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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Question
Chapter 7, Problem 36P
1.
To determine
Calculate the number of units the company must sell to break even if model 6754 is selected.
2.
To determine
Show which of the two systems would be more profitable by calculating the net income, if sales and production are expected to average 46,000 units per year.
3.
To determine
Calculate the number of units C Company sells to earn $956,400 of income if Model 4399 is selected.
4.
To determine
Show the volume level at which the annual total cost of each system is equal.
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Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for
producing its sole product, the universal gismo. Data relevant to the systems follow.
Model number 6754:
Variable costs, $16.00 per unit
Annual fixed costs, $986,300
Model number 4399:
Variable costs, $11.80 per unit
Annual fixed costs, $1,114,300
Corrigan's selling price is $66 per unit for the universal gismo, which is subject to a 15 percent
sales commission. (In the following requirements, ignore income taxes.)
2-a. Calculate the net income of the two systems if sales and production are expected to average 63,400 units per
year.
Model Number 6754
Model Number 4399
Net Income
Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow.
Model no. 6754:
Variable costs, $16.00 per unit
Annual fixed costs, $985,900
Model no. 4399:
Variable costs, $11.80 per unit
Annual fixed costs, $1,113,700
Corrigan’s selling price is $64 per unit for the universal gismo, which is subject to a 15 percent sales commission. (In the following requirements, ignore income taxes.)
2A. Calculate the net income of the two systems if sales and production are expected to average 46,000 units per year.
3. Assume Model 4399 requires the purchase of additional equipment that is not reflected in the preceding figures. The equipment will cost $440,000 and will be depreciated over a five-year life by the straight-line method. How many units must Corrigan sell to earn $965,000 of income if Model 4399 is selected? As in requirement 2,…
Company XYZ is conducting an engineering economic analysis to decide
whether to make vs purchase position for a necessary element needed
ins several products. Now the engineering department has established
this information: Option A to purchase 10,000 units annually at a fixed
price of $8.50 per unit. The cost of placing the order is insignificant as
per the present cost accounting procedure. Option B to manufacture
10,000 units annually with a direct labor cost of $1.50 per unit,
manufacturing overhead cost is allotted at 200% of direct labor (which is
$3.00 per unit) ) and Direct materials cost at $5.00 per unit. Based on
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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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