Check my workAs a newly hired management accountant, you have been asked to prepare a profit plan for the company for which youwork. As part of this task, you've been asked to do some what-if analyses. Following is the budgeted informationregarding the coming year:Selling price per unitVariable cost per unitFixed costs (per year)Required:$ 100.0063.001,227,3271. What is the breakeven volume, in units and dollars, for the coming year?2. Assume that the goal of the company is to earn a pretax (operating) profit of $332,001 for the coming year. How manyunits would the company have to sell to achieve this goal?3. Assume that of the $63 variable cost per unit the labor-cost component is $29. Current negotiations with theemployees of the company indicate some uncertainty regarding the labor cost component of the variable cost figurepresented above. What is the effect on the breakeven point in units if selling price and fixed costs are as planned, but thelabor cost for the coming year is 4% higher than anticipated? What if labor costs are 6% higher than anticipated? What iflabor costs turn out to be 8% higher than anticipated?4. Assume now that management is convinced that labor costs will be 5% higher than originally planned when the budgetfor the year was put together. What selling price per unit must the company charge to maintain the budgeted ratio ofcontribution margin to sales? (Hint: Use the Goal Seek function in Excel to answer this question.)Complete this question by entering your answers in the tabs below.Required 1 Required 2 Required 3Required 4What is the breakeven volume, in units and dollars, for the coming year?Break-even volume (units)unitsBreak-even volume (dollars)Required 1Required 2 >

The Break-even point is the optimum point of no profit no loss as at this point the firm is earning…

As a newly hired management accountant, you have been asked to prepare a profit plan for the company for which you work. As part of this task, you've been asked to do some what-if analyses. Following is the budgeted information egarding the coming year: Selling price per unit Variable cost per unit Fixed costs (per year) $ 100.00 63.00 1,227,327

As a newly hired management accountant, you have been asked to prepare a profit plan for the company for which you work. As part of this task, you've been asked to do some what-if analyses. Following is the budgeted information egarding the coming year: Selling price per unit Variable cost per unit Fixed costs (per year) $ 100.00 63.00 1,227,327

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 38P: Friendly Bank is attempting to determine the cost behavior of its small business lending operations....

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Friendly Bank is attempting to determine the cost behavior of its small business lending operations. One of the major activities is the application activity. Two possible activity drivers have been mentioned: application hours (number of hours to complete the application) and number of applications. The bank controller has accumulated the following data for the setup activity: Required: 1. Estimate a regression equation with application hours as the activity driver and the only independent variable. If the bank forecasts 2,600 application hours for the next month, what will be the budgeted application cost? 2. Estimate a regression equation with number of applications as the activity driver and the only independent variable. If the bank forecasts 80 applications for the next month, what will be the budgeted application cost? 3. Which of the two regression equations do you think does a better job of predicting application costs? Explain. 4. Run a multiple regression to determine the cost equation using both activity drivers. What are the budgeted application costs for 2,600 application hours and 80 applications?
As a newly hired management accountant, you have been asked to prepare a profit plan for the company for which you work. As part of this task, you've been asked to do some what-if analyses. Following is the budgeted Information regarding the coming year: Selling price per unit Variable cost per unit Fixed costs (per year) Required: $ 100.00 60.00 1,113,040 1. What is the breakeven volume, in units and dollars, for the coming year? 2. Assume that the goal of the company is to earn a pretax (operating) profit of $316,000 for the coming year. How many units would the company have to sell to achieve this goal? 3. Assume that of the $60 variable cost per unit the labor-cost component is $27. Current negotiations with the employees of the company indicate some uncertainty regarding the labor cost component of the variable cost figure presented above. What is the effect on the breakeven point in units if selling price and fixed costs are as planned, but the labor cost for the coming year is…
As a newly hired management accountant, you have been asked to prepare a profit plan for the company for which you work. As part of this task, you've been asked to do some what-if analyses. Following is the budgeted information regarding the coming year: Selling price per unit Variable cost per unit Fixed costs (per year) $ 100.00 70.00 1,200,000 Required: 1. What is the breakeven volume, in units and dollars, for the coming year? 2. Assume that the goal of the company is to earn a pretax (operating) profit of $300,000 for the coming year. How many units would the company have to sell to achieve this goal? 3. Assume that of the $70 variable cost per unit the labor-cost component is $25. Current negotiations with the employees of the company indicate some uncertainty regarding the labor cost component of the variable cost figure presented above. What is the effect on the breakeven point in units if selling price and fixed costs are as planned, but the labor cost for the coming year is…
On these Excel sheets, you will need to prepare a complete projected income statement in the contribution format for each scenario, in the manner of a flexible budget. The cells will be checked for appropriate formulas, when appropriate. Please highlight the specific answer to the question being posed. Carolina Manufacturing Company has been operating at a loss for several years. A management team has assembled to determine what course of action to take next year to reach profitability. They begin by reviewing the most recent income statement (below). Sales (45,000 units at $15) Less cost of goods sold: Gross margin Less operating expenses Net loss Direct materials Direct labor Manufacturing overhead Carolina Manufacturing Company Income Statement For the Year Ended December 31 Selling expenses Variable Sales commissi Shipping Fixed (advertisi Administrative expenses Variable (billing Fixed (salaries 135,000 117,450 147,750 40,500 8,100 180,000 2,700 72.000 $675,000 400,200 274,800…
Integrated Excel: Preparing a Contribution Format Income Statement Using the High-Low Method Jay Corporation has provided data from a two-year period to aid in planning. The Controller has asked you to prepare a contribution format income statement. Budgeted information for Quarter 1 of 2024: Sales in units Sales price per unit After analyzing expenses, the company has determined the following cost patterns. Cost of Goods Sold (per unit) Sales Commissions (per dollar of sales). Administrative Salaries (per quarter) Rent Expense (per quarter) Depreciation Expense (per quarter) Shipping has been determined to be a mixed cost with the following total costs and units: 2022 Quarter 1 Quarter 2 Quarter 3 Quarter 4 2023 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Cost $ 67,000 $ 94,000 $ 89,800 $ 92,600 $ 72,500 $80,000 $ 84,000 $ 100,000 17,000 $ 48.00 Units 12,500 21,000 13,800 20,000 13,700 14,000 14,300 22,500 $29.00 9.50€ $ 45,000 $ 27,000 $ 36,000 Required: Use the data to answer the…
Required: a) Using Activity Based Costing, calculate the rate for each cost driver. b) Using activity based budgeting, prepare a budgeted yearly operating statement for Aero3D Ltd. Show the following separately, within the statement. i. The budgeted output for each product per year; ii. The contribution to profits for each product and in total before charging activity based costs; iii. The profit for each product and in total after charging activity based costs but before charging core costs (non-activity based costs); iv. The total profit after charging core based costs.
The controller of the Stump Company is preparing the budget for 2021 and needs to estimate a cost function for delivery costs. Information regarding delivery costs incurred in the prior 2 months are: LOADING... (Click the icon to view the information.) Requirements 1. Estimate the cost function for delivery. 2. Can the constant in the cost function be used as an estimate of fixed delivery cost per month? Explain. Requirement 1. Estimate the cost function for delivery. Delivery costs = + ( × ) Delivery costs = + ( × ) Requirement 2. Can the constant in the cost function be used as an estimate of fixed delivery cost per month? Explain. The cost function in requirement 1 is an estimate of how costs behave ▼ outside of within the relevant range, not at cost levels ▼ outside within the relevant range. If there are no months with zero miles driven represented in the delivery cost…
Prepare a complete projected income statement in the contribution format for each scenario, in the manner of a flexible budget. Please show work Carolina Manufacturing Company has been operating at a loss for several years. A management team has assembled to determine what course of action to take next year to reach profitability. They begin by reviewing the most recent income statement (below). Carolina Manufacturing Company Income Statement For the Year Ended December 31 Sales (45,000 units at $15) Less cost of goods sold: Net loss Direct materials Direct labor Manufacturing overhea Gross margin Less operating expenses Selling expenses Variable Sales commissions Shipping 135,000 117,450 147,750 Fixed (advertising, salaries) Administrative expenses Variable (billing and other) Fixed (salaries and other) 40,500 8,100 180,000 $675,000 400,200 274,800 228,600 2,700 72,000 74,700 ($28,500)
arrow_forward Question .(iii) To help achieve the budgeted sales for the year, Sampson is about to introduce bonuses for itssales staff. The bonuses will be an increasing percentage of the gross sales made, by eachsalesperson, above certain monthly targets.(iv) The company is using a new general ledger software package. The financial controller is impressedwith the new system, because management accounts are easily produced and allow detailedcomparisons with budgets and prior-period figures across product lines and geographical areas.The conversion to the new system occurred with a minimum of fuss. As it is a popular computerpackage, it required only minor modifications.(v) As part of the conversion, the position of systems administrator was created. This position isresponsible for all systems maintenance, including data backups and modifications. These taskswere the responsibility of the accountant.Required:For each of the scenarios above, explain how the components of…
Dallus wants to examine the behaviour of maintenance costs for budgeting purpose. The following data on machine hours worked and maintenance costs for the past year are collected: Month Machine Hours Maintenance Cost January 18,000 February 15,000 March 12,750 21,000 April May June 11,880 14,500 July 19,000 August 14,880 September 10,000 October 13,360 November 16,600 December 18,800 $20,600 18,900 15,100 22,010 13,200 19,500 25,000 19,874 12,000 15,500 19,800 13,500 Required: a. Use the high-low method to estimate the variable cost per machine hour and the fixed cost per month. b. Plot and comment on the estimated cost function. C. Develop a formula to express the cost behaviour of ABC's maintenance costs. d. According to the budget, the machine is expected to work 200,000 hours next year. How much is the budgeted maintenance costs?
Click Draperies makes and sells curtains. Information related to its performance in 2020 is given below: (Click the icon to view the data.) Calculate Click Draperies' flexible budget for (a) revenues, (b) variable costs, (c) fixed costs, and (d) operating income. Calculate Click's flexible budget for (a) revenues. Begin by determining the formula and then solve for the amount. Flexible budget for revenues X X Data table Units made and sold Selling price Variable costs Fixed costs $ Actual = = 1,560 $220 per curtain 168,000 77,000 $ Budgeted I X 1,460 $232 per curtain $108 per curtain 73,000
Prepare a 12-month Master Budget for a company of your choosing. It can be a company that you are closely connect too or one randomly selected. COMPLETED IN EXCEL. As you are preparing the Master Budget, some information is NOT provided. You are required to decide or predict or forecast this information. Provide an introduction for the company you have chosen. The introduction should include the following: Name of company Location of company Name of owner Nature of the business. Type of product Fiscal period For the company that you have selected - Prepare a 12-month Master Budget. Your submission must show each month’s activities. Here are some considerations to include in preparing the budget: You must forecast your sales, purchases, direct labour and manufacturing overhead for each month and any other information as required All sales are on accounts Expected collections are to be 50% in the month of the sale, 30 % in the first month following the sale, and 20% in the second…