acadamic onlinetutor
rperez1989
hw.docxProblem 1:
The Peace Company has the following functional income statement for the prior month.
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Sales |
($50 * 100,000 units) |
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$5,000,000 |
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Cost of goods sold |
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Direct materials |
$1,200,000 |
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Direct labor |
$950,000 |
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Variable factory overhead |
$600,000 |
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Fixed factory overhead |
$850,000 |
$3,600,000 |
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Gross profit |
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$1,400,000 |
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Selling and administrative expense |
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Variable |
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Fixed |
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Operating income |
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There were no beginning and ending inventories. |
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Required:
a. Calculate the contribution margin per unit.
b. Calculate the contribution margin ratio.
c. What is the break-even point in units?
d. What is the amount of sales in dollars needed to obtain a before-tax profit of $40,000?
Problem 2:
Suzy Manufacturing has estimated monthly sales of 18,000 units for $48 per unit. Variable costs include manufacturing costs of $27 and distribution costs of $9. Fixed costs are $60,000 per month.
Required Determine each of the following values.
a. Unit contribution margin
b. Monthly break-even unit sales volume
c. Before-tax monthly profit
d. Monthly margin of safety in units
Create a contribution margin-based income statement.
THREE POSTS
2-3 Sentences for each individual post or a completed graph or table if requested. (NOTE if a post has 2 or more questions just answer one of them)
1. Exercise 17.5 Determining Relevant Costs
Six months ago, Lee Anna Carver purchased a fire-engine red, used LeBaron convertible for $10,000. Lee Anna was looking forward to the feel of the sun on her shoulders and the wind whipping through her hair as she zipped along the highways of life. Unfortunately, the wind turned her hair into straw, and she didn't do much zipping along since the car spent so much of its time in the shop. So far, she has spent $1,200 on repairs, and she's afraid there is no end in sight. In fact, Lee Anna anticipates the following costs of restoration:
Rebuilt engine $1,250
New paint job 560
Tires 460
New interior 500
Miscellaneous maintenance 340
Total $3,110
Required:
1. In trying to decide whether to restore the LeBaron or buy the CR-V, Lee Anna is distressed because she has already spent $11,200 on the LeBaron. The investment seems too much to give up. How would you react to her concern?
2. List all costs that are relevant to Lee Anna's decision. What advice would you give her? (Hansen 904-905)
2. Exercise 17.13 Sell or Process Further, Basic Analysis
Carleigh, Inc., is a pork processor. Its plants, located in the Midwest, produce several products from a common process: sirloin roasts, chops, spare ribs, and the residual. The roasts, chops, and spare ribs are packaged, branded, and sold to supermarkets. The residual consists of organ meats and leftover pieces that are sold to sausage and hot dog processors. The joint costs for a typical week are as follows:
Direct materials $84,500
Direct labor 29,000
Overhead 20,000
The revenues from each product are as follows: sirloin roasts, $68,000; chops, $71,000; spare ribs, $33,000; and residual, $9,800.
Carleigh's management has learned that certain organ meats are a prized delicacy in Asia. They are considering separating those from the residual and selling them abroad for $52,000. This would bring the value of the residual down to $2,650. In addition, the organ meats would need to be packaged and then air freighted to Asia. Further processing cost per week is estimated to be $27,500 (the cost of renting additional packaging equipment, purchasing materials, and hiring additional direct labor). Transportation cost would be $12,100 per week. Finally, resource spending would need to be expanded for other activities as well (purchasing, receiving, and internal shipping). The increase in resource spending for these activities is estimated to be $3,120 per week.
Required:
1. What is the gross profit earned by the original mix of products for one week?
2. Should the company separate the organ meats for shipment overseas or continue to sell them at split-off? What is the effect of the decision on weekly gross profit? (Hansen 909)
3. Cornerstone Exercise 16.1 Variable Costs, Contribution Margin, Contribution Margin Ratio
Super-Tees Company plans to sell 12,000 T-shirts at $16 each in the coming year. Product costs include:
Direct materials per T-shirt $5.75
Direct labor per T-shirt $1.25
Variable overhead per T-shirt $0.60
Total fixed factory overhead $43,000
Variable selling expense is the redemption of a coupon, which averages $0.80 per T-shirt; fixed selling and administrative expenses total $19,000.
Required:
1. Calculate the:
a. Variable product cost per unit
b. Total variable cost per unit
c. Contribution margin per unit
d. Contribution margin ratio (rounded to four significant digits)
e. Total fixed expense for the year
2. Prepare a contribution-margin-based income statement for Super-Tees Company for the coming year.
3. What if the per unit selling expense increased from $0.80 to $1.75? Calculate the new values for the following:
a. Variable product cost per unit
b. Total variable cost per unit
c. Contribution margin per unit
d. Contribution margin ratio (rounded to four significant digits)
e. Total fixed expense for the year (Hansen 858-859)
