Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Question
Chapter 7, Problem 39E
1.
To determine
Calculate the number of pans to be sold at the break-even point.
2.
To determine
Calculate unit variable cost and variable manufacturing cost per unit. Also, describe which one is used in the cost-volume-profit analysis.
3.
To determine
Calculate the number of pans to be sold to earn the operating income of $13,530.
4.
To determine
Calculate the sales revenue in order to earn a profit of $13,530.
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Students have asked these similar questions
Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income Werner Company produces and sells disposable foil baking pans to retailers for $2.75 per pan. The variable cost per pan is as follows:
Direct materials
$0.37
Direct labor
063
Variable factory overhead
0.53
Variable selling expenses
0.12
Fixed manufacturing cost totals $111,425 per year. Administrative cost (all fixed) totals $48,350.Required:1. Compute the number of pans that must be sold for Werner to break even.2. CONCEPTUAL CONNECTION What is the unit variable cost? What is the unit variable manufacturing cost? Which is used in cost-volume-profit analysis and why?3. How many pans must be sold for Werner to earn operating income of $13,530?4. How much sales revenue must Werner have to earn operating income of $13,530?
Lindstrom Company produces two fountain pen models. Information about its products follows:
Product A
Product B
Sales revenue
Less: Variable costs
Contribution margin
Total units sold
Lindstrom's fixed costs total $86,500.
Required:
$ 76,600
41,400
$ 46,000
5,000
$ 123,400
52,800
$ 91,000
5,000
1. Determine Lindstrom's weighted-average unit contribution margin and weighted-average contribution margin ratio.
2. Calculate Lindstrom's break-even point in units and in sales revenue.
3. Calculate the number of units that Lindstrom must sell to earn a $150,000 profit.
4. Calculate Lindstrom's margin of safety (in units and sales dollars) and margin of safety as a percentage of sales based on the sales
data provided in the table above.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Required 4
Calculate the number of units that Lindstrom must sell to earn a $150,000 profit.
Note: Do not round your intermediate calculations. Round your answer…
1
Lazy Days Inc. (LDI), sells hammocks. Revenue and cost information is given below:
Sales Price
3.
TL
30
Unit Variable Cost
20
Annual Fixed Operating Expenses
47,500
Required:
a) Determine the sales volume in units and TL amount that would be required to attain a TL
12,500 profit. Verify your answer by preparing an income statement using the
contribution margin format.
b) LDI is considering the implementation of a quality improvement program. The program
will require a TL 2.50 increase in the variable cost per unit. To inform its customers of
the quality improvements, the company plans to spend an additional TL 5,000 for
advertising. Assuming that the improvement program will increase sales to a level that is
1,500 units above the amount computed in requirement a, should LDI proceed with plans
to improve product quality? Support your answer by preparing a budgeted income
statement.
c) Determine the new break-even point volume of units and sales in TL as well as the
margin of safety…
Chapter 7 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
Ch. 7 - Prob. 1DQCh. 7 - Describe the difference between the units sold...Ch. 7 - Define the term break-even point.Ch. 7 - Prob. 4DQCh. 7 - What is the variable cost ratio? The contribution...Ch. 7 - Prob. 6DQCh. 7 - Define the term sales mix. Give an example to...Ch. 7 - Explain how CVP analysis developed for single...Ch. 7 - Prob. 9DQCh. 7 - How does targeted profit enter into the break-even...
Ch. 7 - Explain how a change in sales mix can change a...Ch. 7 - Define the term margin of safety. Explain how it...Ch. 7 - Explain what is meant by the term operating...Ch. 7 - How can sensitivity analysis be used in...Ch. 7 - Why is a declining margin of safety over a period...Ch. 7 - If the variable cost per unit goes down,Ch. 7 - The amount of revenue required to earn a targeted...Ch. 7 - Prob. 3MCQCh. 7 - Prob. 4MCQCh. 7 - An important assumption of cost-volume-profit...Ch. 7 - The use of fixed costs to extract higher...Ch. 7 - Prob. 7MCQCh. 7 - The contribution margin is the a. amount by which...Ch. 7 - Dartmouth Company produces a single product with a...Ch. 7 - Dartmouth Company produces a single product with a...Ch. 7 - If a companys total fixed cost decreases by...Ch. 7 - Prob. 12MCQCh. 7 - Variable Cost, Fixed Cost, Contribution Margin...Ch. 7 - Prob. 14BEACh. 7 - Variable Cost Ratio, Contribution Margin Ratio...Ch. 7 - Prob. 16BEACh. 7 - Units to Earn Target Income Head-First Company...Ch. 7 - Sales Needed to Earn Target Income Head-First...Ch. 7 - Break-Even Point in Units for a Multiple-Product...Ch. 7 - Prob. 20BEACh. 7 - Margin of Safety Head-First Company plans to sell...Ch. 7 - Degree of Operating Leverage Head-First Company...Ch. 7 - Impact of Increased Sales on Operating Income...Ch. 7 - Variable Cost, Fixed Cost, Contribution Margin...Ch. 7 - Prob. 25BEBCh. 7 - Variable Cost Ratio, Contribution Margin Ratio...Ch. 7 - Prob. 27BEBCh. 7 - Units to Earn Target Income Chillmax Company plans...Ch. 7 - Sales Needed to Earn Target Income Chillmax...Ch. 7 - Prob. 30BEBCh. 7 - Prob. 31BEBCh. 7 - Margin of Safety Chillmax Company plans to sell...Ch. 7 - Prob. 33BEBCh. 7 - Impact of Increased Sales on Operating Income...Ch. 7 - Basic Break-Even Calculations Suppose that Larimer...Ch. 7 - Price, Variable Cost per Unit, Contribution...Ch. 7 - Contribution Margin Ratio, Variable Cost Ratio,...Ch. 7 - Prob. 38ECh. 7 - Prob. 39ECh. 7 - Margin of Safety Comer Company produces and sells...Ch. 7 - Prob. 41ECh. 7 - Sales Revenue Approach, Variable Cost Ratio,...Ch. 7 - Prob. 43ECh. 7 - Cherry Blossom Products Inc. produces and sells...Ch. 7 - Prob. 45ECh. 7 - Lotts Company produces and sells one product. The...Ch. 7 - Klamath Company produces a single product. The...Ch. 7 - Margin of Safety and Operating Leverage Medina...Ch. 7 - Parker Pottery produces a line of vases and a line...Ch. 7 - Jellico Inc.s projected operating income (based on...Ch. 7 - Break-Even Units, Contribution Margin Ratio,...Ch. 7 - Prob. 52PCh. 7 - Aldovar Company produces a variety of chemicals....Ch. 7 - Basu Company produces two types of sleds for...Ch. 7 - Cost-Volume-Profit Equation, Basic Concepts,...Ch. 7 - Contribution Margin Ratio, Break-Even Sales,...Ch. 7 - Prob. 57PCh. 7 - Polaris Inc. manufactures two types of metal...Ch. 7 - Cost-Volume-Profit, Margin of Safety Victoria...Ch. 7 - Abraham Company had revenues of 830,000 last year...Ch. 7 - Prob. 61PCh. 7 - Prob. 62PCh. 7 - Prob. 63PCh. 7 - Suppose that Kicker had the following sales and...Ch. 7 - Danna Lumus, the marketing manager for a division...Ch. 7 - Cost-Volume-Profit Analysis, Single-Product...Ch. 7 - Cost-Volume-Profit Analysis, Single-Product...Ch. 7 - Prob. 3MTCCh. 7 - Prob. 4MTCCh. 7 - Sensitivity Cost-Volume-Profit Analysis and...Ch. 7 - Calculate the hotels margin of safety (both in...
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