Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I?m working on the museum jewelry case study for break-even analysis. My question is regarding Jane?s rent. Jane works 40 weeks pays rent @ $300/wk

image text in transcribed

I?m working on the museum jewelry case study for break-even analysis. My question is regarding Jane?s rent.

Jane works 40 weeks pays rent @ $300/wk = 12,000

Jane travels 10 weeks of the year and sublets the workshop at $300/wk = 3,000

Jane vacations 2 weeks of the year and sublets the workshop at $300/week = 600

Rent totals $15,600

Under fixed costs, not sure if I should list only the rent Jane pays (12k)and add separate line items for the 12 weeks of sublet rent, or list all rent asJane?s rent (15.6k) and add separate line items for 12 weeks of sublet rent. I seem to come up with different figures either way. Please see attached document with sheets labeled 12k and 15.6k rent.

image text in transcribed Batch Sales Variable cost Cost to pack and ship batches Joe 's labor (packing & shipping batches only) Raw materials Contribution margin Total Variable Costs Fixed Costs Workshop rent & utilities Joe's other labor Travel - hotel & food costs Sublet rent income while traveling Sublet rent income while on vacation Selling price Batches Total 680 200 -80 -30 -500 70 200 200 200 200 136,000 -16,000 cost to pack and ship 20 -6,000 $15/hr x 2 hrs/batch x 2 -100,000 $500 material costs (avg 14,000 ($680 - $30 labor - $80 c -108,000 -300 -150 52 40 300 300 10 2 Total Fixed Costs -15,600 300 per week x 40 week -6,000 remaining 10 hours @ $ -6,050 3,000 300/wk * 10 weeks 600 -24,050 Net income 3,950 operating income (reven Net loss Currently, Jane's net income is only $3,950 per year. Breakeven = fixed cost/contribution per unit -343.5714286 To break even, Jane would need to increase batch production from 200 to 344 batches per year Cost Analysis Sales Variable cost Fixed cost Net Income 136000 -108,000 -24,050 3950 100.00% -79.41% -17.68% 2.90% -100.00% Target Sales Jane's desired proft is $25,000 after taxes To increase revenue, Jane would need to raise the cost of each batch from The targeted sales should be as follows Desired profit after taxes Operating profit before taxes The targeted sales should be Fixed cost+ operating profit /C.M Ratio 25000 target profit = 34722 (25000/.72) operating incomeet sales cost to pack and ship 200 batches @ $80 ea $15/hr x 2 hrs/batch x 200 batches (avg 5batches/wk = 10 hrs/wk) $500 material costs (avg 5 batches/wk)/batch x 200 batches ($680 - $30 labor - $80 cost to pack/ship - $500 raw materials) 300 per week x 40 weeks remaining 10 hours @ $15/hr * 40 weeks 300/wk * 10 weeks operating income (revenue - costs) meet sales Batch Sales Variable cost Cost to pack and ship batches Joe 's labor (packing & shipping batches only) Raw materials Contribution margin Total Variable Costs Fixed Costs Workshop rent & utilities Joe's other labor Travel - hotel & food costs Sublet rent income while traveling Sublet rent income while on vacation Selling price Batches Total 680 200 -80 -30 -500 70 200 200 200 200 136,000 -16,000 cost to pack and ship 20 -6,000 $15/hr x 2 hrs/batch x 2 -100,000 $500 material costs (avg 14,000 ($680 - $30 labor - $80 c -108,000 -300 -150 40 40 300 300 10 2 Total Fixed Costs -12,000 300 per week x 40 week -6,000 remaining 10 hours @ $ -6,050 3,000 300/wk * 10 weeks 600 -20,450 Net income 7,550 operating income (reven Net loss Currently, Jane's net income is only $3,950 per year. Breakeven = fixed cost/contribution per unit -292.1428571 To break even, Jane would need to increase batch production from 200 to 344 batches per year Cost Analysis Sales Variable cost Fixed cost Net Income 136000 -108,000 -20,450 7550 100.00% -79.41% -15.04% 5.55% -100.00% Target Sales Jane's desired proft is $25,000 after taxes To increase revenue, Jane would need to raise the cost of each batch from The targeted sales should be as follows Desired profit after taxes Operating profit before taxes The targeted sales should be Fixed cost+ operating profit /C.M Ratio 25000 target profit = 34722 (25000/.72) operating incomeet sales cost to pack and ship 200 batches @ $80 ea $15/hr x 2 hrs/batch x 200 batches (avg 5batches/wk = 10 hrs/wk) $500 material costs (avg 5 batches/wk)/batch x 200 batches ($680 - $30 labor - $80 cost to pack/ship - $500 raw materials) 300 per week x 40 weeks remaining 10 hours @ $15/hr * 40 weeks 300/wk * 10 weeks operating income (revenue - costs) meet sales

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Data Analytics for Accounting

Authors: Vernon Richardson

1st edition

1260375196, 9781260375183 , 978-1260375190

More Books

Students also viewed these Accounting questions

Question

How would you handle this situation?

Answered: 1 week ago

Question

1. To gain knowledge about the way information is stored in memory.

Answered: 1 week ago