Bintang corp. For the 20x9 fiscal year, it plans to produce and sell 500,000 units of product X. The budget for the year is as follows: - variable cost $650,000,000 - fixed cost $350,000,000 It is estimated that in the fiscal year the total assets to be used in the business are $500,000,000 The expected profit in the fiscal year is 25% of the total assets to be used. Question: - At what quantity of sales did the company not suffer a loss (break even)?

Bintang corp. For the 20x9 fiscal year, it plans to produce and sell 500,000 units of product X. The budget for the year is as follows: - variable cost $650,000,000 - fixed cost $350,000,000 It is estimated that in the fiscal year the total assets to be used in the business are $500,000,000 The expected profit in the fiscal year is 25% of the total assets to be used. Question: - At what quantity of sales did the company not suffer a loss (break even)?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 4CE: Refer to Cornerstone Exercises 2.2 and 2.3. Next year, Pietro expects to produce 50,000 units and...

See similar textbooks

Similar questions

Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000 for reworking products. A good estimate of nonvalue-added costs would be a. 70,000. b. 130,000. c. 40,000. d. 90,000. e. 100,000.
Foy Company has a welding activity and wants to develop a flexible budget formula for the activity. The following resources are used by the activity: Four welding units, with a lease cost of 12,000 per year per unit Six welding employees each paid a salary of 50,000 per year (A total of 9,000 welding hours are supplied by the six workers.) Welding supplies: 300 per job Welding hours: Three hours used per job During the year, the activity operated at 90 percent of capacity and incurred the actual activity and resource costs, shown on page 676. Lease cost: 48,000 Salaries: 315,000 Parts and supplies: 805,000 Required: 1. Prepare a flexible budget formula for the welding activity using welding hours as the driver. 2. Prepare a performance report for the welding activity. 3. What if welders were hired through outsourcing and paid 30 per hour (the welding equipment is provided by Foy)? Repeat Requirement 1 for the outsourcing case.
Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
Refer to Cornerstone Exercises 2.2 and 2.3. Next year, Pietro expects to produce 50,000 units and sell 49,300 units at a price of 12.50 each. Beginning inventory of finished goods is 42,500, and ending inventory of finished goods is expected to be 34,000. Total selling expense is projected at 26,000, and total administrative expense is projected at 134,000. Required: 1. Prepare an income statement in good form. Be sure to include the percent of sales column. 2. What if the cost of goods sold percentage for the past few years was 65 percent? Explain how management might react.
Star corp. plans to sell 200,000 units of product A with a selling price of Rp 2,500 / unit in the 20x9 fiscal year. Profit contribution is estimated at 60% of sales revenue. At the level of sales volume of 100,000 units the company is at break even.Question: a. How much is the fixed cost? b. How much profit or loss on sales is budgeted? c. What is the variable cost per unit? d. What is the sales revenue at break-even?
Klamath Company produces a single product. The projected income statement for the coming year is as follows: Sales (54,600 units @ $34) $1,856,400 Total variable cost 1,064,700 Contribution margin $ 791,700 Total fixed cost 801,850 Operating income $(10,150) Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income be?$_________
Bintang corp. For the 20x9 fiscal year, it plans to produce and sell 500,000 units of product X. The budget for the year is as follows: - variable cost $650,000,000 - fixed cost $350,000,000 It is estimated that in the fiscal year the total assets to be used in the business are $500,000,000 The expected profit in the fiscal year is 25% of the total assets to be used. Question: 1. how many BEP (unit) if the company able to sell 500,000 unit in that fiscal year?2. If the company is only able to sell 450,000 units in that fiscal year, what is the profit or loss?
Fazel Company makes and sells paper products. In the coming year, Fazel expects total sales of $19,730,000. There is a 3% commission on sales. In addition, fixed expenses of the sales and administrative offices include the following: Salaries $ 960,000 Utilities 365,000 Office space 230,000 Advertising 1,200,000 Required: Prepare a selling and administrative expenses budget for Fazel Company for the coming year. What is the answer for variable selling expenses? Total selling and administrative expenses?
The next year's budget for Green, Inc., a multi-product company, is given below: Product A Product B Sales $2,129,400 $1,526,850 Variable costs $928,200 $596,700 Fixed costs $530,000 $530,000 Net income $671,200 $400,150 Units 273,000 117,000 At the end of the year, the total fixed costs and the variable costs per unit were exactly as budgeted, but the following units per product line were sold. Green analyzes the effects its sales variances have on the profitability of the company. Product lines Units Sales A 273,930 $208,186 B 123,070 $163,683 What is the total sales mix variance?
Jameson Company provided the following information for the coming year: Units produced and sold 230,000 Cost of goods sold per unit $5.30 Selling price $9.70 Variable selling and administrative expenses per unit $1.60 Fixed selling and administrative expenses $387,000 Tax rate 35% Required: Prepare a budgeted income statement for Jameson Company for the coming year. Round all income statement amounts to the nearest dollar. Jameson Company Budgeted Income Statement For the Coming Year Sales $fill in the blank 1 Cost of goods sold fill in the blank 2 Gross margin $fill in the blank 3 Less: Variable selling and administrative expenses fill in the blank 4 Less: Fixed selling and administrative expenses fill in the blank 5 Operating income $fill in the blank 6 Less: Income taxes fill in the blank 7 Net income $fill in the blank 8
ABC Company manufactures the product XE-17. The product is sold at a unit price of $70.Variable expenses are $13.50 per unit and fixed expenses are $220,000 per year.Required :a. What should be the product’s CM ratio? b. Calculate the BEP is sales dollars and in units for ABC Company. c. The manager of ABC company estimates that in the coming year, the company’s sales willincrease by $80,000 (from the current sales). How much should the net profit / loss increase/decrease if the fixed costs remain constant? d. The manager of ABC company predicts that by spending an additional $80,000 per year onadvertising and using higher quality raw material (which will in turn increase the raw materialcost per unit by $3), and increasing selling price per unit by 2% (to compensate for theincreased costs), unit sales will increase by two- thirds of the current sales units. Should thecompany go with the manager’s proposed plan? Explain your answer. (Assume that in thecurrent year, the company sold…
Brodrick Company expects to produce 21,800 units for the year ending December 31. A flexible budget for 21,800 units of production reflects sales of $610,400; variable costs of $65,400; and fixed costs of $142,000. 1a) If the company instead expects to produce and sell 27,100 units for the year, calculate the expected level of income from operations. 1b)Assume that actual sales for the year are $711,800 (27,100 units), actual variable costs for the year are $113,200, and actual fixed costs for the year are $138,000.Prepare a flexible budget performance report for the year. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)