COST ACCOUNTING
16th Edition
ISBN: 9781323169261
Author: Horngren
Publisher: PEARSON C
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Chapter 3, Problem 3.36E
Contribution margin, gross margin, and margin of safety. Juicy Beauty manufactures and sells a face cream to small specialty stores in the greater Los Angeles area. It presents the monthly operating income statement shown here to George Lopez, a potential investor in the business. Help Mr. Lopez understand Juicy Beauty’s cost structure.
- 1. Recast the income statement to emphasize contribution margin.
Required
- 2. Calculate the contribution margin percentage and breakeven point in units and revenues for June 2017.
- 3. What is the margin of safety (in units) for June 2017?
- 4. If sales in June were only 16,000 units and Juicy Beauty’s tax rate is 30%, calculate its net income.
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Michael McDowell Co. establishes a $108 million liability at the end of 2025 for the estimated site-cleanup costs at two of its manufacturing facilities. All related closing costs will be paid and deducted on the tax return in 2026. Also, at the end of 2025, the company has $54 million of temporary differences due to excess depreciation for tax purposes, $7.56 million of which will reverse in 2026.
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Chapter 3 Solutions
COST ACCOUNTING
Ch. 3 - Define costvolumeprofit analysis.Ch. 3 - Describe the assumptions underlying CVP analysis.Ch. 3 - Distinguish between operating income and net...Ch. 3 - Prob. 3.4QCh. 3 - Prob. 3.5QCh. 3 - Why is it more accurate to describe the subject...Ch. 3 - CVP analysis is both simple and simplistic. If you...Ch. 3 - Prob. 3.8QCh. 3 - Prob. 3.9QCh. 3 - Give an example of how a manager can decrease...
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