Horngrens Accounting CHapter 22 problems E22-24, E22-27, P22-57, & E22A-34. Excel is the easiest to complete problems

Solution E21-30 1) Calculating the variable cost per inspection Hi - 1,400 Inspections Lo - 1,000 Inspections Variable cost per inspection = Cost at Hi point - Cost al Lo point)/(Total inspectiona at Hi point - Total inspectiona at Lo point) Variable cost per inspection = (4400-4200)/(1400-1000) Variable cost per inspection = $0.5 2) Calculating the total fixed cost Total fixed cost = Cost at Hi point - (Total inspectiona at Hi point*Variable cost per inspection) Total fixed cost = 4400 - 0.5*1400 Total fixed cost = $3,700 3) Cost equation and total operating cost for 1200 inspections is as follows Cost equation, Total Cost = Fixed cost + Variable cost per unit*Total units Total Cost = $3,700 + $0.5*Total units Total Cost for 1200 units = $3,700 + $0.5*1200 Total Cost for 1200 units = $4,300 4) Graph showing total cost at different level of inspection Inspection Total Cost 1000 1200 1400 $4,200 $4,300 $4,400 4425 4350 4275 Total Cost Total cost 4200 4125 4050 800 950 1100 1250 Inspections 1400 1550 Solution E21-31 1) Calculating the contribution margin ratio Contribution margin ratio = (Sales Revenue - Variable cost)/Sales Revenue Contribution margin ratio = (318500-111475)/318500 Contribution margin ratio = 0.65 2) Contribution margin income statement Sales revenue Less: Variable cost Contribution margin Less: Fixed costs Operating income $ $ $ $ $ 250,000.00 87,500.00 162,500.00 175,000.00 (12,500.00) $ $ $ $ $ 360,000.00 126,000.00 234,000.00 175,000.00 59,000.00 Solution E21-31 1) Determining the break-even point in units for following situations Sales price per unit Variable cost per unit A B a. b. c. d. $ $ $ $ 500.00 250.00 500.00 500.00 $ $ $ $ 150.00 150.00 100.00 150.00 Fixed costs C $ $ $ $ 140,000.00 140,000.00 140,000.00 122,500.00 Contribution Margin per unit D=A-B $ $ $ $ 350.00 100.00 400.00 350.00 Break-even point (In units) E = C/D $ $ $ $ 400.00 1,400.00 350.00 350.00 2) Comparing the result of change in sales price, Variable cost and fixed cost on break-even point 1) Decrease in the sales price per unit lead to decrease in the contribution margin per unit and increase in break-even units 2) Decrease in variable cost per unit lead to increase in the contribution margin per unit and decrease in break-even units 3) Decrease in fixed cost had no affect on contribution margin but lead to decrease in break-even units. In short decrease in cost will increase contribution margin and decrease the break-even point and decrease in sale will lead to decreae in contribution margin and increase in break-even point and vice versa. Solution E21-63 1) Determining the break-even point Break-even point = Total Fixed costs/Contribution margion per hour where, Contribution margin per hour = Sales price per hour - Variable cost per hour Contribution margin per hour = $120 - $60 Contribution margin per hour = $60 Break-even point = $3,900/$60 Break-even point = 65 hours Thus, total number of hours that must be billed to reach the breakeven point is 65. 2) Determining the number of hours Daniel has to complete to make profit of $4,500 Required hours to earn required profit = (Total Fixed costs + Required profit)/Contribution margion per hour where, Contribution margin per hour = Sales price per hour - Variable cost per hour Contribution margin per hour = $120 - $60 Contribution margin per hour = $60 Required hours to earn required profit = ($3,900 + $4,500)/$60 Required hours to earn required profit = 140 hours Thus, total number of hours that must be billed to reach the earn $4,500 in profit is 140. 3) Determining the revised break-even point Break-even point = Total Fixed costs/Contribution margion per hour where, Contribution margin per hour = Sales price per hour - Variable cost per hour Contribution margin per hour = $120 - $62 Contribution margin per hour = $58 Break-even point = $3,190/$58 Break-even point = 55 hours Thus, total number of hours that must be billed to reach the revised breakeven point is 55.