Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 16, Problem 14E
Sports-Reps, Inc., represents professional athletes and movie and television stars. The agency had revenue of $12,345,000 last year, with total variable costs of $5,678,700 and fixed costs of $2,192,400.
Required:
- 1. What is the contribution margin ratio for Sports-Reps based on last year’s data? What is the break-even point in sales revenue?
- 2. What was the margin of safety for Sports-Reps last year?
- 3. One of Sports-Reps’s agents proposed that the firm begin cultivating high school sports stars around the nation. This proposal is expected to increase revenue by $230,000 per year, with increased fixed costs of $122,500. Is this proposal a good idea? Explain.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Sports-Reps, Inc., represents professional athletes and movie and television stars. The agencyhad revenue of $12,345,000 last year, with total variable costs of $5,678,700 and fixed costs of$2,192,400.Required:1. What is the contribution margin ratio for Sports-Reps based on last year’s data? What is thebreak-even point in sales revenue?2. What was the margin of safety for Sports-Reps last year?3. One of Sports-Reps’s agents proposed that the firm begin cultivating high school sports starsaround the nation. This proposal is expected to increase revenue by $230,000 per year, withincreased fixed costs of $122,500. Is this proposal a good idea? Explain.
Meargia Plastics is evaluating its plastic bottles division. The accounting manager has come up with the following data for the year: contribution margin of $570,000, controllable fixed of $228,000, and noncontrollable fixed costs of $57,000.
Required:
1. What is the controllable margin?
Controllable Margin
2. What is the total contribution by profit center (CPC)?
Break-Even in Sales Revenue, Margin of Safety
Sports-Reps, Inc., represents professional athletes and movie and television stars. The agency had revenue of $12,300,000 last year, with total variable costs of $6,150,000 and fixed costs of $2,100,000.
Required:
1. What is the contribution margin ratio for Sports-Reps based on last year's data? Round your answer to two decimal places. (Express as a decimal-based amount rather than a whole percent.)
X
What is the break-even point in sales revenue?
2. What was the margin of safety for Sports-Reps last year?
X
Chapter 16 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 16 - Prob. 1DQCh. 16 - Describe the difference between the units-sold...Ch. 16 - Define the term break-even point.Ch. 16 - Explain why contribution margin per unit becomes...Ch. 16 - A restaurant owner who had yet to earn a monthly...Ch. 16 - What is the variable cost ratio? The contribution...Ch. 16 - Prob. 7DQCh. 16 - Suppose a firm with a contribution margin ratio of...Ch. 16 - Prob. 9DQCh. 16 - Explain how CVP analysis developed for single...
Ch. 16 - Prob. 11DQCh. 16 - How do income taxes affect the break-even point...Ch. 16 - Explain how a change in sales mix can change a...Ch. 16 - Explain how a change in sales mix can change a...Ch. 16 - Prob. 15DQCh. 16 - Prob. 1CECh. 16 - Prob. 2CECh. 16 - Health-Temp Company is a placement agency for...Ch. 16 - Olivian Company wants to earn 420,000 in net...Ch. 16 - Vandenberg, Inc., produces and sells two products:...Ch. 16 - Prob. 6CECh. 16 - Prob. 7CECh. 16 - Prob. 8ECh. 16 - Gelbart Company manufactures gas grills. Fixed...Ch. 16 - Schylar Pharmaceuticals, Inc., plans to sell...Ch. 16 - Prob. 11ECh. 16 - Prob. 12ECh. 16 - Big Red Motors, Inc., employs 15 sales personnel...Ch. 16 - Sports-Reps, Inc., represents professional...Ch. 16 - Campbell Company manufactures and sells adjustable...Ch. 16 - Prob. 16ECh. 16 - Sara Pacheco is a sophomore in college and earns a...Ch. 16 - Carmichael Corporation is in the process of...Ch. 16 - Choose the best answer for each of the following...Ch. 16 - Prob. 20ECh. 16 - Income statements for two different companies in...Ch. 16 - Prob. 22ECh. 16 - Prob. 23ECh. 16 - Busy-Bee Baking Company produces a variety of...Ch. 16 - Prob. 25ECh. 16 - Jester Company had unit contribution margin on...Ch. 16 - Loessing Company produced and sold 12,000 units...Ch. 16 - Junior Company has a breakeven point of 34,600...Ch. 16 - Prob. 29ECh. 16 - If a companys variable cost per unit increases,...Ch. 16 - Prob. 31PCh. 16 - More-Power Company has projected sales of 75,000...Ch. 16 - Consider the following information on four...Ch. 16 - Hammond Company runs a driving range and golf...Ch. 16 - Prob. 35PCh. 16 - Faldo Company produces a single product. The...Ch. 16 - Katayama Company produces a variety of products....Ch. 16 - Prob. 38PCh. 16 - Prob. 39PCh. 16 - Prob. 40PCh. 16 - Salem Electronics currently produces two products:...Ch. 16 - Good Scent, Inc., produces two colognes: Rose and...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Meargia Plastics is evaluating its plastic bottles division. The accounting manager has come upwith the following data for the year: contribution margin of $500,000, controllable fixed costs of$200,000, and noncontrollable fixed costs of $50,000.What is the controllable margin and total contribution by profit center (CPC)?a. Controllable margin: $200,000; CPC: $50,000b. Controllable margin: $50,000; CPC: $500,000c. Controllable margin: $250,000; CPC: 300,000d. Controllable margin: $300,000; CPC: $250,000arrow_forwardBreak-Even in Sales Revenue, Margin of Safety Sports-Reps, Inc., represents professional athletes and movie and television stars. The agency had revenue of $12,400,000 last year, with total variable costs of $6,200,000 and fixed costs of $2,100,000. Required: 1. What is the contribution margin ratio for Sports-Reps based on last year's data? Round your answer to two decimal places. (Express as a decimal-based amount rather than a whole percent.) What is the break-even point in sales revenue? 2. What was the margin of safety for Sports-Reps last year? 3. One of Sports-Reps's agents proposed that the firm begin cultivating high school sports stars around the nation. This proposal is expected to increase revenue by $250,000 per year, with increased fixed costs of $123,400. Is this proposal a good idea?arrow_forwarda) Calculate the contribution margin per unit.b) Calculate the number of units Beauty Supplies Company must sell each year to break even.c) Calculate the number of units Beauty Supplies Company must sell to yield a profit of $160,000.d) Managers may use Sensitivity analysis in their accounting system.i) What is sensitivity analysis? ii) How is Sensitivity analysis useful to managers?arrow_forward
- Break-Even in Sales Revenue, Margin of Safety Sports-Reps, Inc., represents professional athletes and movie and television stars. The agency had revenue of $12,300,000 last year, with total variable costs of $6,150,000 and fixed costs of $2,000,000. Required: 1. What is the contribution margin ratio for Sports-Reps based on last year's data? Round your answer to two decimal places. (Express as a decimal-based amount rather than a whole percent.)fill in the blank 1 What is the break-even point in sales revenue?$fill in the blank 2 2. What was the margin of safety for Sports-Reps last year?$fill in the blank 3 3. One of Sports-Reps's agents proposed that the firm begin cultivating high school sports stars around the nation. This proposal is expected to increase revenue by $250,000 per year, with increased fixed costs of $123,400. Is this proposal a good idea?arrow_forwardHoward Cooper, the president of Vernon Computer Services, needs your help. He wonders about the potential effects on the firm's net income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal Year 3. Standard rate and variable costs Service rate per hour Labor cost Overhead cost Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative Required A Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 42,000 hours of services in Year 3. b. A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Vernon charges customers $83 per hour, the firm can achieve 52,000 hours of services. Prepare a flexible budget using the consultant's assumption. c. The same consultant also suggests that if…arrow_forwardComputing and Using the CM Ratio Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, and fixed expenses were $65,000. Required: 1. What is the company’s contribution margin (CM) ratio? 2. What is the estimated change in the company’s net operating income if it can increase total sales by $1,000?arrow_forward
- How many units will Cadre need to sell in order to realize a target profit of $300,000? Use commas as needed (i.e. 1,234). What dollar sales will Cadre need to generate in order to realize a target profit of $300,000? Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Construct a contribution margin income statement for the month of November that reflects $2,400,000 in sales revenue for Cadre, Inc. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Cadre Inc. Contribution Margin Income Statement For the Month of Novemberarrow_forwardAnu’s Amusement Center has collected the following data for operations for the year. Total revenues $ 2,016,000 Total fixed costs $ 694,400 Total variable costs $ 1,134,000 Total tickets sold 63,000 Required: a. What is the average selling price for a ticket? b. What is the average variable cost per ticket? c. What is the average contribution margin per ticket? (Do not round intermediate calculations.) d. What is the break-even point? (Do not round intermediate calculations.) e. Anu has decided that unless the operation can earn at least $222,600 in operating profits, she will close it down. What number of tickets must be sold for Anu’s Amusements to make a $222,600 operating profit for the year on ticket sales? (Do not round intermediate calculations.)arrow_forwardEXERCISE: Computing and Using the CM Ratio,Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, and fixed expenses were $65,000.Required:1. What is the company’s contribution margin (CM) ratio?2. Estimate the change in the company’s net operating income if it were toarrow_forward
- What is the procedure to answer these questions, please? Last year a local restaurant realized sales of $300,000 with fixed costs of $110,000 and total variable costs of $70,000. 1. What was the restaurants contribution rate (as a decimal) last year? 2. If the restaurant has the same contribution rate this year, what net income can be expected this year from a revenue of $180,000? 3. If the restaurant has the same fixed and variable costs this year, what sales this year will result in a profit of $29,000? 4. Suppose that the fixed costs this year rise to $130,000 and the variable costs remain the same. What is break-even revenue?arrow_forwardIgnoring your answer to above part, assume that fixed manufacturing overhead was $100,000 and the fixed selling and administrative expenses were $82,000. The marketing vice president feels that if the company increased its advertising, sales could be increased by 20%. What is the maximum increased advertising cost the company can incur and still report the same income as before the advertising expenditure, assuming that the contribution margin ratio remains unchanged?arrow_forwardCullumber Markets imports and sells small bear-shaped piñatas. In planning for the coming year, the company’s owner is evaluating several scenarios. For each scenario under consideration, prepare a contribution margin income statement showing the anticipated operating income. Consider each scenario is applied independently to the original data. Last year’s income statement is as follows: Total Per Unit Sales revenue $756,000 $21.00 Variable expenses 324,000 9.00 Contribution margin 432,000 $12.00 Fixed expenses 175,000 Operating income $257,000 (a) The sales price increases by 10% and sales volume decreases by 6%. (Round per unit answers to 2 decimal places, e.g. 0.38.) Cullumber MarketsIncome Statement Total Per Unit Sales $enter a dollar amount $enter a dollar amount rounded to 2 decimal places Variable expenses enter a dollar…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Cost-Volume-Profit (CVP) Analysis and Break-Even Analysis Step-by-Step, by Mike Werner; Author: Accounting Step by Step;https://www.youtube.com/watch?v=D0MOfse9OWk;License: Standard Youtube License