Managerial Accounting
Zachary Trophies makes and sells trophies it distributes to little league ballplayers. The company normally produces and sells between 4,000 and 10,000 trophies per year. The following cost data apply to various activity levels: Required Complete the preceding table by filling in the missing amounts for the levels of activity shown in the first row of the table. (Round "Cost per unit" answers to 2 decimal places.) 6,000 8,000 10,000 Number of Trophies 4,000 Total costs incurred Fixed $ 46,000 Variable 42,000 Total costs $ 88,000 Cost per unit Fixed $ 11.50 Variable 10.50 Total cost per trophy $ 22.00 Baird Entertainment sells souvenir T-shirts at each rock concert that it sponsors. The shirts cost $10 each. Any excess shirts can be returned to the manufacturer for a full refund of the purchase price. The sales price is $27 per shirt. Required a. What are the total cost of shirts and cost per shirt if sales amount to 3,000, 3,500, 4,000, 4,500, or 5,000? b. Is the cost of T-shirts a fixed or a variable cost? Complete this question by entering your answers in the tabs below. Required A Required B What are the total cost of shirts and cost per shirt if sales amount to 3,000, 3,500, 4,000, 4,500, or 5,000? 3,000 3,500 4,000 4,500 5,000 Number of shirts sold Total cost of shirts Cost per shirt Required A Required B The following income statement applies to Perez Company for the current year: Income Statement Sales revenue (380 units X $35) Variable cost (380 units x $20) Contribution margin Fixed cost Net income $13,300 (7,600) 5,700 (4,500) $ 1,200 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Perez Company will earn if it experiences a 20 percent increase in revenue. The sales price per unit is not affected. 0-1. Verify your answer to Requirement b by constructing an income statement based on a 20 percent increase in sales revenue. The sales price is not affected. c-2. Calculate the percentage change in net income for the two income statements. Complete this question by entering your answers in the tabs below. Reg A and B Reg C1 Reg C2 Use the contribution margin approach to calculate the magnitude of operating leverage. Afterwards, use the operating leverage measure previously computed for Requirement A to determine the amount of net income that Perez Company will earn if it experiences a 20 percent increase in revenue. The sales price per unit is not affected. (Do not round intermediate calculations. Round "Operating leverage" to 2 decimal place.) Show less Operating leverage Net Income b Ren Aan ReqC1 >
