Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

can some one help me with the attached problem? i need all answers checked andones i do not have or have right i need please

image text in transcribed

can some one help me with the attached problem? i need all answers checked andones i do not have or have right i need please

image text in transcribed Problem 5-20 Various CVP Questions: Break-Even Point; Cost Structure; Target Sales [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6, LO5-8] Northwood Company manufactures basketballs. The company has a ball that sells for $42. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $25.20 per ball, of which 60% is direct labor cost. Last year, the company sold 44,000 of these balls, with the following results: Sales (44,000 balls) Variable expenses $ Contribution margin Fixed expenses Net operating income 1,848,000 1,108,800 739,200 470,400 $ 268,800 Required: 1-a. Compute the CM ratio and the break-even point in balls. (Do not round intermediate calculations.) 1-b. Compute the the degree of operating leverage at last year's sales level. (Round your answer to 2 decimal places.) 2. Due to an increase in labor rates, the company estimates that variable expenses will increase by $3.36 per ball next year. If this change takes place and the selling price per ball remains constant at $42.00, what will be the new CM ratio and break-even point in balls? (Do not round intermediate calculations.) 3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $268,800, as last year? (Do not round intermediate calculations. Round your answer to the nearest whole unit.) 4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year, what selling price per ball must it charge next year to cover the increased labor costs? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40%, but it would cause fixed expenses per year to increase by 99%. If the new plant is built, what would be the company's new CM ratio and new break-even point in balls? (Do not round intermediate calculations.) 6. Refer to the data in (5) above. a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $268,800, as last year? (Do not round intermediate calculations.) b1. Assume the new plant is built and that next year the company manufactures and sells 44,000 balls (the same number as sold last year). Prepare a contribution format income statement (Do not round your intermediate calculations.) b- Compute the degree of operating leverage. (Do not round intermediate calculations and 2. round your final answer to 2 decimal places.) rev: 10_08_2014_QC_55322 Garrison 15e Recheck 2014-12-18

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

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

Step: 2

blur-text-image

Step: 3

blur-text-image

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

Authors: Warren, Reeve, Duchac

12th Edition

1133952410, 9781133952411, 978-1133952428

Students also viewed these Accounting questions

Question

Understand chargeback methods and how they are used

Answered: 1 week ago