factory rent expense $10.250.000
production manager salaries $8.500.000
insurance expense $6.000.000
equipment depreciation expense $5.350.000
advertising expense $5.000.000
battery $10
camera $45
internal components $90
receiver $35
screen $95
speaker $25
sales price unit $750
Exercise 18-1 Cost behavior in graphs LO C1 Following are five graphs representing various cost behaviors. 1. 2. 3. 4. 5. Volume Volume Volume Volume Volume Required: (1) Identify whether the cost behavior in each graph is mixed, step-wise, fixed, variable, or curvilinear. (2) Identify the graph (by number) that best illustrates each cost behavior Costs Costs Complete this question by entering your answers in the tabs below Required 1 Required 2 Identify whether the cost behavior in each graph is mixed, step-wise, fixed, variable, or curvilinear. Graph #1 Graph # 2 Graph #3 Graph #4 Graph #5 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Identify the graph (by number) that best illustrates each cost behavior: (a) Cost of materials used in making product (b) Factory insurance. (c) Factory policy that requires one supervisor for every 30 factory workers Costs of hourly paid workers that provide substantial gains in efficiency when a few workers are (d) added but gradually smaller gains in efficiency when more workers are added. (e) Salesperson paid a salary plus a commission based on units sold. Tableau DA 18-1: Quick Study, Contribution margin and break-even LO A1, P2 Our team is hired by Apple to help assess whether or not to continue to manufacture and sell an older model of the iPhone. Apple explains that this model continues to sll well in foreign markets but it worries that fixed costs are so large that it is difficult to earn a profit. The Tableau Dashboard is provided to aid our analysis of this model. Total Fixed Costs Factory rent expense Equipment Insurance expense depreciation expense Production manager salaries Advertising expense Variable Costs Per Unit Internal Speaker Screen Receiver Components Camera Battery e wwww Sales Price Per Unit iPhone iPhone Sales Price Per Unit: $750 E K +ableau 1. Compute the contribution margin per unit Contribution margin 2. Compute the contribution margin ratio. Contribution Margin Ratio Choose Denominator: Choose Numerator: Contribution margin ratio 3. Compute break-even point in sales dollars. Break-Even Dollars Choose Denominator: Choose Numerator: Break-even dollars 1. Compute break-even point in units. Choose Numerator: Break-Even Units Choose Denominator: Break-even units 2. Compute the units of product that must be sold to earn pretax income of $9,000,000. Units to Achieve Target Choose Denominator: Choose Numerator: Units to achieve target 3. Compute the dolar value of sales (revenue) that must be sold to earn pretax income of $9,000,000. Choose Numerator: Choose Denominator: Break-Even Dollars Break-even dollars Answer the requirements for each of the following separate situations. 1. If Apple expects sales of 100,000 units, compute its margin of safety (a) in dollars and (b) as a percent of expected sales. 2(a). Apple anticipates it will sell 100,000 units in the coming year. It is considering investing in a new machine that will increase its fixed costs by $7,500,000 per year and decrease its variable costs by $40 per unit. Compute net income if Apple does not purchase the machine. 2(b). Apple anticipates it will sell 100,000 units in the coming year. It is considering investing in a new machine that will increase its fixed costs by $7,500,000 per year and decrease its variable costs by $40 per unit. Compute net income if Apple does purchase the machine. 3(a). Apple anticipates it will sell 100,000 units in the coming year. A marketing executive believes that increasing advertising costs by $4,000,000 will increase Apple's sales volume to 110,000 units. Compute net income if Apple does not increase advertising expenses. 3(b). Apple anticipates it will sell 100,000 units in the coming year. A marketing executive believes that increasing advertising costs by $4,000,000 will increase Apple's sales volume to 110,000 units. Compute net income if Apple does increase advertising expenses. Complete this question by entering your answers in the tabs below. Required 3A Required 2B Required 3B Required 2A Required 1 If Apple expects sales of 100,000 units, compute its margin of safety (a) in dollars and (b) as a percent of expected sales. Margin of Safety (a) Dollars % (b) Percent Required 2B Required 1 Required 2A Required 3A Required 3B Apple anticipates it will sell 100,000 units in the coming year. It is considering investing in a new machine that will increase its fixed costs by $7,500,000 per year and decrease its variable costs by $40 per unit. Compute net income if Apple does not purchase the machine. Does not purchase the new machine Sales Variable costs Contribution margin Fixed costs Net income Required 1 Required 2A Required 3A Required 2B Required 3B Apple anticipates it will sell 100,000 units in the coming year. It is considering investing in a new machine that will increase its fixed costs by $7,500,000 per year and decrease its variable costs by $40 per unit. Compute net income if Apple does purchase the machine. Does purchase the new machine Sales Variable costs Contribution margin Fixed costs Net income Required 2B Required 1 Required 3A Required 3B Required 2A Apple anticipates it will sell 100,000 units in the coming year. A marketing executive believes that increasing advertising costs by $4,000,000 will increase Apple's sales volume to 110,000 units. Compute net income if Apple does not increase advertising expenses. Does not increase advertising expenses Sales Variable costs Contribution margin Fixed costs Net income Required 1 Required 2A Required 2B Required 3B Required 3A Apple anticipates it will sell 100,000 units in the coming year. A marketing executive believes that increasing advertising costs by $4,000,000 will increase Apple's sales volume to 110,000 units. Compute net income if Apple does increase advertising expenses. Does increase advertising expenses Sales Variable costs Contribution margin Fixed costs Net income Exercise 18-1 Cost behavior in graphs LO C1 Following are five graphs representing various cost behaviors. 1. 2. 3. 4. 5. Volume Volume Volume Volume Volume Required: (1) Identify whether the cost behavior in each graph is mixed, step-wise, fixed, variable, or curvilinear. (2) Identify the graph (by number) that best illustrates each cost behavior Costs Costs Complete this question by entering your answers in the tabs below Required 1 Required 2 Identify whether the cost behavior in each graph is mixed, step-wise, fixed, variable, or curvilinear. Graph #1 Graph # 2 Graph #3 Graph #4 Graph #5 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Identify the graph (by number) that best illustrates each cost behavior: (a) Cost of materials used in making product (b) Factory insurance. (c) Factory policy that requires one supervisor for every 30 factory workers Costs of hourly paid workers that provide substantial gains in efficiency when a few workers are (d) added but gradually smaller gains in efficiency when more workers are added. (e) Salesperson paid a salary plus a commission based on units sold. Tableau DA 18-1: Quick Study, Contribution margin and break-even LO A1, P2 Our team is hired by Apple to help assess whether or not to continue to manufacture and sell an older model of the iPhone. Apple explains that this model continues to sll well in foreign markets but it worries that fixed costs are so large that it is difficult to earn a profit. The Tableau Dashboard is provided to aid our analysis of this model. Total Fixed Costs Factory rent expense Equipment Insurance expense depreciation expense Production manager salaries Advertising expense Variable Costs Per Unit Internal Speaker Screen Receiver Components Camera Battery e wwww Sales Price Per Unit iPhone iPhone Sales Price Per Unit: $750 E K +ableau 1. Compute the contribution margin per unit Contribution margin 2. Compute the contribution margin ratio. Contribution Margin Ratio Choose Denominator: Choose Numerator: Contribution margin ratio 3. Compute break-even point in sales dollars. Break-Even Dollars Choose Denominator: Choose Numerator: Break-even dollars 1. Compute break-even point in units. Choose Numerator: Break-Even Units Choose Denominator: Break-even units 2. Compute the units of product that must be sold to earn pretax income of $9,000,000. Units to Achieve Target Choose Denominator: Choose Numerator: Units to achieve target 3. Compute the dolar value of sales (revenue) that must be sold to earn pretax income of $9,000,000. Choose Numerator: Choose Denominator: Break-Even Dollars Break-even dollars Answer the requirements for each of the following separate situations. 1. If Apple expects sales of 100,000 units, compute its margin of safety (a) in dollars and (b) as a percent of expected sales. 2(a). Apple anticipates it will sell 100,000 units in the coming year. It is considering investing in a new machine that will increase its fixed costs by $7,500,000 per year and decrease its variable costs by $40 per unit. Compute net income if Apple does not purchase the machine. 2(b). Apple anticipates it will sell 100,000 units in the coming year. It is considering investing in a new machine that will increase its fixed costs by $7,500,000 per year and decrease its variable costs by $40 per unit. Compute net income if Apple does purchase the machine. 3(a). Apple anticipates it will sell 100,000 units in the coming year. A marketing executive believes that increasing advertising costs by $4,000,000 will increase Apple's sales volume to 110,000 units. Compute net income if Apple does not increase advertising expenses. 3(b). Apple anticipates it will sell 100,000 units in the coming year. A marketing executive believes that increasing advertising costs by $4,000,000 will increase Apple's sales volume to 110,000 units. Compute net income if Apple does increase advertising expenses. Complete this question by entering your answers in the tabs below. Required 3A Required 2B Required 3B Required 2A Required 1 If Apple expects sales of 100,000 units, compute its margin of safety (a) in dollars and (b) as a percent of expected sales. Margin of Safety (a) Dollars % (b) Percent Required 2B Required 1 Required 2A Required 3A Required 3B Apple anticipates it will sell 100,000 units in the coming year. It is considering investing in a new machine that will increase its fixed costs by $7,500,000 per year and decrease its variable costs by $40 per unit. Compute net income if Apple does not purchase the machine. Does not purchase the new machine Sales Variable costs Contribution margin Fixed costs Net income Required 1 Required 2A Required 3A Required 2B Required 3B Apple anticipates it will sell 100,000 units in the coming year. It is considering investing in a new machine that will increase its fixed costs by $7,500,000 per year and decrease its variable costs by $40 per unit. Compute net income if Apple does purchase the machine. Does purchase the new machine Sales Variable costs Contribution margin Fixed costs Net income Required 2B Required 1 Required 3A Required 3B Required 2A Apple anticipates it will sell 100,000 units in the coming year. A marketing executive believes that increasing advertising costs by $4,000,000 will increase Apple's sales volume to 110,000 units. Compute net income if Apple does not increase advertising expenses. Does not increase advertising expenses Sales Variable costs Contribution margin Fixed costs Net income Required 1 Required 2A Required 2B Required 3B Required 3A Apple anticipates it will sell 100,000 units in the coming year. A marketing executive believes that increasing advertising costs by $4,000,000 will increase Apple's sales volume to 110,000 units. Compute net income if Apple does increase advertising expenses. Does increase advertising expenses Sales Variable costs Contribution margin Fixed costs Net income
