COST ACCOUNTING W/CONNECT
6th Edition
ISBN: 9781264022021
Author: LANEN
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 59P
a.
To determine
Compute Company F’s break-even point in the number of passengers per flight.
b.
To determine
Calculate the target number of passengers per flight to earn a profit of $3,510 for Company F.
c.
To determine
Determine whether Company F can carry enough passengers to break-even and enough passengers to earn the after-tax profit of $3,510.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Meyerson’s Bakery is considering the addition of a new line of pies to its product offerings.
However, the following scenarios could be faced by this Bakery for the new line:
First scenario: It is expected that each pie will sell for $17 and the variable costs per pie will be $11. Total fixed operating costs are expected to be $25,000. Meyerson’s faces a marginal tax rate of 25%, will have interest expense associated with this line of $3,500, and expects to sell about 4,500 pies in the first year.
Second scenario: It is expected that each pie will sell for $15 and the variable costs per pie will be $9. Total fixed operating costs are expected to be $20,000. Meyerson’s faces a marginal tax rate of 35%, will have interest expense associated with this line of $3,000, and expects to sell about 4,000 pies in the first year.
1. Under the first scenario, How many pies would Meyerson’s need to sell in order to achieve EBIT of $20,000? (EBIT = Earnings Before Interest and Taxes).…
Global Air is considerng a new flight between Atlanta and Los Angeles. The avaerage fare per seat for the flight is $760.The cost associated with the flight are as follows:
Fixed cost for the flight
Crew Salaries $5,000
Operating Costs 50,000
Aircraft Depreciation 25,000
Total: $80,000
Variable cost per passenger
Passenger check-in $20
Operating Costs: 100
Total: $120
The airline estimates that the flight will sell 175 seats.
a. determine the break-even number of passengers per flight
b. Based on answer in (a), should the airline add this flight to it's schedule?
c. How much profit should each flight produce?
d. What additionl issues might the airline consider in this decision?
Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain, but lasts two years longer than the other. Gateway's discount rate is 9%. It plans to continue with one of the two
models for the foreseeable future. Based on the equivalent annual costs of each, shown below, which should it choose?
[Note: I have tried to make it easier for you to solve this problem. You do not need to do extra, unnecessary calculations merely to show me your work.]
Model
Old R
Year 0
$0
Year 1
-$29
Year 2
-$29
Year 3
Year 4
-$29
Year 5
-$29
-$29
Year 6
-$29
S & S
$0
-$27
-$27
-$27
-$27
Which bus should Gateway Tours choose, and why?
because $
is better than $
Give me the name of the bus that should be chosen, and the final numbers that justify your answer. Your answer must take the form: "Choose
B
IUS Ix = =
X₂
x²
Insert Formula
14
!!!
!!!
H
IM
Chapter 3 Solutions
COST ACCOUNTING W/CONNECT
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
Similar questions
- 1. ABC Taxi has an average fixed cost of $8,000 a year for each car. Each mile driven has variable cost $.40 and collect fares of $.60. How many miles a year does each car have to travel before making profit? a. ABC company is contemplating adding a new line of product, which will require leasing new equipment for a monthly payment of $12,000. Variable costs would be $15.00 per product, and selling price per product is $40. What would be profit or loss if business sell 600 of these products? b. If 800 quantity of products can be sold, and a profit target is $10,000, what price should be charged for each product?arrow_forwardGateway Tours is choosing between two bus models. One is more expensive to purchase and maintain, but lasts much longer than the other. Gateway's discount rate is 9%. It plans to continue with one of the two models for the foreseeable future. Based on the equivalent annual costs of each, shown below, which should it choose? [Note: I have tried to make it easier for you to solve this problem. You do not need to do extra, unnecessary calculations merely to show me your work.] Model Year 0 Year 1 Year 2 Year 3 -$23 -$21 Year 4 Year 5 Year 6 Old R S &S $0 -$23 -$21 -$23 -$21 -$23 -$21 -$23 -$23 $0 Which bus should Gateway Tours choose? Give me the name of the bus that should be chosen, and the final numbers that justify your answer. Do not explain any concepts - I'm looking for an answer along the lines of "Choose because $ is better than $ [I'm sorry if the columns don't line up perfectly. Old R. is a 6 year project, and S&S is a 4 year project.] B I X, Insert Formulaarrow_forwardWhat is the implied variable cost rate for scanner A on these general accounting question?arrow_forward
- A Programme to promote energy demand management would replace old household heating appliance. The market price/cost of this new heating appliance is GHc500 but the utility provider/regulator will provide 10% rebate to encourage participation. It is estimated that the utility provider will incur an administration cost of Ghc20 per client by replacing the old heating system with new ones. The utility provider will avoid electricity purchase of Ghc400,000 per annum whiles electricity bill per household will go down by GHC2 per client If the programme anticipate 300,000 participants Determine the cost and benefit to the utility provider Determine the cost and benefit to the participant Comment on how their programme will fare from the different stakeholders perspectivearrow_forwardWisconsin Snowmobile Corp. is considering a switch to level production. Cost efficiencies would occur under level production, and aftertax costs would decline by $31,500, but inventory would increase by $350,000. Wisconsin Snowmobile would have to finance the extra inventory at a cost of 10.0 percent. a-1. Determine the extra cost or savings of switching over to level production. Loss or Gain and how much? __________ a-2. Should the company go ahead and switch to level production? multiple choice Yes No b. How low would interest rates need to fall before level production would be feasible?arrow_forwardNonearrow_forward
- Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longer than the other. Gateway's discount rate is 10.8%. The company plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown below, which should it choose? (Note: dollar amounts are in thousands.) Model Year 0 Year 1 Year 5 - $4.2 Year 2 Year 3 - $4.2 - $2.1 Year 4 Year 6 Year 7 - $200 - $101 - $4.2 - $2.1 - $4.2 - $2.1 Old Reliable - $4.2 -$2.1 - $4.2 - $4.2 Short and Sweet Based on the costs of each model, which should it choose? (Select the best choice below.) O A. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller. O B. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller. OC. Gateway Tours should choose Old Reliable because it lasts longer. O D. Gateway Tours should choose Short and Sweet because the NPV of its costs…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 672,000 per year Required: What number must Grove Audio sell annually to break even? What number must Grove Audio sell to make an operating profit of $180,000 for the year?arrow_forwardA fleet manager must choose between two trucks to purchase for a company's fleet. The company uses an interest rate of 6% and will keep either truck for 3 years. Truck A costs $29,000 and has a market value of $18,000 after 3 years. Truck B costs $33,000 and has a market value of $20,000 after 3 years. Determine the equivalent uniform annual cost (EUAC) for the truck the fleet manager should buy. Express your answer as a positive number is $ to the nearest $10.arrow_forward
- can you please help me figure this outarrow_forwardthe foreseeable future. Based on the costs of each shown here: 囲, which should it choose? (Note: dollar amounts are in thousands.)arrow_forwardGateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longer than the other. Its discount rate is 11.0%. The company plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown below, which should it choose? (Note: dollar amounts are in thousands.) Model Old Reliable Short and Sweet Year 0 -$200 -$100 Year 1 -$4.0 -$2.0 Year 2 -$4.0 -$2.0 Year 3 -$4.0 -$2.0 Year 4 -$4.0 -$2.0 Based on the costs of each model, which should it choose? (Select the best choice below) OA. Gateway Tours should choose Short and Sweet because the NPV of its costs is smaller. OB. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller. OC. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller. D. Gateway Tours should choose Old Reliable because it lasts longer. Year 5 -$4.0 Year 6 -$4.0 Year 7 -$4.0arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College