Cost-Volume-Profit Analysis (CVP Analysis): CVP Analysis is a tool of cost accounting that measures the effect of variation on operating profit and net income due to the variation in proportion of sales and product costs. Operating Income: Operating income is the revenue generated from the routine course of business operations. Alternatively operating income can also be referred as the earnings before interest and taxes (EBIT) which is the sum total of income after deduction of operational expenses. To compute: Units of sunglasses to be sold to reach break-even point.

Question

The December 31, 2021, balance sheet of Chen, Incorporated, showed long-term debt of $1,420,000, $144,000 in the common stock account, and $2,690,000 in the additional paid-in surplus account. The December 31, 2022, balance sheet showed long-term debt of $1,620,000, $154,000 in the common stock account and $2,990,000 in the additional paid-in surplus account. The 2022 income statement showed an interest expense of $96,000 and the company paid out $149,000 in cash dividends during 2022. The firm’s net capital spending for 2022 was $1,000,000, and the firm reduced its net working capital investment by $129,000. What was the firm's 2022 operating cash flow, or OCF?

Answer 1

Question

Chapter 3, Problem 3.46P

1.

To determine

Cost-Volume-Profit Analysis (CVP Analysis):

CVP Analysis is a tool of cost accounting that measures the effect of variation on operating profit and net income due to the variation in proportion of sales and product costs.

Operating Income:

Operating income is the revenue generated from the routine course of business operations. Alternatively operating income can also be referred as the earnings before interest and taxes (EBIT) which is the sum total of income after deduction of operational expenses.

To compute: Units of sunglasses to be sold to reach break-even point.

2.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

3.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

4.

To determine

To compute: Preferred sales level to pay monthly rent.

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The December 31, 2021, balance sheet of Chen, Incorporated, showed long-term debt of $1,420,000, $144,000 in the common stock account, and $2,690,000 in the additional paid-in surplus account. The December 31, 2022, balance sheet showed long-term debt of $1,620,000, $154,000 in the common stock account and $2,990,000 in the additional paid-in surplus account. The 2022 income statement showed an interest expense of $96,000 and the company paid out $149,000 in cash dividends during 2022. The firm’s net capital spending for 2022 was $1,000,000, and the firm reduced its net working capital investment by $129,000. What was the firm's 2022 operating cash flow, or OCF?

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Answer 2

Question

Chapter 3, Problem 3.46P

1.

To determine

Cost-Volume-Profit Analysis (CVP Analysis):

CVP Analysis is a tool of cost accounting that measures the effect of variation on operating profit and net income due to the variation in proportion of sales and product costs.

Operating Income:

Operating income is the revenue generated from the routine course of business operations. Alternatively operating income can also be referred as the earnings before interest and taxes (EBIT) which is the sum total of income after deduction of operational expenses.

To compute: Units of sunglasses to be sold to reach break-even point.

2.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

3.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

4.

To determine

To compute: Preferred sales level to pay monthly rent.

Expert Solution & Answer

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Answer 3

Question

Chapter 3, Problem 3.46P

1.

To determine

Cost-Volume-Profit Analysis (CVP Analysis):

CVP Analysis is a tool of cost accounting that measures the effect of variation on operating profit and net income due to the variation in proportion of sales and product costs.

Operating Income:

Operating income is the revenue generated from the routine course of business operations. Alternatively operating income can also be referred as the earnings before interest and taxes (EBIT) which is the sum total of income after deduction of operational expenses.

To compute: Units of sunglasses to be sold to reach break-even point.

2.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

3.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

4.

To determine

To compute: Preferred sales level to pay monthly rent.

Expert Solution & Answer

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Answer 4

Question

Chapter 3, Problem 3.46P

1.

To determine

Cost-Volume-Profit Analysis (CVP Analysis):

CVP Analysis is a tool of cost accounting that measures the effect of variation on operating profit and net income due to the variation in proportion of sales and product costs.

Operating Income:

Operating income is the revenue generated from the routine course of business operations. Alternatively operating income can also be referred as the earnings before interest and taxes (EBIT) which is the sum total of income after deduction of operational expenses.

To compute: Units of sunglasses to be sold to reach break-even point.

2.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

3.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

4.

To determine

To compute: Preferred sales level to pay monthly rent.

Expert Solution & Answer

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Answer 5

Chapter 3, Problem 3.46P

1.

To determine

Cost-Volume-Profit Analysis (CVP Analysis):

CVP Analysis is a tool of cost accounting that measures the effect of variation on operating profit and net income due to the variation in proportion of sales and product costs.

Operating Income:

Operating income is the revenue generated from the routine course of business operations. Alternatively operating income can also be referred as the earnings before interest and taxes (EBIT) which is the sum total of income after deduction of operational expenses.

To compute: Units of sunglasses to be sold to reach break-even point.

2.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

3.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

4.

To determine

To compute: Preferred sales level to pay monthly rent.

Answer 6

Chapter 3, Problem 3.46P

1.

To determine

Cost-Volume-Profit Analysis (CVP Analysis):

CVP Analysis is a tool of cost accounting that measures the effect of variation on operating profit and net income due to the variation in proportion of sales and product costs.

Operating Income:

Operating income is the revenue generated from the routine course of business operations. Alternatively operating income can also be referred as the earnings before interest and taxes (EBIT) which is the sum total of income after deduction of operational expenses.

To compute: Units of sunglasses to be sold to reach break-even point.

Answer 7

Chapter 3, Problem 3.46P

1.

To determine

Cost-Volume-Profit Analysis (CVP Analysis):

CVP Analysis is a tool of cost accounting that measures the effect of variation on operating profit and net income due to the variation in proportion of sales and product costs.

Operating Income:

Operating income is the revenue generated from the routine course of business operations. Alternatively operating income can also be referred as the earnings before interest and taxes (EBIT) which is the sum total of income after deduction of operational expenses.

To compute: Units of sunglasses to be sold to reach break-even point.

Answer 8

2.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

Answer 9

2.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

Answer 10

3.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

Answer 11

3.

To determine

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

Answer 12

4.

To determine

To compute: Preferred sales level to pay monthly rent.

Answer 13

4.

To determine

To compute: Preferred sales level to pay monthly rent.

Answer 14

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Ch. 3 - Define costvolumeprofit analysis.Ch. 3 - Describe the assumptions underlying CVP analysis.Ch. 3 - Distinguish between operating income and net...Ch. 3 - Prob. 3.4Q Ch. 3 - Prob. 3.5Q Ch. 3 - Why is it more accurate to describe the subject...Ch. 3 - CVP analysis is both simple and simplistic. If you...Ch. 3 - Prob. 3.8Q Ch. 3 - Prob. 3.9Q Ch. 3 - Give an example of how a manager can decrease...

Solution Summary: The author explains how CVP Analysis measures the effect of variation on operating profit and net income due to the variation in proportion of sales and product costs.

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

To compute: Sunglasses to be sold to earn operating income of $5,300 per month.

To compute: Preferred sales level to pay monthly rent.

Chapter 3 Solutions