I need to get my paper re writer

Accounting

BA510

Dr. Green Jonathan

May 11, 2015

Running head: CHAPTER 1 PROBLEMS 1

CHAPTER 1 PROBLEMS 10

CHAPTER 1 PROBLEMS 2

1. PROBLEM 3 – 22 – MARLIN COMPANY

The answer to this problem has been handwritten and scan (see the attached)

2. PROBLEM 3 – 25 – DETMER HOLDINGS AG

Required 1. Present yearly net operating income or loss:

According to the given data,

Selling price per unit = SFr90

Variable expenses per unit = SFr60

Fixed expenses per year = SFr840,000

Annual sales volume = 25,000 units

NET OPERATING INCOME OR LOSS

Sales…………… 25,000units*SFr90 SFr2,250,000

Less Variable cost…… 25,000units*SFr60 SFr1,500,000

Contribution margin ........................ SFr750,00

Less Fixed cost........................................ SFr840000

Net operating loss ………………. (SFr90,000)

Present breakeven point = Fixed cost/ selling price -VC

Therefore selling price per unit –VC per unit = SFr90per unit-SFr60 = SFr30 per unit

= SFr840000/SFr30 per unit = 28000 units

Break-even point in Swiss franc = 28000 units*SFr90 per unit = SFr2,520,000

1. Company can earn the maximum profit at 50000 units at which point the sale price will be SFr80 per unit.

NET OPERATING INCOME OR LOSS

Sales 50000units*SFr80 per unit SFr4,000,000

Less Variable cost ………...50000units*SFr60 SFr3,000,000

Contribution margin SFr1000,000

Less Fixed cost SFr840,000

Net operating income SFr160,000

2. Break even point at selling price of SFr80 per unit

Breakeven point = Fixed cost/ selling price – VC

Therefore selling price per unit-VC per unit=SFr80 per unit-SFr60 per unit

= SFr840,000/SFr20 per unit = 42,000 units

Break-even point in Swiss franc = 42,000 units* SFr80 per unit = SFr3,360,000

This break-even point is changed from the one calculated in above. Selling price per unit– variable cost per unit has decreased from SFr30 per unit to SFr20 per unit and therefore the company has to create more sales to cover fixed cost incurred.

3. PROBLEM 3-26 – FRIEDEN COMPANY

SOLUTION

REQUIRED 1

CONTRIBUTION FORMAT INCOME STATEMENT

PRESENT OPERATIONS

Amount Per Unit Percentage

Sales…………………$800,000 $20 100%

Less VC……………...$560,000 $14 70%

Contribution Margin…$240,000 $6 30%

Less fixed cost………..$192,000

Net Operating Loss ….($48,000)

PROPOSED OPERATIONS

Amount Per Unit Percentage

Sales…………………$800,000 $20 100%

Less VC……………...$320,000 $8 40%

Contribution Margin…$480,000 $12 60%

Less fixed cost………..$432,000

Net Operating Loss ….($48,000)

REQUIRED 2

Refer to the contribution format income statements in (Required 1) above

a) The degree of operating leverage = Contribution margin/Net operating income

Therefore, Present operation = $240,000/$48,000 = 5

Proposed Operations = $480,000/$48,000 = 10

b) Break-even point in dollars = Fixed cost/ CM ratio

Therefore, Present Operations = $192,000/0.30 = $640,000

Proposed Operations = $432,000/0.60 =$720,000

c) Margin of safety in dollars = Actual sales – Break-even sales

Therefore, Present Operations = $80,000 - $640,000 = $160,000

Proposed Operations = $800,000 - $720,000 = $80,000

Margin of safety in percentage = Margin of safety in dollars/Actual sales * 100%

Therefore, Present Operations = $160,000/$800,000 * 100% = 20%

Proposed Operation = $80,000/$800,000 * 100% = 10%

Required 3.

Cyclical Movement in economy. For the reason that the new equipment will increase the CM ratio, in years of sturdy economic operation, the Frieden Company will be in good standing with the new equipment. Nevertheless, the company will be out of shape with the new equipment in years in which sales fall. The fixed costs of the new equipment will consequence in losses being spent more rapidly and they will be unfathomable. Therefore, management team should make decision as to the possible for maximum profits in worthy years is worth the threat of unfathomable losses in unscrupulous years

Required 4.

New variable expenses:

Profit = (Sales – Variable expenses) – Fixed expenses

$60,000 = ($1,200,000 – Variable expenses) – $240,000

Variable expenses = $1,200,000 – $240,000 – $60,000

= $900,000

New level of sales:

$1,200,000/$800,000 = $ 1.5

$800,000 *1.5 = $1,200,000

New level of net operating income:

$60,000/$48,000 = $1.25

$48,000 *1.25 = $60,000

New CM ratio

Sales $1,200,000 100 %

Less Variable expenses $900,000 75 %

Contribution margin $ 300,000 25 %

With the above data, the new break-even point can be calculated as:

Break-even point in sales dollars = fixed cost/CM ration

Therefore, $240,000/25%

$240,000/0.25 = $960,000

4. PROBLEM 4-17- DURHAM COMPANY

Solution

Required 1. Calculation of under over absorption of overhead:

Required 2.

INCOME STATEMENT OF THE YEAR

Total sales value………………………………………$200,000

Less Cost of goods sold……………………………… $120,000

$80,000

Less: Administration and selling costs:

Depreciation…………………………$7,000

Sales commission …………………...$10,000

Administration salaries………………$25,000

Insurance……………………………..$600

Miscellaneous………………………...$18,000 $60,600

NET INCOME $19,400

6. PROBLEM 4 – 18 – HERITAGE GARDEN

The answer to this problem has been handwritten and scan (see the attached)

7. PROBLEM 4-22- WINKLE, KOTTER, ZALE

Required 1.

Predetermined rate for R&D Department = Dept. OH cost/No of Research hours

= $700,000/20,000 hours = $35 per hour

Predetermined rate for Litigation Department = Dept. OH cost/Direct Attorney hours

= $320000/16000 hours = $20 per hour

Required 2.

OH based on R&D Department = 18*$35 = $630

OH Based on Litigation Department = 42*$20 = $840

Required 3.

R&D Department cost:

Materials and supplies $50

Direct attorney cost $410

Overheads:

Research-hours =18*$35 = $630

Total Cost charged to R&D Department = ($50+$410+$630) = $1,090

Litigation Department cost:

Materials and supplies $30

Direct attorney cost $2100

Overheads

Research-hours = Not Applicable

Direct attorney-hours=42*$20 = $840

Total Cost charged to Litigation Department = ($30+$2100+$840) = $2,970

Therefore, the total cost charged to case = $1090 + $2970 = $4,060

Required 4.

R&D Department:

Overheads:

Estimated Research-hours OH =23000*$35 = $805,000

Actual R&D OH charged = $770,000

Under applied overhead of $35,000

Litigation Department:

Overhead:

Estimated Litigation department overhead =15000*$20 = $300,000

Actual Litigation department overhead: $300,000

Hence, there is no under/over applied overhead

.

REFERENCE