Question
1) Perez Trophies makes and sells trophies it distributes to little league ballplayers. The company normally produces and sells between 12,000 and 18,000 trophies per
1) Perez Trophies makes and sells trophies it distributes to little league ballplayers. The company normally produces and sells between 12,000 and 18,000 trophies per year. The following cost data apply to various activity levels.
Required
Complete the preceding table by filling in the missing amounts for the levels of activity shown in the first row of the table. (Round your intermediate calculations and per unit amounts to 2 decimal places.)
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2 ) Estrada Corporation produced 205,000 watches that it sold for $17 each. The company determined that fixed manufacturing cost per unit was $7 per watch. The company reported a $820,000 gross margin on its financial statements.
Required
Determine the variable cost per unit, the total variable product cost, and the total contribution margin.
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3)
The following income statement applies to Fanning Company for the current year:
Income Statement | |||
Sales revenue (460 units $29) | $ | 13,340 | |
Variable cost (460 units $14) | (6,440 | ) | |
Contribution margin | 6,900 | ||
Fixed cost | (3,900 | ) | |
Net income | $ | 3,000 | |
Required
a. Use the contribution margin approach to calculate the magnitude of operating leverage.
b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Fanning Company will earn if it experiences a 10 percent increase in revenue. The sales price per unit is not affected.
c-1. Verify your answer to Requirement b by constructing an income statement based on a 10 percent increase in sales revenue. The sales price is not affected.
c-2. Calculate the percentage change in net income for the two income statements.
Use the contribution margin approach to calculate the magnitude of operating leverage. use the operating leverage measure computed in Requirement a to determine the amount of net income that Fanning Company will earn if it experiences a 10 percent increase in revenue. The sales price per unit is not affected. (Do not round intermediate calculations. Round "Operating leverage" to 2 decimal place.)
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Verify your answer to Requirement b by constructing an income statement based on a 10 percent increase in sales revenue. The sales price is not affected.
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Calculate the percentage change in net income for the two income statements.
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4) Munoz Corporation sells products for $36 each that have variable costs of $11 per unit. Munozs annual fixed cost is $580,000.
Required
Use the per-unit contribution margin approach to determine the break-even point in units and dollars.
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5) Baird Company incurs annual fixed costs of $55,925. Variable costs for Bairds product are $19.50 per unit, and the sales price is $30.00 per unit. Baird desires to earn an annual profit of $58,000.
Required Use the per unit contribution margin approach to determine the sales volume in units and dollars required to earn the desired profit. (Do not round intermediate calculations. Round your final answers to the nearest whole number.)
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6)
Information concerning a product produced by Ender Company appears here:
Sales price per unit | $ | 173 | |
Variable cost per unit | $ | 95 | |
Total annual fixed manufacturing and operating costs | $ | 530,400 | |
Required
Determine the following:
- Contribution margin per unit.
- Number of units that Ender must sell to break even.
- Sales level in units that Ender must reach to earn a profit of $148,200.
- Determine the margin of safety in units, sales dollars, and as a percentage.
a. Contribution margin per unit. b. Number of units that Ender must sell to break even. c. Sales level in units that Ender must reach to earn a profit of $148,200.
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Determine the margin of safety in units, sales dollars, and as a percentage. (Round Percentage answer to 1 decimal place (i.e., 0.234 should be entered as 23.4).)
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