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Exercise 7-25 Manufacturing; Using CVP Analysis (LO 7-1, 7-4) Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery.

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Exercise 7-25 Manufacturing; Using CVP Analysis (LO 7-1, 7-4) Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm's fixed costs are 3,200,000 p per year. The variable cost of each component is 1,400 p, and the components are sold for 3,300 p each. The company sold 5,400 components during the prior year. (p denotes the peso, Argentina's national currency. Several countries use the peso as their monetary unit. On the day this exercise was written, Argentina's peso was worth 0.104 U.S. dollar . In the following requirements, Ignore income taxes.) Required: 1. Compute the break-even point in units. (Round your answer to the nearest whole number.) 2. What will the new break-even point be if fixed costs increase by 5 percent? (Round your answer to the nearest whole number.) 3. What was the company's net income for the prior year? 4. The sales manager believes that a reduction in the sales price to 2,800 p will result in orders for 900 more components each year, What will the break-even point be if the price is changed? (Round your answer to the nearest whole number.) 5. Should the price change discussed in requirement 4 be made? 1. Break-even point components 2 New break-even point components 3. Net Income P 4. New break-even point components 5. Should the price change discussed in requirement 4 be made? Exercise 7-28 Publishing; Contribution Income Statement (LO 7-7, 7-8) Europa Publications, Inc., specializes in reference books that keep abreast of the rapidly changing political and economic issues in Europe. The results of the company's operations during the prior year are given in the following table. All units produced during the year were sold. (Ignore income taxes.) $1,650,000 461,000 857,000 Sales revenue Manufacturing costs: Fixed Variable Selling costs: Fixed Variable Administrative costs: Fixed Variable 33,000 63,000 73,000 20,000 Required: 1-a. Prepare a traditional income statement for the company. 1.b. Prepare a contribution income statement for the company 2. What is the firm's operating leverage for the sales volume generated during the prior year? 3. Suppose sales revenue increases by 15 percent. What will be the percentage increase in net income? 4. Which income statement would an operating manager use to answer requirement 3? Complete this question by entering your answers in the tabs below. Reg 1A Req 15 Reg 2 Req3 Reg 4 Prepare a traditional income statement for the company, EUROPA PUBLICATIONS, INC Required: 1-a. Prepare a traditional income statement for the company. 1-b. Prepare a contribution income statement for the company. 2. What is the firm's operating leverage for the sales volume generated during the prior year? 3. Suppose sales revenue increases by 15 percent. What will be the percentage increase in net income? 4. Which income statement would an operating manager use to answer requirement 3? Complete this question by entering your answers in the tabs below. Reg 1A Reg 10 Reg 2 Reg 3 Req 4 Prepare a traditional income statement for the company. EUROPA PUBLICATIONS, INC. Income Statement For the Year Ended December 31, 20XX Operating expenses: 1 Reg 18 > 2. What is the firm's operating leverage for the sales volume generated during the prior year? 3. Suppose sales revenue increases by 15 percent. What will be the percentage increase in net income? 4. Which income statement would an operating manager use to answer requirement 3? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 Reg 3 Reg 4 Prepare a contribution income statement for the company. EUROPA PUBLICATIONS, INC. Income Statement For the Year Ended December 31, 20XX Variable expenses: Fixed expenses ROL1A A $1,650,000 461,000 857,000 Sales revenue Manufacturing costs : Pixed Variable Selling costs: Fixed Variable Administrative costs: Fixed Variable 33,000 63,000 73,000 28,000 Required: 1-a. Prepare a traditional income statement for the company. 1-b. Prepare a contribution Income statement for the company. 2. What is the firm's operating leverage for the sales volume generated during the prior year? 3. Suppose sales revenue increases by 15 percent. What will be the percentage increase in net income? 4. Which income statement would an operating manager use to answer requirement 3? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 Reg 3 Req4 What is the firm's operating leverage for the sales volume generated during the prior year? (Round your answer to 2 decima places.) Operating leverage $1,650,000 461,000 857,000 Sales revenue Manufacturing costs: Fixed Variable Selling costs: Fixed Variable Administrative costs: Fixed Variable 33,000 63,000 73,000 28,000 Required: 1-a. Prepare a traditional income statement for the company. 1-b. Prepare a contribution income statement for the company. 2. What is the firm's operating leverage for the sales volume generated during the prior year? 3. Suppose sales revenue increases by 15 percent. What will be the percentage increase in net income? 4. Which income statement would an operating manager use to answer requirement 3? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 Reg 3 Req 4 Suppose sales revenue increases by 15 percent. What will be the percentage Increase in net incomeb (Do not round Intermediate calculations. Round your answer to 1 decimal place.) Percentage increase in net incomo %

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