ACC 561 Final Exam

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In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.

QUESTION 4: Kai decides to add color and keep his price the same. This will increase variable costs by $0.40 per issue. What will be the new unit volume (copies per issue) required to maintain $500 profits and cover the increased fixed and variable costs?

Unit Break-even Volume = Total Fixed Costs/Contribution per unit = $525,000 - $6.40 = 82,031.25units

If Marlene Herbert were to discontinue place mats, he would miss $270,000 that will go toward Mendel paper company fixed cost. The company currently has a plant overhead that is estimated at $420,000 for the quarter. In addition to the fixed plant overhead, the plant incurs fixed selling and administrative expenses per quarter of $118,000. This draws the company to a total fixed cost of $538,000. If Marlene Herbert were to discontinue the second highest contributor to the fixed cost, he would need to increase the volume of computer paper and lower material cost to help pull the contribution margin of the lowest product up to help support the lost of a whole product line.

4.    Evergreen Fertilizer Company produces fertilizer. The company’s fixed monthly cost is $25,000, and its variable cost per pound of fertilizer is $0.15. Evergreen sells the fertilizer for $0.40 per pound. Determine the monthly break-even volume for the

In the problem, the ASU bookstore is selling t-shirts for $25. The setup fee is $550 and it cost $850 to produce 100 shirts. The questions I am solving for are: How much the bookstore is paying for each shirt and should the bookstore produce 500 t-shirts? I approached the problem by using my notes as a guide. I decided to use the cost function, profit function, revenue function, and break even analysis formulas to solve this problem. The key elements I pulled from the text are these equations:

1- The total unit cost = Total Variable Cost + Production Fixed Expenses + Advertising Expense + Selling and Administrative Expense = 3.23 + 1.20 + 0.30 + 0.19 = 4.92.

Which terms would make the following sentence true? Manufacturing companies that benefit the most from activity-based costing are those where overhead costs are a _________ percentage of total product cost and where there is ___________ diversity among the various products that they produce.

Question 1 (16 points) Carol Inc is considering the following three prices to charge customers for each of the candy packets they produce: i) $2.20 ii) $2.00 iii) $1.70 The relevant data for decision-making is below: Fixed Costs = $1200 Variable Costs = $0.50 per unit Calculate the following: a) The Breakeven Point for each price level b) Using price of $2.20 what would be the new breakeven point if (1) fixed costs decreased to $1000 all else remaining the same, (2) Variable costs increased to $0.75 all else remaining the same. Draw a graph to represent scenario (1) and (2) comparing with the original data for price of $2.20. [Total of two graphs] Question 2 (12 points) Greater Manufacturing is evaluating two different operating

2. Adams Company sells a single product. The product sells for $100 per unit. The company’s variable

                        Missouri Company has a current production capacity level of 200,000 units per month. At this level of production, variable costs are $0.50 per unit and fixed costs are $0.50 per unit.  Current monthly sales are 173,000 units.  Gates Company has contacted Missouri Company about purchasing 20,000 units at $1.00 each.  Current sales would not be affected by the special order and no additional fixed costs would be incurred on the special order.  Missouri Company 's change in profits if the order is accepted will be a  _____:

At an activity of 70000 units per year, variable costs total 280000.Full capacity is 100000 units per year. Required: (1) Production is now set at 50000 units per year with a sales price of Rs.7.50 per unit. What is the minimum number of additional units needed to be sold in an unrelated market at Rs.5.50 per unit to show a net profit of Rs.3000 per year? (2) Production is now set at 60000 units per year. By how much may sales promotion costs be increased to bring production up to 80000 units and still earn a net profit of 5% of total sales if the selling price is held at Rs.7.50? (3) If net profit is currently Rs.10000 with fixed costs at Rs.160000 and a 2% increase in price will leave units sold unchanged but increase profits by Rs.5000.What is the present volume in units? Question: 4 The manager of a business has received enquiries about printing three different types of advertising leaflet. Information concerning these three leaflets is shown below: A Selling prices per 1000 leaf lets Estimated printing costs: Variable per 1000 leaflets Specific fixed costs per month 40 2,400 70 4,000 130 9,500 100 B 220 C 450

Because each product has a different contribution margin percentage, the volume required for each break-even point would be different and will not add up to the company’s overall break-even volume of 1,100,000 units; the overall break-even volume assumes that there is only one contribution margin percentage which is :

Gina Fox has started her own company, Foxy Shirts, which manufactures imprinted shirts for special occasions. Since she has just begun this operation, she rents the equipment from a local printing shop when necessary. The cost of using the equipment is $350. The materials used in one shirt cost $8, and Gina can sell these for $15 each. (a) If Gina sells 20 shirts, what will her total revenue be? What will her total variable cost be? (b) How many shirts must Gina sell to break even? What is the total revenue for this?