Break-Even Point: The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain. (1) To Calculate: The break-even point in dollars.

Question

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Answer 1

Question

Chapter 6, Problem 6.4E

(a)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

(1)

To Calculate: The break-even point in dollars.

(2)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

To Calculate: The break-even point in number of passenger flights.

(b)

To determine

Contribution Margin Ratio:

The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

To Determine: The contribution margin at the break-even point.

(c)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To Determine: Whether the decrease in the ticket price should be adopted.

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Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+ 10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

Answer 2

Question

Chapter 6, Problem 6.4E

(a)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

(1)

To Calculate: The break-even point in dollars.

(2)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

To Calculate: The break-even point in number of passenger flights.

(b)

To determine

Contribution Margin Ratio:

The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

To Determine: The contribution margin at the break-even point.

(c)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To Determine: Whether the decrease in the ticket price should be adopted.

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Answer 3

Question

Chapter 6, Problem 6.4E

(a)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

(1)

To Calculate: The break-even point in dollars.

(2)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

To Calculate: The break-even point in number of passenger flights.

(b)

To determine

Contribution Margin Ratio:

The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

To Determine: The contribution margin at the break-even point.

(c)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To Determine: Whether the decrease in the ticket price should be adopted.

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Answer 4

Question

Chapter 6, Problem 6.4E

(a)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

(1)

To Calculate: The break-even point in dollars.

(2)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

To Calculate: The break-even point in number of passenger flights.

(b)

To determine

Contribution Margin Ratio:

The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

To Determine: The contribution margin at the break-even point.

(c)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To Determine: Whether the decrease in the ticket price should be adopted.

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Answer 5

Chapter 6, Problem 6.4E

(a)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

(1)

To Calculate: The break-even point in dollars.

(2)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

To Calculate: The break-even point in number of passenger flights.

(b)

To determine

Contribution Margin Ratio:

The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

To Determine: The contribution margin at the break-even point.

(c)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To Determine: Whether the decrease in the ticket price should be adopted.

Answer 6

Chapter 6, Problem 6.4E

(a)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

(1)

To Calculate: The break-even point in dollars.

Answer 7

Chapter 6, Problem 6.4E

(a)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

(1)

To Calculate: The break-even point in dollars.

Answer 8

(2)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

To Calculate: The break-even point in number of passenger flights.

Answer 9

(2)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

To Calculate: The break-even point in number of passenger flights.

Answer 10

(b)

To determine

Contribution Margin Ratio:

The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

To Determine: The contribution margin at the break-even point.

Answer 11

(b)

To determine

Contribution Margin Ratio:

The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

To Determine: The contribution margin at the break-even point.

Answer 12

(c)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To Determine: Whether the decrease in the ticket price should be adopted.

Answer 13

(c)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To Determine: Whether the decrease in the ticket price should be adopted.

Answer 14

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Ch. 6 - What is meant by CVP analysis?Ch. 6 - Provide three examples of management decisions...Ch. 6 - Prob. 3Q Ch. 6 - Describe the features of a CVP income statement...Ch. 6 - The traditional income statement for Wheat Company...Ch. 6 - Prob. 6Q Ch. 6 - What is meant by the term sales mix? How does...Ch. 6 - Prob. 8Q Ch. 6 - Prob. 9Q Ch. 6 - Prob. 10Q

Solution Summary: The author explains that the break-even point is a point where total cost incurred are the same as the total revenue earned.

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