Managerial Accounting Questions
kenhum20.00 points
Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm’s fixed costs are 3,500,000 p per year. The variable cost of each component is 1,400 p, and the components are sold for 3,300 p each. The company sold 5,000 components during the prior year. (p denotes the peso, Argentina’s national currency. Several countries use the peso as their monetary unit. On the day this exercise was written, Argentina’s peso was worth .327 U.S. dollar. In the following independent requirements, ignore income taxes.) |
| Required: |
| 1. | Compute the break-even point in units. (Round your answer to the nearest whole number.) |
| Break-even point | [removed] components |
| 2. | What will the new break-even point be if fixed costs increase by 15 percent? (Round your answer to the nearest whole number.) |
| New break-even point | [removed] components |
| 3. | What was the company’s net income for the prior year? (Omit the "p" sign in your response.) |
| Net income | [removed] p |
| 4. | The sales manager believes that a reduction in the sales price to 2,800 p will result in orders for 1,800 more components each year. What will the break-even point be if the price is changed? (Round your answer to the nearest whole number.) |
| New break-even point | [removed] components |
| Worksheet | Learning Objective: 07-01 Compute a break-even point using the contribution-margin approach and the equation approach. | |
| Difficulty: Medium | Learning Objective: 07-04 Apply CVP analysis to determine the effect on profit of changes in fixed expenses, variable expenses, sales prices, and sales volume. |
20.00 points
The Houston Armadillos, a minor-league baseball team, play their weekly games in a small stadium just outside Houston. The stadium holds 20,800 people and tickets sell for $14 each. The franchise owner estimates that the team’s annual fixed expenses are $228,800, and the variable expense per ticket sold is $3. (In the following requirements, ignore income taxes.) |
| Required: |
| 2. | If the stadium is half full for each game, how many games must the team play to break even? |
| Team must play | [removed] games |
20.00 points
The Houston Armadillos, a minor-league baseball team, play their weekly games in a small stadium just outside Houston. The stadium holds 12,000 people and tickets sell for $14 each. The franchise owner estimates that the team’s annual fixed expenses are $200,000, and the variable expense per ticket sold is $4. (In the following requirements, ignore income taxes.) |
| Required: |
| 2. | What is the safety margin for the baseball franchise if the team plays a 14-game season and the team owner expects the stadium to be 50 percent full for each game? (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) |
| Safety margin | $ [removed] |
| 3. | If the stadium is half full for each game, what ticket price would the team have to charge in order to break even? (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) |
| Price | $ [removed] per ticket |
20.00 points
Fill in the missing data for each of the following independent cases. (Ignore income taxes.) (Leave no cells blank - be certain to enter "0" wherever required. Do not round your intermediate calculations. Omit the "$" sign in your response.) |
| Sales Revenue | Variable Expenses | Total Contribution Margin | Fixed Expenses | Net Income | Break-Even Sales Revenue | |||||||||||||
| 1. | $ | [removed] | $ | 40,000 | $ | [removed] | $ | 30,000 | $ | [removed] | $ | 40,000 | ||||||
| 2. | 80,000 | [removed] | 15,000 | [removed] | [removed] | 80,000 | ||||||||||||
| 3. | [removed] | 40,000 | 80,000 | [removed] | 50,000 | [removed] | ||||||||||||
| 4. | 110,000 | 22,000 | [removed] | [removed] | 38,000 | [removed] | ||||||||||||
20.00 points
College Pizza delivers pizzas to the dormitories and apartments near a major state university. The company’s annual fixed expenses are $40,000. The sales price of a pizza is $10, and it costs the company $5 to make and deliver each pizza. (In the following requirements, ignore income taxes.) |
| Required: |
| 1. | Using the contribution-margin approach, compute the company’s break-even point in units (pizzas). |
| Break-even point | [removed] pizzas |
| 2. | What is the contribution-margin ratio? (Round your answer to 1 decimal place.) |
| Contribution-margin ratio | [removed] |
| 3. | Compute the break-even sales revenue. Use the contribution-margin ratio in your calculation. (Omit the "$" sign in your response.) |
| Break-even point | $ [removed] |
| 4. | How many pizzas must the company sell to earn a target net profit of $65,000? Use the equation method. |
| Number of pizzas | [removed] |
11 years ago
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