Fundamentals of Cost Accounting
6th Edition
ISBN: 9781260708783
Author: LANEN, William
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 3, Problem 29E
Basic Decision Analysis Using CVP
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics:
Required
- a. What number must Derby sell per month to break even?
- b. What number must Derby sell to make an operating profit of $180,000 for the month?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
D) is what i need assistance with
Groove auto is considering the introduction of a new model of wireless speakers with the following price and cost characteristics.sales price 443.00 per unit.variable cost 203.00 per unit.fixed costs 715,000assume that the projected number of units sold for the year is 4 400.consider requirement b,c,d independent from each other.
[a] What will the operating profit be?
[b] What is the impact of operating profit if the sales price decreases by twenty percent increases by ten percent?
[c] What is the impact on operating profit A veritable cost per unit decrease by ten percent increase by twenty?
[d] Suppose that fixed costs for the year are 20% lower. Than projected and bearable costs per unit are 10% higher than projected. What impact will these costs changes have on operating profit for the year
Kindly solve b c and d
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics.
Sales price
$
23
per unit
Variable costs
6
per unit
Fixed costs
24,000
per month
Assume that the projected number of units sold for the month is 6,000. Consider requirements (b), (c), and (d) independently of each other.
Required:
What will the operating profit be?
What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent?
What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent?
Suppose that fixed costs for the year are 10 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much?
Chapter 3 Solutions
Fundamentals of Cost Accounting
Ch. 3 - Write out the profit equation and describe each...Ch. 3 - What are the components of total costs in the...Ch. 3 - How does the total contribution margin differ from...Ch. 3 - Compare cost-volume-profit (CVP) analysis with...Ch. 3 - Fixed costs are often defined as fixed over the...Ch. 3 - Prob. 6RQCh. 3 - What is the margin of safety? Why is this...Ch. 3 - Prob. 8RQCh. 3 - Write out the equation for the target volume (in...Ch. 3 - How do income taxes affect the break-even...
Ch. 3 - Why is it common to assume a fixed sales mix...Ch. 3 - What are some important assumptions commonly made...Ch. 3 - Prob. 13CADQCh. 3 - Prob. 14CADQCh. 3 - The typical cost-volume-profit graph assumes that...Ch. 3 - The assumptions of CVP analysis are so simplistic...Ch. 3 - Prob. 17CADQCh. 3 - Consider a class in a business school where volume...Ch. 3 - Prob. 19CADQCh. 3 - Prob. 20CADQCh. 3 - Consider the Business Application,...Ch. 3 - Consider the Business Application,...Ch. 3 - Prob. 23CADQCh. 3 - Profit Equation Components Identify each of the...Ch. 3 - Profit Equation Components Identify the letter of...Ch. 3 - Basic Decision Analysis Using CVP Anus Amusement...Ch. 3 - Basic CVP Analysis The manager of Dukeys Shoe...Ch. 3 - CVP AnalysisEthical Issues Mark Ting desperately...Ch. 3 - Basic Decision Analysis Using CVP Derby Phones is...Ch. 3 - Prob. 30ECh. 3 - Basic Decision Analysis Using CVP Warner Clothing...Ch. 3 - Basic Decision Analysis Using CVP Refer to the...Ch. 3 - Prob. 33ECh. 3 - Prob. 34ECh. 3 - Analysis of Cost Structure Spring Companys cost...Ch. 3 - CVP and Margin of Safety Bristol Car Service...Ch. 3 - CVP and Margin of Safety Caseys Cases sells cell...Ch. 3 - Prob. 38ECh. 3 - Prob. 39ECh. 3 - Refer to the data for Derby Phones in Exercise...Ch. 3 - Refer to the data for Warner Clothing in Exercise...Ch. 3 - CVP with Income Taxes Hunter Sons sells a single...Ch. 3 - CVP with Income Taxes Hammerhead Charters runs...Ch. 3 - Prob. 44ECh. 3 - Prob. 45ECh. 3 - Prob. 46ECh. 3 - Prob. 47ECh. 3 - CVP Analysis and Price Changes Argentina Partners...Ch. 3 - Prob. 49PCh. 3 - CVP AnalysisMissing Data Breed Products has...Ch. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - CVP AnalysisSensitivity Analysis (spreadsheet...Ch. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Extensions of the CVP ModelSemifixed (Step) Costs...Ch. 3 - Prob. 57PCh. 3 - Extensions of the CVP ModelTaxes Odd Wallow Drinks...Ch. 3 - Prob. 59PCh. 3 - Prob. 60PCh. 3 - Extensions of the CVP ModelTaxes Toys 4 Us sells...Ch. 3 - Extensions of the CVP AnalysisTaxes Eagle Company...Ch. 3 - Extensions of the CVP ModelMultiple Products...Ch. 3 - Extensions of the CVP ModelMultiple Products...Ch. 3 - Prob. 65PCh. 3 - Prob. 66PCh. 3 - Prob. 67PCh. 3 - Prob. 68PCh. 3 - Extensions of the CVP ModelMultiple Products and...Ch. 3 - Extensions of the CVP ModelTaxes With Graduated...Ch. 3 - Prob. 71PCh. 3 - Financial Modeling Three entrepreneurs were...
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
- Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics. Sales price $ 438.00 per unit Variable costs 198.00 per unit Fixed costs 680,000 per year Assume that the projected number of units sold for the year is 4,150. Consider requirements (b), (c), and (d) independently of each other. Required: What will the operating profit be? What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? Suppose that fixed costs for the year are 20 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? omplete this question by entering your answers in the tabs below. Required A Required B…arrow_forwardGrove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics. Sales price $ 450.00 per unit Variable costs 210.00 per unit Fixed costs 764,000 per year Assume that the projected number of units sold for the year is 4,750. Consider requirements (b), (c), and (d) independently of each other. What will the operating profit be? What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? Suppose that fixed costs for the year are 20 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much?arrow_forwardHELP MEarrow_forward
- A Company wants to introduce new mobile phone into the market. The estimated price of each mobile phone is RO 800. The company requires a profit margin of 15% on sales. Calculate a target cost for the new mobile phone.arrow_forwardGrove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics. Sales price $ 430 per unit Variable costs 190 per unit Fixed costs 624,000 per year Assume that the projected number of units sold for the year is 3,750. Consider requirements (b), (c), and (d) independently of each other. Required: What will the operating profit be? What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? Suppose that fixed costs for the year are 20 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much?arrow_forwardGrove Audio is considering the Introduction of a new model of wireless speakers with the following price and cost characteristics. $430.00 per unit 190.00 per unit 624,000 per year Sales price Variable costs Fixed costs Required: a. What number must Grove Audio sell annually to break even? b. What number must Grove Audio sell to make an operating profit of $180,000 for the year? a. Break-even sales in units b. Number of units to be soldarrow_forward
- Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.arrow_forwardHudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?arrow_forwardNeed helparrow_forward
- Need help with these financial accounting questionarrow_forwardMarigold Corp. is using the target cost approach on a new product. Information gathered so far is as follows: Expected annual sales Desired profit per unit Target cost What is the unit selling price? O $0.30 O $0.64 O $0.62 O $0.32 500000 units $0.32 $150000arrow_forwardCalculating a Target Cost Yuhu manufactures cell phones and is developing a new model with a feature (aptly named Don't Drink and Dial) that prevents the phone from dialing an owner-defined list of phone numbers between the hours of midnight and 6:00 a.m. The new phone model has a target price of $370. Management requires a 10% profit on new product revenues. Required: If required, round to the nearest dollar. 1. Calculate the amount of desired profit. $ 2. Calculate the target cost.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Essentials of Business Analytics (MindTap Course ...
Statistics
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Cengage Learning
Pricing Decisions; Author: Rutgers Accounting Web;https://www.youtube.com/watch?v=rQHbIVEAOvM;License: Standard Youtube License