Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

SHOW ALL SUPPORTING CALCULATIONS FOR THIS PROBLEM. Denbury Hospitality Products, Inc. is a small-sized food product manufacturer based in the Rocky Mountain regions of the

SHOW ALL SUPPORTING CALCULATIONS FOR THIS PROBLEM. Denbury Hospitality Products, Inc. is a small-sized food product manufacturer based in the Rocky Mountain regions of the US mid-west. The company started operations in January 2005 and quickly gained a reputation for its highly popular birthday cakes, which the company sells for $500 each. The following information regarding estimated revenues and costs relating to the birthday cakes is taken from the companys budget for the year 2022: Net sales $680,000 Selling expenses variable $20,000 Direct materials $130,000 Selling expenses fixed $31,000 Direct labour $40,000 Administrative expenses variable $14,000 Manufacturing overhead variable $35,000 Administrative expenses fixed $22,000 Manufacturing overhead fixed $17,000 Required: 1. Assuming fixed costs and net sales are spread evenly throughout the year, calculate the companys monthly break-even point in (1) units and (2) dollars. 6 marks 2. Calculate the contribution margin ratio, the annual margin of safety ratio, and the annual profit. 6 marks 3. Assume the price remains at $500 per unit and variable costs remain the same per unit, but fixed costs increase by 10% annually. Calculate the percentage increase in unit sales required to achieve the same level of annual profit calculated in part (2). 4 marks 4. Return to the original cost estimates and determine the sales required to earn an operating income of $380000 after tax. The companys income tax rate is 30%. 4 marks

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

Top Accounting And Auditing Issues For 2023

Authors: CCH Tax Law Editors

1st Edition

0808059335, 978-0808059332

More Books

Students also viewed these Accounting questions

Question

1 . 4 What are the main components of a CPU?

Answered: 1 week ago

Question

Describe new developments in the design of pay structures. page 475

Answered: 1 week ago