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
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 7, Problem 43P
1.
To determine
Calculate the number clients required to visit the office to attain the break-even point.
2.
To determine
Calculate the margin of safety.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Don Masters and two of his colleagues are considering opening a law office in a large metropolitan area that would make inexpensive legal services available to those who could not otherwise afford these services. The intent is to provide easy access for their clients by having the office open360 days per year, 16 hours each day from 7:00 a.m. to 11:00 p.m. The office would be staffed by a lawyer, paralegal, legal secretary, and clerk-receptionist for each of the two 8-hour shifts.In order to determine the feasibility of the project, Don hired a marketing consultant to assist with market projections. The results of this study show that if the firm spends $500,000 onadvertising the first year, the number of new clients expected each day would have the following probability distribution:
Number of NewClients per Day Probability 20 0.10 30 0.30 55 0.40…
Emily Smith and two colleagues are considering opening a law office in a large metropolitan area that would make inexpensive legal
services available to those who could not otherwise afford services. The intent is to provide easy access for their clients by having the
office open 360 days per year, 16 hours each day from 7:00 a.m. to 11:00 p.m. The office would be staffed by a lawyer, paralegal, legal
secretary, and clerk-receptionist for each of the two eight-hour shifts.
In order to determine the feasibility of the project, Smith hired a marketing consultant to assist with market projections. The results of
this study show that if the firm spends $995,000 on advertising the first year, the number of new clients expected each day will be 53.
Smith believes this number is reasonable and is prepared to spend the $995,000 on advertising. Other pertinent information about
the operation of the office follows:
• The only charge to each new client would be $63 for the initial consultation.…
Don Masters and two of his colleagues are considering opening a law office in a largemetropolitan area that would make inexpensive legal services available to those whocould not otherwise afford these services. The intent is to provide easy access for theirclients by having the office open 360 days per year, 16 hours each day from 7:00 a.m. to11:00 p.m. The office would be staffed by a lawyer, paralegal, legal secretary, andclerk-receptionist for each of the two 8-hour shifts.In order to determine the feasibility of the project, Don hired a marketing consultantto assist with market projections. The results of this study show that if the firm spends$500,000 on advertising the first year, the number of new clients expected each daywould have the following probability distribution:Don and his associates believe these numbers are reasonable and are prepared tospend the $500,000 on advertising. Other pertinent information about the operation ofthe office is as follows.The only charge to…
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...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Dinesh bhaiarrow_forwardLon Timur is an accounting major at a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Lon, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Lon has gathered the following investment information. 1. 2. 3. 4. 5. Five used vans would cost a total of $75,000 to purchase and would have a 3-year useful life with negligible salvage value. Lon plans to use straight-line depreciation. Ten drivers would have to be employed at a total payroll expense of $48,000. Other annual out-of-pocket expenses associated with running the commuter service would include Gasoline $16,000, Maintenance $3,300, Repairs $4,000, Insurance $4,200, and…arrow_forwardLon Timur is an accounting major at a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Lon, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Lon has gathered the following investment information. 1. Five used vans would cost a total of $75,551 to purchase and would have a 3-year useful life with negligible salvage value. Lon plans to use straight-line depreciation. 2. Ten drivers would have to be employed at a total payroll expense of $48,300. 3. Other annual out-of-pocket expenses associated with running the commuter service would include Gasoline $16,200, Maintenance $3,300, Repairs $3,800, Insurance…arrow_forward
- Hh.arrow_forwardMs. Faye Santos is an accounting major at a Midwestern state university located approximately 60 miles from a major city. Ms. Faye Santos is an accounting major at a Midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan areas and visit their homes regularly on the weekends. Faye, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. She believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Faye has gathered the following investment information. Five used vans would cost a total of $75,000 to purchase and would have a three-year useful life with negligible salvage value. Faye plans to use straight-line depreciation. Ten drivers would have to be employed at a total payroll expense of $48,000. 3. Other annual out-of-pocket expenses…arrow_forwardMarvin Turner was discussing summer employment with Tina Song, president of Motown Construction Service:Tina: I’m glad you’re thinking about joining us for the summer. We certainly can use the help. Marvin: Sounds good. I enjoy outdoor work, and I could use the money to help with next year’s school expenses.Tina: I’ve got a plan that can help you out on that. As you know, I’ll pay you $14 per hour, but in addition, I’d like to pay you with cash. Since you’re only working for the summer, it really doesn’t make sense for me to go to the trouble of formally putting you on our payroll system. In fact, I do some jobs for my clients on a strictly cash basis, so it would be easy just to pay you that way.Marvin: Well, that’s a bit unusual, but I guess money is money.Tina: Yeah, not only that, it’s tax-free!Marvin: What do you mean?Tina: Didn’t you know? Any money that you receive in cash is not reported to the IRS on a W-2 form; therefore, the IRS doesn’t know about the income—hence, it’s the…arrow_forward
- Suppose that FedEx Kinko’s has decided to install personal computers and printers in its Pittsburgh store that will be rented to customers on an hourly basis. FedEx Kinko’s management has called in consultants from a number of computer suppliers to assist it in designing a system. After considering a number of alternatives, FedEx Kinko’s decided that an Apple computer system consisting of eight iMac computers and two printers best meets its current and projected future needs. FedEx Kinko’s evaluated the desirability of the acquisition of the Apple computer system using its normal capital budgeting procedures. It found that the computer system has a large positive expected net present value. Jim Horn, a new management trainee in the financial planning office, has recently been reading about the boom in the leasing industry. He feels that if leasing is growing as rapidly as it seems, there must be some significant advantages to the leasing alternative compared to ownership. If purchased,…arrow_forwardRamesh & Associates is a successful legal firm operating in Alor Setar. In appreciation for their success journey, the founders were thinking of giving something back to the community. One of the founders, Mr. Ramesh believes that inexpensive legal consultation services could be very helpful for all businesses or individuals who reside within the city. He would like to charge for the services at cost. Since this community service is something new to them, thus as a starting point they agree to offer an hourly charge of RM50, which is half of the normal commercial rate. Initially, they try to operate the community service for 2 months to collect the data in order to determine the appropriate charge on an ongoing basis. They have collected the data for the first two months of October and November. During October they had 240 hours of legal consulting service and 300 hours for November. The costs for these two levels of activity usage are as follows: Types of cost…arrow_forwardSuppose you have just finished your third year of college and expect to graduate with a bachelor's degree in accounting after completing two more semesters of coursework. The salary for entry-level positions with an accounting degree is approximately $48,000 in your area. Shelton Industries has just offered you a position in its northwest regional office. The position has an annual salary of $40,000 and would not require you to complete your undergraduate degree. If you accept the position, you would have to move to Seattle. Required: For each of the following costs, choose 'Yes' to indicate if the cost or benefit is a relevant cost or benefit, irrelevant cost or benefit, sunk cost, or opportunity cost (can choose "Yes" in more than one column if applicable). (Select 'No' in the inappropriate cells.) $40,000 salary from Shelton Anticipated $48,000 salary with an accounting degree Tuition and books for years 1 to college Cost to relocate to Seattle Tuition and books for remaining two…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning