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I need help with #2. 2. Instructions for Posting (200 to 300 words - 60pts): a. Based on the results for your cvp analysis: 1.
I need help with #2.
2. Instructions for Posting (200 to 300 words - 60pts): a. Based on the results for your cvp analysis: 1. Explain the results for the break-even point, margin of safety ratio, and cvp income statement 2. Would you make the changes recommended by Hakim? b. Explain and compare the per unit behavior and the total cost behavior for fixed costs. c. Explain relevant range: 1- Explain what the relevant range is. 2- Explain and provide an example when the straight-line relationship does not exist for fixed costs. service to attract more business that will add $3 in variable costs to Tahoe's current variable costs of $15. Hakim is also proposing that a 10% room rate increase (from $60 to $66 per room) will produce an increase in room rentals from 3,500 to 4,000 units. Fixed costs will remain at $126,000 for Tahoe. Compute and prepare a cup analysis: Current Break-even point in units 2,800 After Changes 2,625 Increase/Decrease Decrease 175 units Margin of Safety Ratio 20.0% 34.4% Increase 14.38% Prepare the CVP Income Statement (Totals) CVP Income Statement: Current Sales revenes $210,000 Less: Variable costs ($52,500) Contribution margin $157,500 Less: Fixed costs ($126,000) Profit/Loss $31,500 After Changes $264,000 {$72,000) $192,000 ($126,000) $66,000 Increase/Decrease to Profit/Loss Increase $54000 Increase $19500 Increase $34500 No Change Increase $34500 service to attract more business that will add $3 in variable costs to Tahoe's current variable costs of $15. Hakim is also proposing that a 10% room rate increase (from S60 to $66 per room) will produce an increase in room rentals from 3,500 to 4,000 units. Fixed costs will remain at $126,000 for Tahoe. Compute and prepare a cup analysis: Current Break-even point in units 2,800 After Changes 2,625 Increase/Decrease Decrease 175 units Margin of Safety Ratio 20.0% 34.4% Increase 14.38% Prepare the CVP Income Statement (Totals) CVP Income Statement: Current Sales revenes $210,000 Less: Variable costs ($52,500) Contribution margin $157,500 Less: Fixed costs ($126,000) Profit/Loss $31.500 After Changes $264,000 ($72,000) $192,000 ($126,000) $66,000 Increase/Decrease to Profit/Loss Increase $54000 Increase $19500 Increase $34500 No Change Increase $34500 2. Instructions for Posting (200 to 300 words - 60pts): a. Based on the results for your cup analysis: 1- Explain the results for the break-even point, margin of safety ratio, and cvp income statement 2- Would you make the changes recommended by Hakim? b. Explain and compare the per unit behavior and the total cost behavior for fixed costs. c. Explain relevant range: 1- Explain what the relevant range is. 2- Explain and provide an example when the straight-line relationship does not exist for fixed costs Step by Step Solution
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