles of Accounting Volume 2
Ch. 3 - The amount of a units sales price that helps to...Ch. 3 - A companys product sells for $150 and has variable...Ch. 3 - A companys product sells for $150 and has variable...Ch. 3 - A companys contribution margin per unit is $25. It...Ch. 3 - A company sells its products for $80 per unit and...Ch. 3 - If a company has fixed costs of $6.000 per month...Ch. 3 - Company A wants to earn $5,000 profit in the month...Ch. 3 - A company has wants to earn an income of $60,000...Ch. 3 - A company has pre-tax or operating income of...Ch. 3 - When sales price increases and all other variables...
Ch. 3 - When sales price decreases and all other variables...Ch. 3 - When variable costs increase and all other...Ch. 3 - When fixed costs decrease and all other variables...Ch. 3 - When fixed costs increase and all other variables...Ch. 3 - If the sales mix in a multi-product environment...Ch. 3 - Break-even for a multiple product firm. can be...Ch. 3 - Waskowski Company sells three products (A. B. and...Ch. 3 - Beaucheau Farms sells three products (E, F, and G)...Ch. 3 - A company sells two products, Model 101 and Model...Ch. 3 - Wallace Industries has total contribution margin...Ch. 3 - Macom Manufacturing has total contribution margin...Ch. 3 - If a firm has a contribution margin of $59,690 and...Ch. 3 - If a firm has a contribution margin of $78M90 and...Ch. 3 - Define and explain contribution margin on a per...Ch. 3 - Define and explain contribution margin ratio.Ch. 3 - Explain how a contribution margin income statement...Ch. 3 - In a cost-volume-profit analysis, explain what...Ch. 3 - What is meant by a products contribution margin...Ch. 3 - Explain how a manager can use CVP analysis to make...Ch. 3 - After conducting a CVP analysis, most businesses...Ch. 3 - Explain how for is possible for costs to change...Ch. 3 - Explain what a sales mix is and how changes in the...Ch. 3 - Explain how break-even analysis for a...Ch. 3 - Explain margin of safety and why it is an...Ch. 3 - Define operating leverage and explain its...Ch. 3 - Calculate the per-unit contribution margin of a...Ch. 3 - Calculate the per-unit contribution margin of a...Ch. 3 - A product has a sales price of $150 and a per-unit...Ch. 3 - A product has a sales price of $250 and a per-unit...Ch. 3 - Maple Enterprises sells a single product with a...Ch. 3 - Marlin Motors sells a single product with a...Ch. 3 - Flanders Manufacturing is considering purchasing a...Ch. 3 - Marchete Company produces a single product. They...Ch. 3 - Brahma Industries sells vinyl replacement windows...Ch. 3 - Salvador Manufacturing builds and sells...Ch. 3 - Salvador Manufacturing builds and sells...Ch. 3 - Use the information from the previous exercises...Ch. 3 - Company A has current sales of $10,000,000 and a...Ch. 3 - Marshall s target margin of safety be in units and...Ch. 3 - Calculate the per-unit contribution margin of a...Ch. 3 - Calculate the per-unit contribution margin of a...Ch. 3 - A product has a sales price of $175 and a per-unit...Ch. 3 - A product has a sales price of $90 and a per-unit...Ch. 3 - Cadre, Inc., sells a single product with a selling...Ch. 3 - Kerr Manufacturing sells a single product with a...Ch. 3 - Delta Co. sells a product for $150 per unit. The...Ch. 3 - Shonda & Shonda is a company that does land...Ch. 3 - Baghdad Company produces a single product. They...Ch. 3 - Keleher Industries manufactures pet doors and...Ch. 3 - Manufacturing builds and sells switch harnesses...Ch. 3 - Manufacturing builds and sells switch harnesses...Ch. 3 - Use the information from the previous exercises...Ch. 3 - Company A has current sales of $4,000,000 and a...Ch. 3 - Best Wholesale recently calculated their...Ch. 3 - A company sells small motors as a component part...Ch. 3 - A company manufactures and sells racing bicycles...Ch. 3 - Fill in the missing amounts for the four...Ch. 3 - Markham Farms reports the following contribution...Ch. 3 - Kylies Cookies is considering the purchase of a...Ch. 3 - Morris Industries manufactures and sells three...Ch. 3 - Manatoah Manufacturing produces 3 models of window...Ch. 3 - Jakarta Company is a service firm with current...Ch. 3 - A company sells mulch by the cubic yard. Grade A...Ch. 3 - A company manufactures and sells blades that are...Ch. 3 - Fill in the missing amounts for the four...Ch. 3 - West Island distributes a single product. The...Ch. 3 - Wellington, Inc., reports the following...Ch. 3 - Karens Quilts is considering the purchase of a new...Ch. 3 - Abilene Industries manufactures and sells three...Ch. 3 - Tim-Buck-Il rents jet skis at a beach resort....Ch. 3 - Fire Company is a service firm with current...Ch. 3 - Mariana Manufacturing and Bellow Brothers compete...Ch. 3 - Roald is the sales manager for a small regional...Ch. 3 - As a manager, you have to choose between two...Ch. 3 - Coutures Creations is considering offering Joe, an...
Additional Business Textbook Solutions
Find more solutions based on key concepts
Define cost object and give three examples.
Cost Accounting (15th Edition)
4. JC Manufacturing purchase d inventory for $ 5,300 and al so paid a $260 freight bill. JC Manufacturing retur...
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Account for bonds. (LO 4). If a $1,000 bound is selling at 95, how much cash will the issuing company receive? ...
Financial Accounting
How is inventory tracked under a perpetual inventory system?
Intermediate Accounting
4. JC Manufacturing purchase d inventory for $ 5,300 and al so paid a $260 freight bill. JC Manufacturing retur...
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Discussion Analysis A13-41 Discussion Questions 1. How do managers use the statement of cash flows? 2. Describ...
Managerial Accounting (5th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- How I can resolve this problem. The management of a firm wants to introduce a new product. the product will sell for $4 a unit and can be produced by either of two scales of operation. in the first, total cost are. TC= $3,000 +$2.8Q In the second scale of operation, total cost are TC=$5,000+$2.04Q a. what is the break-even level of outpur for each scale of operation? b. what will be the firm;s profit for each scale of operation if sales reach 5,000 units? c. one-half of the fixed cost are noncash(depreciation) . all other expenses are for cash. if sale are 2,000 units, will cash receipts cover cash expenses for each scale of operation? d. the anticipaded levels of sales are the following: Year Unit Sales 1 4,000 2 5000 3 6,000 4 7,000 If management selects the scale of production which higher fixed cost, what can it expect…arrow_forwardJasmine Incorporated sells a product for $61 per unit. Variable costs per unit are $31, and monthly fixed costs are $252,000. Answer the following questions: Required: a. What is the breakeven point in units? b. What unit sales would be required to earn a target profit of $162,000 ? c. Assuming Jasmine achieves the level of sales required in part b, what is the margin of safety in sales dollars?arrow_forwardThe smith company management would like to know the total sales units that are required for the company to earn a profit of $ 150000. The following data are available. The unit selling price of $50, variable cost per unit $25. Total fixed cost of $ 500000. Find Profit in order for the Manufacturer to break even. How many units must be sold in order for the Manufacturer to break even?arrow_forward
- The manufacturer of a product that has a variable cost of $2.50 per unit and total fixed cost of $117,000 wants to determine the level of output necessary to avoid losses. What level of sales is necessary to break-even if the product is sold for $4.35? Round your answer to the nearest whole number. units What will be the manufacturer’s profit or loss on the sales of 104,000 units? Round your answer to the nearest dollar. $ If fixed costs rise to $164,000, what is the new level of sales necessary to break-even? Round your answer to the nearest whole number. units If variable costs decline to $2.25 per unit, what is the new level of sales necessary to break-even? Round your answer to the nearest whole number. units If fixed costs were to increase to $164,000, while variable costs declined to $2.25 per unit, what is the new break-even level of sales? Round your answer to the nearest whole number. units If a major proportion of fixed costs were noncash (depreciation), would…arrow_forwardPlease answer these all.arrow_forwardCyan Corporation has provided the following data concerning its only product: Selling price $ 90 per unit Current sales 11,600 units Break-even sales 10,324 units What is the margin of safety in dollars?arrow_forward
- One company makes watches and delivers them in a wooden case. You buy each case for $ 58. The company is considering manufacturing the cases with a fixed cost of $ 3,360 and a variable cost of $ 46 per case. a) How many cases must the company manufacture to be at a point of equilibrium?b) What is the total cost of these kits? Note: Establish the necessary equations and solve them, take as variable "x" the number of kits and as variable "y" the total costarrow_forwardA firm manufactures a product that sells for $25 per unit. Variable cost per unit is $2 and fixed cost per period is $1840. Capacity per period is 2000 units. (a) Develop an algebraic statement for the revenue function and the cost function. (b) Determine the number of units required to be sold to break even. (c) Compute the break-even point as a percent of capacity. (d) Compute the break-even point in sales dollars.arrow_forwardCobb Co. can further process Product X to produce Product Y. Product X is currently selling for $30 per pound and costs $28 per pound to produce. Product Y would sell for $60 per pound and would require an additional cost of $24 per pound to produce. What is the net differential income from producing Product Y? (a)$6 per pound (b)a$8 per pound (c)$2 per pound (d)$30 per pound Aarrow_forward
- Cox Electric makes electronic components and has estimated the following for a new design of one of its products: Fixed Cost = $7,000 Material cost per unit = $0.15 Labor cost per unit = $0.10 Revenue per unit = $0.65 Production Volume = 12,000 Per-unit material and labor cost together make up the variable cost per unit. Assuming that Cox Electric sells all it produces, build a spreadsheet model that calculates the profit by subtracting the fixed cost and total variable cost from total revenue, and answer the following questions. (a) Construct a one-way data table with production volume as the column input and profit as the output. Breakeven occurs when profit goes from a negative to a positive value; that is, breakeven is when total revenue = total cost, yielding a profit of zero. Vary production volume from 5,000 to 50,000 in increments of 5,000. In which interval of production volume does breakeven occur? to units (b) Use Goal Seek to find the exact breakeven point. Assign Set cell:…arrow_forwardWhat is the firm’s margin of safety?arrow_forwardBaghdad Company produces a single product. They have recently received the result of a market survey that indicates that they can increase the retail price of their product by 10% without losing customers or market share. All other costs will remain unchanged. If they enact the 10% price increase, what will be their new break-even point in units and dollars? Their most recent CVP analysis is:arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Cost-Volume-Profit (CVP) Analysis and Break-Even Analysis Step-by-Step, by Mike Werner; Author: Accounting Step by Step;https://www.youtube.com/watch?v=D0MOfse9OWk;License: Standard Youtube License