Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ACC 205 Mini Case 1 Case Description Jasper Company produces widgets that it sells for $62 each, and Joe Jasper, the owner, is contemplating several

image text in transcribedimage text in transcribed

ACC 205 Mini Case 1 Case Description Jasper Company produces widgets that it sells for $62 each, and Joe Jasper, the owner, is contemplating several ideas to grow his business. He has brought his monthly operating budget to you and has asked you to analyze it for him. (See BUDGET page in accompanying EXCEL spreadsheet.) Each unit requires 22 hour of machine time and direct labor. Assembly workers are paid $20 per hour. The machinery is serviced on a regular schedule based on the r of hours each machine runs. 1. Prepare a break-even graph. 2. How many units would have to be sold to achieve an operating income of $20,000? 3. Compute the margin of safety at 10,000 units. 4. If sales volumes increase 20% (from 10,000 units), what is the percentage and dollar amount of increase in profit (use operating leverage to determine). 5. It is projected an increase of $3,000 in advertising costs will lead to the sale of 200 additional units. Should the company do this? Show computations. DL 470 1 Intercept 2 Slope 3 Total Cost 0.7 7470 620000 335000 100000 16100 4500 7000 18600 481200 138800 5 10,000 Units 6 Sales 7 Less variable expenses 8 Direct Material 9 Assembly labor 10 Machine Maintenece 11 Factory supplies 12 Factory utilities 13 Sales Comissions 14 Total Variable expenses 15 Contribution Margin 16 Less Fixed expenses 17 Administrative Salaries 18 Advertising 19 Building rent and janitorial co 20 Equipment depreciation 21 Factory utilities 22 Insurance 23 Office supplies 24 Office utilities 25 Sales Salaries 26 Supervisors 27 Telephone and Internet 28 Net Income 30000 15000 20000 18000 470 8000 2400 1200 20000 12000 1500 128570 10230 29 31 Contribution Margin Ratio 33 34 Contribution Margin Ratio Contribution Margin Sales 22.39% 138800 620000 35 = 36 37 Break Even in Units 38 39 Break Even in Units Fixed expenses Contribution Margin Per Unit 9262.97 Units 128570 13.88 = 40 41 42 Breakeven in Sales Dollars = Fixed Expenses Contribution Margin Ratio 44 Breakeven in Sales Dollars = 574230 128570 22.39% 45 N M Ready Sheet1 Sheet2 Sheet32

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting IFRS Principles

Authors: Ilse Lubbe, Goolam Modack, Alex Watson

4th Edition

0199049238, 9780199049233

More Books

Students also viewed these Accounting questions

Question

What are the purposes of promotion ?

Answered: 1 week ago