Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

CVP question Laila company has provided the following information about the company Sales $225,000 Sales Discount $20,000 Overhead cost (Fixed) $ 35,000 Overhead (Variable) $

image text in transcribed
image text in transcribed
CVP question Laila company has provided the following information about the company Sales $225,000 Sales Discount $20,000 Overhead cost (Fixed) $ 35,000 Overhead (Variable) $ 20,000 Sales Return /Allowance $2,500 Selling commission (variable ] $ 39,600 Supplies $2,600 Selling commission (fixed) $ 15,000 Prepaid expense $11,000 Variable admin expenses $ 24500 $7900 Accrued cost Fixed admin expenses $ 20,000 Tax 25% Interest expenses $5,420 Capacity of production 4,000 units Units sold 3,500 Units produced 3.500 REQUIRED 1. Calculate the net income using contribution approach 2. Calculate Net income using the absorption method [ Financial Accounting method] 3. Find CM per unit and the Contribution Margin Ratio 4. Determine the breakeven sales in units and dollars 5. Draw a graph to show the profit and lost and breakeven point for this company (BE graph) 6. Calculate margin of safety in dollars and in percentage. Explain what this concept means to a cost accountant. 7. The sales manager believes that a project of the company could increase sales by 25% but variable cost will also decrease by $5,000 and fixed cost will increase by $ 85,000. Should the company accept the project or reject? 8. Determine the sales revenue necessary to generate before tax profit if the after tax is$75,000. The tax rate is 18% 9. Determine sales revenue necessary to generate after-tax profit of $85,000 10. Calculate degree of leverage (DOL) and if sales increases by 25%, what will be the increase or decrease in net income in $ of this company? What will be the total net income if the project is accepted [use original data in the beginning)

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

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

Cost Benefit Analysis Concepts And Practice

Authors: Anthony E. Boardman, David H. Greenberg, Aidan R. Vining, David L. Weimer

3rd Edition

0131435833, 978-0131435834

More Books

Students also viewed these Accounting questions