Assignment: Ch 16 HW 1. eBook Cornerstone Exercise 16.1 (Algorithmic) Variable Costs, Contribution Margin, Contribution Margin Ratio
Question:
| Assignment: Ch 16 HW |
1.
eBook
Cornerstone Exercise 16.1 (Algorithmic) Variable Costs, Contribution Margin, Contribution Margin Ratio
Super-Tees Company plans to sell 17,000 T-shirts at $24 each in the coming year. Product costs include:
| Direct materials per T-shirt | $8.40 |
| Direct labor per T-shirt | $1.68 |
| Variable overhead per T-shirt | $0.72 |
| Total fixed factory overhead | $39,000 |
Variable selling expense is the redemption of a coupon, which averages $1.20 per T-shirt; fixed selling and administrative expenses total $12,000.
Required:
1. Calculate the following values: Round dollar amounts to the nearest cent and round ratio values to three decimal places (express the ratio as a decimal rather than a percentage).
| a. Variable product cost per unit | $ _________________ |
| b. Total variable cost per unit | $ _________________ |
| c. Contribution margin per unit | $ _________________ |
| d. Contribution margin ratio | _________________ |
| e. Total fixed expense for the year | $ _________________ |
| 2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year. If required, round your per unit answers to the nearest cent.
|
3. What if the per unit selling expense increased from $1.20 to $2.55? Calculate new values for the following: Round dollar amounts to the nearest cent and round ratio values to four decimal places (express the ratio as a decimal rather than a percentage):
| a. Variable product cost per unit | $ _________________ |
| b. Total variable cost per unit | $ _________________ |
| c. Contribution margin per unit | $ _________________ |
| d. Contribution margin ratio | _________________ |
| e. Total fixed expense for the year | $ _________________ |
2.
eBook
Cornerstone Exercise 16.2 (Algorithmic) Break-Even Units: Units for Target Profit
Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 19,000 units at a price of $330 each. Product costs include:
| Direct materials | $69.00 |
| Direct labor | $40.00 |
| Variable overhead | $10.00 |
| Total fixed factory overhead | $523,800 |
Variable selling expense is a commission of 4 percent of price; fixed selling and administrative expenses total $90,000.
Required:
1. Calculate the sales commission per unit sold. If required, round your answers to the nearest dollar. Use rounded answers in subsequent computations. $ _________________ per unit
Calculate the contribution margin per unit. $ _________________ per unit
2. How many units must Jay-Zee Company sell to break even? Round your answer to the nearest whole number. _________________ units
| Prepare an income statement for the calculated number of units. If an amount is zero, enter "0". Do NOT round Break-even units and, if required, round your answer to the nearest dollar.
|
3. Calculate the number of units Jay-Zee Company must sell to achieve target operating income (profit) of $358,776. Round your answer to the nearest whole number. _________________ units
4. What if the Jay-Zee Company wanted to achieve a target operating income of $346,500? Would the number of units needed increase or decrease compared to your answer in Requirement 3? Round your answer to the nearest whole number. _________________
Compute the number of units needed for the new target operating income. _________________ units
3.
| eBook Cornerstone Exercise 16.3 (Algorithmic) Break-Even Sales: Sales for Target Profit Health-Temp Company is a placement agency for temporary nurses. It serves hospitals and clinics throughout the metropolitan area. Health-Temp Company believes it will place temporary nurses for a total of 21,500 hours next year. Health-Temp charges the hospitals and clinics $90 per hour and has variable costs of $76.50 per hour (this includes the payment to the nurse). Total fixed costs equal $281,475. Required: 1. Calculate the contribution margin per unit and the contribution margin ratio (express the ratio as a decimal rather than a percentage). If required, round your answers to two decimal places.
2. Calculate the sales revenue needed to break even. $ _________________ 3. Calculate the sales revenue needed to achieve a target profit of $83,700. $ _________________ 4. What if Health-Temp had target operating income (profit) of $102,600? Would sales revenue be larger or smaller than the one calculated in Requirement 3? _________________ By how much? $ _________________ |
4.
eBook
Cornerstone Exercise 16.4 (Algorithmic) After-Tax Profit Targets
Olivian Company wants to earn $300,000 in net (after-tax) income next year. Its product is priced at $250 per unit. Product costs include:
| Direct materials | $75.00 |
| Direct labor | $55.00 |
| Variable overhead | $12.50 |
| Total fixed factory overhead | $440,000 |
Variable selling expense is $10 per unit; fixed selling and administrative expense totals $290,000. Olivian has a tax rate of 40 percent.
Required:
1. Calculate the before-tax profit needed to achieve an after-tax target of $300,000. $ _________________
2. Calculate the number of units that will yield operating income calculated in Requirement 1 above. If required, round your answer to the nearest whole unit. _________________ units
| 3. Prepare an income statement for Olivian Company for the coming year based on the number of units computed in Requirement 2. Do NOT round interim calculations and, if required, round your answer to the nearest dollar.
|
4. What if Olivian had a 35 percent tax rate? Would the units sold to reach a $300,000 target net income be higher or lower than the units calculated in Requirement 2? _________________
Calculate the number of units needed at the new tax rate. In your calculations, round before-tax income to the nearest dollar. Round your answer to the nearest whole unit. _________________ units
5.
eBook
Cornerstone Exercise 16.5 (Algorithmic) Multiple-Product Break-Even and Target Profit
Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans to sell 30,000 ceiling fans and 70,000 table fans in the coming year. Product price and cost information includes:
| Ceiling Fan | Table Fan | |
| Price | $54 | $14 |
| Unit variable cost | $16 | $10 |
| Direct fixed cost | $23,800 | $49,000 |
Common fixed selling and administrative expenses total $98,000.
Required:
1. What is the sales mix estimated for next year (calculated to the lowest whole number for each product)? Sales mix of ceiling fans to table fans = _________________ : _________________
2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans. How many ceiling fans and table fans are sold at break-even? Do not round intermediate calculations. If required, round your final answers to the nearest whole number.
| Break-even ceiling fans | _________________ |
| Break-even table fans | _________________ |
| 3. Prepare a contribution-margin-based income statement for Vandenberg, Inc., based on the unit sales calculated in Requirement 2. If an amount is zero, enter "0". Enter any negative product margin and losses with a minus sign. Do not round intermediate calculations. Round your final answers to nearest dollar.
|
4. What if Vandenberg, Inc., wanted to earn operating income equal to $16,000? Calculate the number of ceiling fans and table fans that must be sold to earn this level of operating income. (Hint: Remember to form a package of ceiling fans and table fans based on the sales mix and to first calculate the number of packages to earn an operating income of $16,000.) Round your intermediate calculations and final answers to nearest number.
| Break-even ceiling fans | _________________ |
| Break-even table fans | _________________ |
6.
| eBook Cornerstone Exercise 16.6 (Algorithmic) Break-Even Units and Sales Revenue: Margin of Safety Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 3,110,000 pages at a price of $0.08 each in the coming year. Product costs include:
There is no variable selling expense; fixed selling and administrative expenses total $35,000. Required: In your computations that involve the contribution margin ratio, do not round the ratio. 1. Calculate the break-even point in units. _________________ units 2. Calculate the break-even point in sales revenue. $ _________________ 3. Calculate the margin of safety in units for the coming year. _________________ units 4. Calculate the margin of safety in sales revenue for the coming year. $ _________________ 5. What if the total selling and administrative expenses are reduced to $13,920? Recalculate the following:
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Assignment: Ch 16 HW 1. eBook Cornerstone Exercise 16.1 (Algorithmic) Variable Costs, Contribution Margin, Contribution Margin Ratio Super-Tees Company plans to sell 17,000 T-shirts at $24 each in the coming year. Product costs include: Direct materials per T-shirt Direct labor per T-shirt Variable overhead per T-shirt Total fixed factory overhead $8.40 $1.68 $0.72 $39,000 Variable selling expense is the redemption of a coupon, which averages $1.20 per T-shirt; fixed selling and administrative expenses total $12,000. Required: 1. Calculate the following values: Round dollar amounts to the nearest cent and round ratio values to three decimal places (express the ratio as a decimal rather than a percentage). a. Variable product cost per unit $ _________________ b. Total variable cost per unit $ _________________ c. Contribution margin per unit $ _________________ d. Contribution margin ratio _________________ e. Total fixed expense for the year $ _________________ 2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year. If required, roun Super-Tees Company Contribution-Margin-Based Operating Income Statement For the Coming Year Total $ Per Unit $ $ $ $ 3. What if the per unit selling expense increased from $1.20 to $2.55? Calculate new values for the following: Round dollar amounts to the nearest cent and round ratio values to four decimal places (express the ratio as a decimal rather than a percentage): a. Variable product cost per unit $ _________________ b. Total variable cost per unit $ _________________ c. Contribution margin per unit $ _________________ d. Contribution margin ratio e. Total fixed expense for the year _________________ $ _________________ 2. eBook Cornerstone Exercise 16.2 (Algorithmic) Break-Even Units: Units for Target Profit Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 19,000 units at a price of $330 each. Product costs include: Direct materials $69.00 Direct labor Variable overhead Total fixed factory overhead $40.00 $10.00 $523,800 Variable selling expense is a commission of 4 percent of price; fixed selling and administrative expenses total $90,000. Required: 1. Calculate the sales commission per unit sold. If required, round your answers to the nearest dollar. Use rounded answers in subsequent computations. $ _________________ per unit Calculate the contribution margin per unit. $ _________________ per unit 2. How many units must Jay-Zee Company sell to break even? Round your answer to the nearest whole number. _________________ units Prepare an income statement for the calculated number of units. If an amount is zero, enter "0". Do NOT round Break-ev Jay-Zee Company Income Statement $ $ $ 3. Calculate the number of units Jay-Zee Company must sell to achieve target operating income (profit) of $358,776. Round your answer to the nearest whole number. _________________ units 4. What if the Jay-Zee Company wanted to achieve a target operating income of $346,500? Would the number of units needed increase or decrease compared to your answer in Requirement 3? Round your answer to the nearest whole number. _________________ Compute the number of units needed for the new target operating income. _________________ units 3. eBook Cornerstone Exercise 16.3 (Algorithmic) Break-Even Sales: Sales for Target Profit Health-Temp Company is a placement agency for temporary nurses. It serves hospitals and clinics throughout the metropolitan area. Health-Temp Company believes it will place temporary nurses for a total of 21,500 hours next year. Health-Temp charges the hospitals and clinics $90 per hour and has variable costs of $76.50 per hour (this includes the payment to the nurse). Total fixed costs equal $281,475. Required: 1. Calculate the contribution margin per unit and the contribution margin ratio (express the ratio as a decimal rather than a percentage). If required, round your answers to two decimal places. Contribution margin per unit $ _________________ Contribution margin ratio _________________ 2. Calculate the sales revenue needed to break even. $ _________________ 3. Calculate the sales revenue needed to achieve a target profit of $83,700. $ _________________ 4. What if Health-Temp had target operating income (profit) of $102,600? Would sales revenue be larger or smaller than the one calculated in Requirement 3? _________________ By how much? $ _________________ 4. eBook Cornerstone Exercise 16.4 (Algorithmic) After-Tax Profit Targets Olivian Company wants to earn $300,000 in net (after-tax) income next year. Its product is priced at $250 per unit. Product costs include: Direct materials Direct labor Variable overhead Total fixed factory overhead $75.00 $55.00 $12.50 $440,000 Variable selling expense is $10 per unit; fixed selling and administrative expense totals $290,000. Olivian has a tax rate of 40 percent. Required: 1. Calculate the before-tax profit needed to achieve an after-tax target of $300,000. $ _________________ 2. Calculate the number of units that will yield operating income calculated in Requirement 1 above. If required, round your answer to the nearest whole unit. _________________ units 3. Prepare an income statement for Olivian Company for the coming year based on the number of units computed in Re answer to the nearest dollar. Olivian Company Income Statement For the Coming Year Total $ $ $ $ 4. What if Olivian had a 35 percent tax rate? Would the units sold to reach a $300,000 target net income be higher or lower than the units calculated in Requirement 2? _________________ Calculate the number of units needed at the new tax rate. In your calculations, round before-tax income to the nearest dollar. Round your answer to the nearest whole unit. _________________ units 5. eBook Cornerstone Exercise 16.5 (Algorithmic) Multiple-Product Break-Even and Target Profit Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans to sell 30,000 ceiling fans and 70,000 table fans in the coming year. Product price and cost information includes: Price Unit variable cost Direct fixed cost Ceiling Fan Table Fan $54 $16 $23,800 $14 $10 $49,000 Common fixed selling and administrative expenses total $98,000. Required: 1. What is the sales mix estimated for next year (calculated to the lowest whole number for each product)? Sales mix of ceiling fans to table fans = _________________ : _________________ 2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans. How many ceiling fans and table fans are sold at break-even? Do not round intermediate calculations. If required, round your final answers to the nearest whole number. Break-even ceiling fans _________________ Break-even table fans _________________ 3. Prepare a contribution-margin-based income statement for Vandenberg, Inc., based on the unit sales calculated in Re margin and losses with a minus sign. Do not round intermediate calculations. Round your final answers to nearest dollar Vandenberg, Inc. Contribution-Margin-Income Statement For the Coming Year Ceiling Fans Table Fans Total $ $ $ $ $ $ $ $ $ $ 4. What if Vandenberg, Inc., wanted to earn operating income equal to $16,000? Calculate the number of ceiling fans and table fans that must be sold to earn this level of operating income. (Hint: Remember to form a package of ceiling fans and table fans based on the sales mix and to first calculate the number of packages to earn an operating income of $16,000.) Round your intermediate calculations and final answers to nearest number. Break-even ceiling fans _________________ Break-even table fans _________________ 6. eBook Cornerstone Exercise 16.6 (Algorithmic) Break-Even Units and Sales Revenue: Margin of Safety Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 3,110,000 pages at a price of $0.08 each in the coming year. Product costs include: Direct materials Direct labor Variable overhead Total fixed overhead $0.012 $0.004 $0.002 $142,940 There is no variable selling expense; fixed selling and administrative expenses total $35,000. Required: In your computations that involve the contribution margin ratio, do not round the ratio. 1. Calculate the break-even point in units. _________________ units 2. Calculate the break-even point in sales revenue. $ _________________ 3. Calculate the margin of safety in units for the coming year. _________________ units 4. Calculate the margin of safety in sales revenue for the coming year. $ _________________ 5. What if the total selling and administrative expenses are reduced to $13,920? Recalculate the following: a. Break-even point in units b. Break-even point in sales revenue c. Margin of safety in units for the coming year d. Margin of safety in sales revenue for the coming year _________________ units $ _________________ _________________ $ _________________ units Expert Answer:
