Hello could you please answer the following questions for Managerial Accounting from page 2-4. Thank You
Exercises 22 (1) Dubai Company has prepared the following cost-volume-profit graph: I B H E A F G C D For the items listed below, enter to the left of the item, the letter in the graph which best corresponds to the item. ____ 1. Activity base ____ 2. Break-even point ____ 3. Dollars ____ 4. Fixed costs ____ 5. Loss _ ___6. Profit ____ 7. Revenues ____ 8. Total costs ____ 9. Variable costs (2) Answer the required of each following questions: 1. Fixed costs are $900,000 and the variable costs are 75% of the unit selling price. What is the break-even point in dollars? 2. Fixed costs are $1,200,000 and the contribution margin per unit is $150. What is the break-even point? 3. The following monthly data are available for Tag, Inc. which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $42,000; Actual sales for the month of June, 4,000 units. How much is the margin of safety for the company for June? 4. How much sales are required to earn a target net income of $160,000 if total fixed costs are $200,000 and the contribution margin ratio is 40%? 1 5. Quaker Corporation sells its product for $40. The variable costs are $18 per unit. Fixed costs are $16,000. The company is considering the purchase of an automated machine that will result in a $2 reduction in unit variable costs and an increase of $5,000 in fixed costs. Which of the following is true about the break-even point in units? a. It will remain unchanged. b. It will decrease. c. It will increase. d. It cannot be determined from the information provided. 6. In the Soma Company, maintenance costs are a mixed cost. At the low level of activity (80 direct labor hours), maintenance costs are $600. At the high level of activity (200 direct labor hours), maintenance costs are $1,100. Using the high-low method, what is the variable maintenance cost per unit and the total fixed maintenance cost? 7. Dubai Company is planning to sell 500,000 hammers for $1.50 per unit. The contribution margin ratio is 20%. If Dubai will break even at this level of sales, what are the fixed costs? (3) Answer the required of each of the following points: (Support your answer with calculations.) A. Mueller Corp. manufactures compact discs that sell for AED 10 each. Fixed costs are AED 56,000 and variable costs are AED 6 per unit. Mueller can buy a newer production machine that will increase fixed costs by AED 28,000 per year, but will decrease variable costs by AED 2 per unit. What effect would the purchase of the new machine have on Mueller's break-even point in units? Break-even point with old machine = 2 Break-even point with new machine = B. A firm expects to sell 25,000 units of its product at AED 11 per unit. Net income is predicted to be AED 60,000. If the variable costs per unit are AED 5, what is the total fixed costs? C. During current year, Khaled Enterprise sold 20,000 electric screwdrivers at a price of AED 15 each. Fixed costs amounted to AED 40,000 and Net income was AED 30,000. What amount should have been reported as variable costs in the company's income statement for the year in question? D. Hartman Co. has fixed costs of AED 36,000 and a contribution margin ratio of 24%. If expected sales are AED 200,000, what is the margin of safety as a percent of sales? E. A product sells for AED 200 per unit, and its variable costs per unit are AED130. Fixed costs are AED 20,000. If the firm wants to earn AED 35,000 Net income, how many units must be sold? (4) Dubai Co. is looking into two alternative methods of producing its product. The following information about the two alternatives is available: Selling price per unit............ 3 Alternative #1 AED 40 Alternative #2 AED 40 Variable costs per unit......... AED 20 Fixed costs........................... AED 180,000 AED 10 AED 210,000 If the company's expected sales volume is 10,000 units. Compute the following: a) CM Ratio for each alternative. Alternative #2 CM% = Alternative #1 CM% = b) BEP in units for each alternative. Alternative #2 BEP = Alternative #1 BEP = c) Net Income for each alternative. Alternative #2 NI (L) = Alternative #1 NI (L) = d) Margin of safety ratio of each alternative. Alternative #2 Alternative #1 MOS% = MOS% = e) Which alternative should be selected? Explain. Alternative #2 should be selected because it is highest CM%, MOS% and NI. Also, it is lowest BEP 4
