Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 3, Problem 3.24E
CVP exercises. The Deli-Sub Shop owns and operates six stores in and around Minneapolis. You are given the following corporate budget data for next year:
| Revenues | $11,000,000 |
| Fixed costs | $ 3,000,000 |
| Variable costs | $ 7,500,000 |
Variable costs change based on the number of subs sold.
Compute the budgeted operating income for each of the following deviations from the original budget data. (Consider each case independently.)
- 1. A 10% increase in contribution margin, holding revenues constant
Required
- 2. A 10% decrease in contribution margin, holding revenues constant
- 3. A 5% increase in fixed costs
- 4. A 5% decrease in fixed costs
- 5. A 5% increase in units sold
- 6. A 5% decrease in units sold
- 7. A 10% increase in fixed costs and a 10% increase in units sold
- 8. A 5% increase in fixed costs and a 5% decrease in variable costs
- 9. Which of these alternatives yields the highest budgeted operating income? Explain why this is the case.
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The Deli-Sub Shop owns and operates six stores in and around Minneapolis. You are given the following corporate budget data for next year:Revenues $11,000,000 Fixed costs $ 3,000,000 Variable costs $ 7,500,000 Variable costs change based on the number of subs sold. Compute the budgeted operating income for each of the following deviations from the original budget data. (Consider each case independently.)
Q1. A 10% increase in contribution margin, holding revenues constant
Q2. A 10% decrease in contribution margin, holding revenues constant
Q3. A 5% increase in fixed costs
Q4. A 5% decrease in fixed costs
Q5. A 5% increase in units sold
Q6. A 5% decrease in units sold
Q7. A 10% increase in fixed costs and a 10% increase in units sold
Q8. A 5% increase in fixed costs and a 5% decrease in variable costs
Q9. Which of these alternatives yields the highest budgeted operating income? Explain why this is the case.
The Deli-Sub Shop owns and operates six stores in and around Minneapolis. You are given the following corporate budget data for next year:
Revenues
$11,000,000
Fixed costs
$3,000,000
Variable costs
$7,500,000
Variable costs change based on the number of subs sold.
Compute the budgeted operating income for each of the following deviations from the original budget data. (Consider each case independently.)Alternatives:1. Determine the budgeted operating income based on the original budget data.2. A 10% increase in contribution margin, holding revenues constant.3. A 10% decrease in contribution margin, holding revenues constant.4. A 5% increase in fixed costs.5. A 5% decrease in fixed costs.6. A 5% increase in units sold.7. A 5% decrease in units sold.8. A 10% increase in fixed costs and a 10% increase in units sold.9. A 5% increase in fixed costs and a 5% decrease in variable…
A small business owner wants to create a budget for the upcoming year. The business has projected sales of $500,000 and wants to achieve a profit margin of 10%. The owner expects to have fixed costs of $200,000 and variable costs of $100,000. Calculate the budgeted net income for the upcoming year.
Chapter 3 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 3 - Define costvolumeprofit analysis.Ch. 3 - Describe the assumptions underlying CVP analysis.Ch. 3 - Distinguish between operating income and net...Ch. 3 - Prob. 3.4QCh. 3 - Prob. 3.5QCh. 3 - Why is it more accurate to describe the subject...Ch. 3 - CVP analysis is both simple and simplistic. If you...Ch. 3 - Prob. 3.8QCh. 3 - Prob. 3.9QCh. 3 - Give an example of how a manager can decrease...
Ch. 3 - Give an example of how a manager can increase...Ch. 3 - What is operating leverage? How is knowing the...Ch. 3 - There is no such thing as a fixed cost. All costs...Ch. 3 - Prob. 3.14QCh. 3 - In CVP analysis, gross margin is a less-useful...Ch. 3 - Jacks Jax has total fixed costs of 25,000. If the...Ch. 3 - During the current year, XYZ Company increased its...Ch. 3 - Under the contribution income statement, a...Ch. 3 - A company needs to sell 10,000 units of its only...Ch. 3 - Once a company exceeds its breakeven level,...Ch. 3 - Prob. 3.21ECh. 3 - CVP computations. Garrett Manufacturing sold...Ch. 3 - CVP analysis, changing revenues and costs. Sunset...Ch. 3 - CVP exercises. The Deli-Sub Shop owns and operates...Ch. 3 - CVP exercises. The Doral Company manufactures and...Ch. 3 - CVP analysis, income taxes. Westover Motors is a...Ch. 3 - CVP analysis, income taxes. The Home Style Eats...Ch. 3 - CVP analysis, sensitivity analysis. Perfect Fit...Ch. 3 - CVP analysis, margin of safety. Suppose Morrison...Ch. 3 - Operating leverage. Cover Rugs is holding a 2-week...Ch. 3 - CVP analysis, international cost structure...Ch. 3 - Sales mix, new and upgrade customers. Chartz 1-2-3...Ch. 3 - Prob. 3.33ECh. 3 - Prob. 3.34ECh. 3 - Contribution margin, decision making. Welch Mens...Ch. 3 - Contribution margin, gross margin, and margin of...Ch. 3 - Uncertainty and expected costs. Kindmart is an...Ch. 3 - CVP analysis, service firm. Lifetime Escapes...Ch. 3 - CVP, target operating income, service firm....Ch. 3 - CVP analysis, margin of safety. Marketing Docs...Ch. 3 - CVP analysis, income taxes. (CMA, adapted) J.T....Ch. 3 - CVP, sensitivity analysis. The Derby Shoe Company...Ch. 3 - CVP analysis, shoe stores. The HighStep Shoe...Ch. 3 - CVP analysis, shoe stores (continuation of 3-43)....Ch. 3 - Prob. 3.45PCh. 3 - Prob. 3.46PCh. 3 - CVP analysis, income taxes, sensitivity. (CMA,...Ch. 3 - Choosing between compensation plans, operating...Ch. 3 - Prob. 3.49PCh. 3 - Multiproduct CVP and decision making. Crystal...Ch. 3 - Sales mix, two products. The Stackpole Company...Ch. 3 - Prob. 3.52PCh. 3 - Ethics, CVP analysis. Megaphone Corporation...Ch. 3 - Deciding where to produce. (CMA, adapted) Portal...
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