Cost Accounting (15th Edition)
15th Edition
ISBN: 9780133428704
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Question
Chapter 3, Problem 3.47P
1.
To determine
Contribution Margin:
Contribution margin is the excess of selling price over the variable costs of a product. It is a tool to evaluate the capability of the company to generate sufficient revenue so as to cover its variable cost.
Formula to calculate contribution margin:
Gross Margin:
Gross margin is the sum total of all the revenue generated from sales after deducting all the production related costs.
Formula to calculate contribution margin:
To compute: Operating profit or loss.
2.
To determine
To compute: Operating profit or loss.
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The Museum of America is preparing for its annual appreciation dinner for contributing members. Last year, 525 members attended the dinner. Tickets for the dinner were $24 per attendee. The profit report for last year’s dinner follows.Ticket sales $12,600
Cost of dinner 15,300
Gross margin (2,700)
Invitations and paperwork 2,500
Profit (loss) $ (5,200)
This year the dinner committee does not want to lose money on the dinner. To help achieve its goal, the committee analyzed last year’s costs. Of the $15,300 cost of the dinner, $9,000 were fixed costs and $6,300 were variable costs. Of the $2,500 cost of invitations and paperwork, $1,975 were fixed and $525 were variable
Q.Prepare last year’s profit report using the contribution margin format.
The Museum of America is preparing for its annual appreciation dinner for contributing members. Last year, 525 members attended the dinner. Tickets for the dinner were $24 per attendee. The profit report for last year’s dinner follows.Ticket sales $12,600
Cost of dinner 15,300
Gross margin (2,700)
Invitations and paperwork 2,500
Profit (loss) $ (5,200)
This year the dinner committee does not want to lose money on the dinner. To help achieve its goal, the committee analyzed last year’s costs. Of the $15,300 cost of the dinner, $9,000 were fixed costs and $6,300 were variable costs. Of the $2,500 cost of invitations and paperwork, $1,975 were fixed and $525 were variable
Q.The committee is considering expanding this year’s dinner invitation list to include volunteer members (in addition to contributing members). If the committee expands the dinner invitation list, it expects…
An art museum covers its operating expenses by charging a small admission fee. The objective of the nonprofit organization is to break even. A local artsenthusiast has just pledged an annual donation of $10,000 to the museum. How will the donation affect the museum’s break-even attendance level?
Chapter 3 Solutions
Cost Accounting (15th 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 - Prob. 3.16ECh. 3 - Prob. 3.17ECh. 3 - Prob. 3.18ECh. 3 - Prob. 3.19ECh. 3 - CVP exercises. The Doral Company manufactures and...Ch. 3 - Prob. 3.21ECh. 3 - Prob. 3.22ECh. 3 - Prob. 3.23ECh. 3 - Prob. 3.24ECh. 3 - Prob. 3.25ECh. 3 - Prob. 3.26ECh. 3 - Sales mix, new and upgrade customers. Chartz 1-2-3...Ch. 3 - Prob. 3.28ECh. 3 - Prob. 3.29ECh. 3 - Prob. 3.30ECh. 3 - Prob. 3.31ECh. 3 - Prob. 3.32ECh. 3 - CVP analysis, service firm. Lifetime Escapes...Ch. 3 - Prob. 3.34PCh. 3 - Prob. 3.35PCh. 3 - Prob. 3.36PCh. 3 - Prob. 3.37PCh. 3 - CVP analysis, shoe stores. The HighStep Shoe...Ch. 3 - Prob. 3.39PCh. 3 - Prob. 3.40PCh. 3 - Prob. 3.41PCh. 3 - Prob. 3.42PCh. 3 - Prob. 3.43PCh. 3 - Prob. 3.44PCh. 3 - Prob. 3.45PCh. 3 - Sales mix, two products. The Stackpole Company...Ch. 3 - Prob. 3.47PCh. 3 - Prob. 3.48PCh. 3 - Deciding where to produce. (CMA, adapted) Portal...
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