Managerial Accounting: Creating Value in a Dynamic Business Environment
11th Edition
ISBN: 9781259569562
Author: Ronald W Hilton Proffesor Prof, David Platt
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 7, Problem 29E
Tim’s Bicycle Shop sells 21-speed bicycles. For purposes of a cost-volume-profit analysis, the shop owner has divided sales into two categories, as follows:
Three-quarters of the shop’s sales are medium-quality bikes. The shop’s annual fixed expenses are $65,000. (In the following requirements, ignore income taxes.)
Requited:
- 1. Compute the unit contribution margin for each product type.
- 2. What is the shop’s sales mix?
- 3. Compute the weighted-average unit contribution margin, assuming a constant sales mix.
- 4. What is the shop’s break-even sales volume in dollars? Assume a constant sales mix.
- 5. How many bicycles of each type must be sold to earn a target net income of $48,750? Assume a constant sales mix.
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Tim's Bicycle Shop sells 21-speed bicycles. For purposes of a cost-volume-profit analysis, the shop owner has
divided sales into two categories, as follows:
product type
high quality
medium quality
price invoice cost
840
620
sales commission
sales price
1850
920
100
40
Three-quarters of the shop's sales are medium-quality bikes. The shop's annual fixed expenses are $270,400.
(In the following requirements, ignore income taxes.)
a. What is the shop's break-even sales volume in dollars? Assume a constant sales mix.
b. How many bicycles of each type must be sold to earn a target net income of $126,750? Assume a constant
sales mix.
Tim's Bicycle Shop sells 21-speed bicycles. For purposes of a cost-volume-profit analysis, the shop
owner has divided sales into two categories, as follows:
Product Type
High-quality
Medium-quality
...
Sales Price
$500
300
Invoice Cost Sales Commission
$275
$25
135
15
Three-quarters of the shop's sales are medium-quality bikes. The shop's annual fixed expenses are
$65,000. (In the following requirements, ignore income taxes.)
Required:
1.
Compute the unit contribution margin for each product type.
2. What is the shop's sales mix?
3. Compute the weighted-average unit contribution margin, assuming a constant sales mix.
4. What is the shop's break-even sales volume in dollars? Assume a constant sales mix.
5.
How many bicycles of each type must be sold to earn a target net income of $48,750? Assume a
constant sales mix.
Karera Bicycle shop sells 21-speed bicycles. For purposes of a cost-volume profit analysis, the shop owner divided sales into two-models:
Model Sales Price Invoice Cost Sales Commission
High-quality P10,000 P5,500 P500
Medium-quality 6,000 2,700 300
Seventy percent of the shop’s sales are medium quality bikes. The shop’s annual fixed expenses are P1,485,000.
a. Compute the weighted average unit contribution margin assuming a constant sales mix.
b. What is the shop’s break-even sales volume?
c. How many bicycles of each model must be sold to earn a target net income of P990,000?
Chapter 7 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 7 - Prob. 1RQCh. 7 - What is the meaning of the term unit contribution...Ch. 7 - What information is conveyed by a...Ch. 7 - What does the term safety margin mean?Ch. 7 - Prob. 5RQCh. 7 - Delmarva Oyster Company has been able to decrease...Ch. 7 - In a strategy meeting, a manufacturing companys...Ch. 7 - What will happen to a companys break-even point if...Ch. 7 - Prob. 9RQCh. 7 - How can a profit-volume graph be used to predict a...
Ch. 7 - List the most important assumptions of...Ch. 7 - Why do many operating managers prefer a...Ch. 7 - Prob. 13RQCh. 7 - East Company manufactures VCRs using a completely...Ch. 7 - When sales volume increases, which company will...Ch. 7 - What does the term sales mix mean? How is a...Ch. 7 - A car rental agency rents subcompact, compact, and...Ch. 7 - How can a hotels management use cost-volume-profit...Ch. 7 - How could cost-volume-profit analysis be used in...Ch. 7 - Prob. 20RQCh. 7 - Prob. 21RQCh. 7 - Explain briefly how activity-based costing (ABC)...Ch. 7 - Fill in the missing data for each of the following...Ch. 7 - Prob. 24ECh. 7 - Rosario Company, which is located in Buenos Aires,...Ch. 7 - The Houston Armadillos, a minor-league baseball...Ch. 7 - Prob. 27ECh. 7 - Europa Publications, Inc. specializes in reference...Ch. 7 - Tims Bicycle Shop sells 21-speed bicycles. For...Ch. 7 - A contribution income statement for the Nantucket...Ch. 7 - Refer to the income statement given in the...Ch. 7 - Hydro Systems Engineering Associates, Inc....Ch. 7 - Disk City, Inc. is a retailer for digital video...Ch. 7 - CollegePak Company produced and sold 60,000...Ch. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Consolidated Industries is studying the addition...Ch. 7 - Serendipity Sound, Inc. manufactures and sells...Ch. 7 - Prob. 41PCh. 7 - The European Division of Worldwide Reference...Ch. 7 - Prob. 43PCh. 7 - Celestial Products, Inc. has decided to introduce...Ch. 7 - Prob. 45PCh. 7 - Jupiter Game Company manufactures pocket...Ch. 7 - Prob. 47PCh. 7 - Condensed monthly income data for Thurber Book...Ch. 7 - Cincinnati Tool Company (CTC) manufactures a line...Ch. 7 - Ohio Limestone Company produces thin limestone...Ch. 7 - Prob. 51PCh. 7 - Colorado Telecom, Inc. manufactures...Ch. 7 - Prob. 53CCh. 7 - Prob. 54CCh. 7 - Niagra Falls Sporting Goods Company, a wholesale...
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