Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 3, Problem 13EB
Use the information from the previous exercises involving JJ Manufacturing to determine their break-even point in sales dollars.
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Check out a sample textbook solutionStudents have asked these similar questions
a) Compute the breakeven sales dollars of cach product assuming the same sales mix remains
constant.
b) Prepare an analysis showing whether Product Z should be eliminated. The amount of
change to net income should be computed.
c) Assume the current demand of cach product is same as the sales volume the company has
for the year. Below is the machine processing time required for cach product.
Product
Machine processing time in hours
i. How many units should the company produce for each product if there is a constraint
of only 24.000 hours of machine processing time in the year.
ii. Compute the highest possible net income camed by the company.
3
2
An accountant has prepared the folowing product-line income statement for the year:
Product
Tatal
No of mts sokd
5,000
4,000
4,000
Saks
Varible enpermes
200,000 S
120,000
100,000 S
60.000
40,000 S
20,000
60,000
40,000
20,000
Cotribution mangin
80,000
40,000
20,000
Fihed expenses
Rert
Depreciin
10,000
12,000
8,000
5.000
6,000
2,000
2,400
3,000…
(a) Calculate and determine the break-even points (in sales dollars and units) for each product type, assuming a constant sales mix.
(b) Explain by showing relevant computations, how your answer to part (a) would change if the constant sales mix assumption is lifted.
What are the answers for the following?
Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
What is the expected margin of safety in dollars and as a percentage of sales?
Determine the operating leverage. Round to one decimal place.
Chapter 3 Solutions
Principles of Accounting Volume 2
Ch. 3 - The amount of a units sales price that helps to...Ch. 3 - A companys product sells for $150 and has variable...Ch. 3 - A companys product sells for $150 and has variable...Ch. 3 - A companys contribution margin per unit is $25. It...Ch. 3 - A company sells its products for $80 per unit and...Ch. 3 - If a company has fixed costs of $6.000 per month...Ch. 3 - Company A wants to earn $5,000 profit in the month...Ch. 3 - A company has wants to earn an income of $60,000...Ch. 3 - A company has pre-tax or operating income of...Ch. 3 - When sales price increases and all other variables...
Ch. 3 - When sales price decreases and all other variables...Ch. 3 - When variable costs increase and all other...Ch. 3 - When fixed costs decrease and all other variables...Ch. 3 - When fixed costs increase and all other variables...Ch. 3 - If the sales mix in a multi-product environment...Ch. 3 - Break-even for a multiple product firm. can be...Ch. 3 - Waskowski Company sells three products (A. B. and...Ch. 3 - Beaucheau Farms sells three products (E, F, and G)...Ch. 3 - A company sells two products, Model 101 and Model...Ch. 3 - Wallace Industries has total contribution margin...Ch. 3 - Macom Manufacturing has total contribution margin...Ch. 3 - If a firm has a contribution margin of $59,690 and...Ch. 3 - If a firm has a contribution margin of $78M90 and...Ch. 3 - Define and explain contribution margin on a per...Ch. 3 - Define and explain contribution margin ratio.Ch. 3 - Explain how a contribution margin income statement...Ch. 3 - In a cost-volume-profit analysis, explain what...Ch. 3 - What is meant by a products contribution margin...Ch. 3 - Explain how a manager can use CVP analysis to make...Ch. 3 - After conducting a CVP analysis, most businesses...Ch. 3 - Explain how for is possible for costs to change...Ch. 3 - Explain what a sales mix is and how changes in the...Ch. 3 - Explain how break-even analysis for a...Ch. 3 - Explain margin of safety and why it is an...Ch. 3 - Define operating leverage and explain its...Ch. 3 - Calculate the per-unit contribution margin of a...Ch. 3 - Calculate the per-unit contribution margin of a...Ch. 3 - A product has a sales price of $150 and a per-unit...Ch. 3 - A product has a sales price of $250 and a per-unit...Ch. 3 - Maple Enterprises sells a single product with a...Ch. 3 - Marlin Motors sells a single product with a...Ch. 3 - Flanders Manufacturing is considering purchasing a...Ch. 3 - Marchete Company produces a single product. They...Ch. 3 - Brahma Industries sells vinyl replacement windows...Ch. 3 - Salvador Manufacturing builds and sells...Ch. 3 - Salvador Manufacturing builds and sells...Ch. 3 - Use the information from the previous exercises...Ch. 3 - Company A has current sales of $10,000,000 and a...Ch. 3 - Marshall s target margin of safety be in units and...Ch. 3 - Calculate the per-unit contribution margin of a...Ch. 3 - Calculate the per-unit contribution margin of a...Ch. 3 - A product has a sales price of $175 and a per-unit...Ch. 3 - A product has a sales price of $90 and a per-unit...Ch. 3 - Cadre, Inc., sells a single product with a selling...Ch. 3 - Kerr Manufacturing sells a single product with a...Ch. 3 - Delta Co. sells a product for $150 per unit. The...Ch. 3 - Shonda & Shonda is a company that does land...Ch. 3 - Baghdad Company produces a single product. They...Ch. 3 - Keleher Industries manufactures pet doors and...Ch. 3 - Manufacturing builds and sells switch harnesses...Ch. 3 - Manufacturing builds and sells switch harnesses...Ch. 3 - Use the information from the previous exercises...Ch. 3 - Company A has current sales of $4,000,000 and a...Ch. 3 - Best Wholesale recently calculated their...Ch. 3 - A company sells small motors as a component part...Ch. 3 - A company manufactures and sells racing bicycles...Ch. 3 - Fill in the missing amounts for the four...Ch. 3 - Markham Farms reports the following contribution...Ch. 3 - Kylies Cookies is considering the purchase of a...Ch. 3 - Morris Industries manufactures and sells three...Ch. 3 - Manatoah Manufacturing produces 3 models of window...Ch. 3 - Jakarta Company is a service firm with current...Ch. 3 - A company sells mulch by the cubic yard. Grade A...Ch. 3 - A company manufactures and sells blades that are...Ch. 3 - Fill in the missing amounts for the four...Ch. 3 - West Island distributes a single product. The...Ch. 3 - Wellington, Inc., reports the following...Ch. 3 - Karens Quilts is considering the purchase of a new...Ch. 3 - Abilene Industries manufactures and sells three...Ch. 3 - Tim-Buck-Il rents jet skis at a beach resort....Ch. 3 - Fire Company is a service firm with current...Ch. 3 - Mariana Manufacturing and Bellow Brothers compete...Ch. 3 - Roald is the sales manager for a small regional...Ch. 3 - As a manager, you have to choose between two...Ch. 3 - Coutures Creations is considering offering Joe, an...
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- Use the information from the previous exercises involving Salvador Manufacturing to determine their break-even point in sales dollars.arrow_forward1. Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in dollar sales for the East region. 3. Compute the break-even point in dollar sales for the West region. 4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. Use the same format as shown above. What is Crossfire’s net operating income (loss) in your new segmented income statement? 5. Do you think that Crossfire should allocate its common fixed expenses to the East and West regions when computing the break-even points for each region?arrow_forwardWhen a company sells multiple products, the breakeven point in sales dollars is computed by:arrow_forward
- Which of the following is true regarding the contribution margin ratio of asingle product company? a. As fixed expenses decrease, the contribution margin ratio increases b. The contribution margin ratio increases as the number of units sold increase c. The contribution margin ratio multiplied by the variable expense per unit equals thecontribution margin per unit d. If sales increase, the peso increase in net operating income can be computed bymultiplying the contribution margin ratio by the peso increase in salesarrow_forwardWhich of the following is true regarding the contribution margin ratio of a single product company? As fixed expenses decrease, the contribution margin ratio increases. The contribution margin ratio multiplied by the variable expense per unit equals the contribution margin per unit. The contribution margin ratio increases as the number of units sold increases. If sales increase, the dollar increase in net operating income can be computed by multiplying the contribution margin ratio by the dollar increase in sales.arrow_forwardCompute the break-even point in sales dollars for the company as a whole and the margin of safety in both dollars and percentage of sales.arrow_forward
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- Customers as a Cost ObjectMorrisom National Bank has requested an analysis of checking account profitability by customer type. Customers are categorized according to the size of their account: low balances, mediumbalances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: Required:(Note: Round answers to two decimal places.)1. Calculate a cost per account per year by dividing the total cost of processing andmaintaining checking accounts by the total number of accounts. What is the average feeper month that the bank should charge to cover the costs incurred because of checkingaccounts?2. Calculate a cost per account by customer category by using activity rates.3. Currently, the bank offers free checking to all of its customers. The interest revenuesaverage $90 per account; however, the interest revenues earned per account by categoryare $80, $100, and $165 for the low-, medium-, and high-balance…arrow_forwardOnce a company exceeds its breakeven level, operating income can be calculated by multiplying: The sales price by unit sales in excess of breakeven units. Unit sales by the difference between the sales price and fixed cost per unit. The contribution margin ratio by the difference between unit sales and breakeven sales. The contribution margin per unit by the difference between unit sales and breakeven sales.arrow_forwardAssume that you are the president of your company and paid a year-end bonus according to the amount of net income earned during the year. When prices are rising, would you choose a FIFO or weighted average cost flow assumption? Explain, using an example to support your answer. Would your choice be the same if prices were falling? I need an example with net income for weighted averagearrow_forward
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