BE5-7 Radial Inc. had sales of $2,400,000 for the first quarter of 2014. In making the sales, statement. the company incurred the costs and expenses shown on page 222. (LO 5), AP 5 Cost-Volume-Profit Variable Fixed Cost of goods sold $920,000 $440,000 Selling expenses 70,000 45,000 Administrative expenses 86,000 98,000 Prepare a CVP income statement for the quarter ended March 31, 2014. BE5-8 Rice Company has a unit selling price of $520, variable costs per unit of $286, and fixed costs of $163,800. Compute the break-even point in units using (a) the mathematical equation and (b) contribution margin per unit. BE5-9 Acorn Corp. had total variable costs of $180,000, total fixed costs of $170,000, and total revenues of $300,000. Compute the required sales in dollars to break even. BE5-10 For Flynn Company, variable costs are 70% of sales, and fixed costs are $195,000. Management's net income goal is $75,000. Compute the required sales in dollars needed to achieve management's target net income of $75,000. (Use the contribution margin approach.) BE5-11 For Stevens Company, actual sales are $1,000,000 and break-even sales are $840,000. Compute (a) the margin of safety in dollars and (b) the margin of safety ratio. BE5-12 Deines Corporation has fixed costs of $480,000. It has a unit selling price of $6, unit variable costs of $4.40, and a target net income of $1,500,000. Compute the required sales in units to achieve its target net income. DO IT! 5-4 Presto Company makes radios that sell for $30 each. For the coming year, management expects fixed costs to total $220,000 and variable costs to be $18 per unit. (a) Compute the break-even point in dollars using the contribution margin (CM) ratio. (b) Compute the margin of safety ratio assuming actual sales are $800,000. (c) Compute the sales dollars required to earn net income of $140,000. oute break-even point in and dollars .6), AP E5-8 All That Blooms provides environmentally friendly lawn services for homeowners. Its operating costs are as follows. Depreciation $1,400 per month Advertising $200 per month Insurance $2,000 per month Exercises 225 Weed and feed materials $12 per lawn Direct labor $10 per lawn Fuel $2 per lawn All That Blooms charges $60 per treatment for the average single-family lawn. Instruction Determine the company's break-even point in (a) number of lawns serviced per month and (b) dollars. E5-9 The Green Acres Inn is trying to determine its break-even point. The inn has 50 Compute break-even point. rooms that it rents at $60 a night. Operating costs are as follows. (LO 5, 6), AP Salaries $6,200 per month XLS Utilities $1,100 per month Depreciation $1,000 per month Maintenance $100 per month Maid service $11 per room Other costs $28 per room Instructions Determine the inn's break-even point in (a) number of rented rooms per month and (b) dollars. E5-10 In the month of March, Style Salon services 560 clients at an average price of $120. Compute contribution margin During the month, fixed costs were $21,024 and variable costs were 60% of sales. and break-even point. Instructions (LO 5, 6), AP (a) Determine the contribution margin in dollars, per unit, and as a ratio. (b) Using the contribution margin technique, compute the break-even point in dollars and in units. E5-11 Kare Kars provides shuttle service between four hotels near a medical center and Compute break-even point. an international airport. Kare Kars uses two 10-passenger vans to offer 12 round trips (LO 5, 6), AP per day. A recent month's activity in the form of a cost-volume-profit income statement is shown below. Fare revenues (1,440 fares) $36,000 Variable costs Fuel $ 5,040 Tolls and parking 3,100 Maintenance 860 9,000 Contribution margin 27,000 Fixed costs Salaries 12,700 Depreciation 1,300 Insurance 1,000 15,000 Net income $12,000 Instructions (a) Calculate the break-even point in (1) dollars and (2) number of fares. (b) Without calculations, determine the contribution margin at the break-even point. E5-12 In 2013, Manhoff Company had a break-even point of $350,000 based on a selling Compute variable costs per price of $5 per unit and fixed costs of $112,000. In 2014, the selling price and the variable unit, contribution margin costs per unit did not change, but the break-even point increased to $420,000. ratio, and increase in fixed costs. Instructions (LO 5, 6), AP (a) Compute the variable costs per unit and the contribution margin ratio for 2013. (b) Compute the increase in fixed costs for 2014. E5-13 Cannes Company has the following information available for September 2014. Prepare CVP income Unit selling price of video game consoles $ 400 Unit variable costs $ 275 (LO 5, 6), AP Total fixed costs $52,000 Units sold 600 statements. 5 Cost-Volume-Profit Instructions (a) Compute the contribution margin per unit. (b) Prepare a CVP income statement that shows both total and per unit amounts. (c) Compute Cannes' break-even point in units. (d) Prepare a CVP income statement for the break-even point that shows both total and per unit amounts. E5-14 Naylor Company had $210,000 of net income in 2013 when the selling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $570,000. Management expects per unit data and total fixed costs to remain the same in 2014. The president of Naylor Company is under pressure from stockholders to increase net income by $52,000 in 2014. Instructions (a) Compute the number of units sold in 2013. (b) Compute the number of units that would have to be sold in 2014 to reach the stock- holders' desired profit level. (c) Assume that Naylor Company sells the same number of units in 2014 as it did in 2013. What would the selling price have to be in order to reach the stockholders' desired profit level? E5-15 Cottonwood Company reports the following operating results for the month of August: sales $400,000 (units 5,000); variable costs $210,000; and fixed costs $90,000. Man- agement is considering the following independent courses of action to increase net income. 1. Increase selling price by 10% with no change in total variable costs or units sold. 2. Reduce variable costs to 45% of sales. Instructions Compute the net income to be earned under each alternative. Which course of action will produce the highest net income? E5-16 Glacial Company estimates that variable costs will be 62.5% of sales, and fixed costs will total $600,000. The selling price of the product is $4. Instructions (a) Prepare a CVP graph, assuming maximum sales of $3,200,000. (Note: Use $400,000 increments for sales and costs and 100,000 increments for units.) (b) Compute the break-even point in (1) units and (2) dollars. (c) Compute the margin of safety in (1) dollars and (2) as a ratio, assuming actual sales are $2 million. E5-17 Oak Bucket Co., a manufacturer of wood buckets, had the following data for 2013: Sales 2,600 units Sales price $40 per unit Variable costs $16 per unit Fixed costs $19,500 Instructions (a) What is the contribution margin ratio? (b) What is the break-even point in dollars? (c) What is the margin of safety in dollars and as a ratio? (d) If the company wishes to increase its total dollar contribution margin by 30% in 2014, by how much will it need to increase its sales if all other factors remain constant? (CGA adapted)