TULSA MEMORIAL HOSPITAL Break-Even Analysis 1. Using the historical data as a guide, construct a pro forma (forecasted) profit and loss statement
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?
3. Increase in expenses for marketing efforts and expanded distribution even if you do not introduce a new product.
(c) What will Yabba’s market share have to be next year for its profit to be the same as this year?
New Sales unit @40% additional sales= 5000*40%= 2000 Additional profit @40% additional Sales = Additional Sales* New Contribution Margin =2000*6 =$12000 New Sales unit @20% additional sales= 5000*20%= 1000 Additional profit @20% additional Sales = Additional Sales* New Contribution Margin =1000*6 =$6000 Steady: Sales: 5000 Price per unit: $10 Variable Cost per unit: $5.5 Fixed Cost: $35000 Current Profit: $ 2500 New Price per additional unit: $8.5 New The change in the contribution margin for all the products is responsible for the change in profitability.
3- As we can see the company would loss 0.52 cent per 1 kg if it decides to sell at 6.85 price and allocates the fixed expenses at 1.20 per 1 kg.
| ABSORPTION COSTING | VARIABLE COSTING | Direct Materials | $ 5.60 | $ 5.60 | Direct labor dollars needed per product | $ 4.00 | $ 4.00 | Variable Factory Overhead | $ 1.00 | $ 1.00 | Fixed Factory Overhead | $ 4.40 | S - | Product Cost Per Unit | $ 15.00 | $ 10.60 | IMPACT OF EXPANSION ON PRODUCT COST One of the major benefits of expansion is the reduction of fixed cost (fixed and selling). The cost is absorbed by 85,000 units instead of 80,000 units resulting in saving of $0.42 per unit.
Mendel Paper Company Mendel Paper Company has been doing relatively well with the sales of computer paper, napkins, place mats, and poster board. With more people eating out, the demand for napkins and place mats have increased. Computer paper and poster boards have slowly increased in demand as well. However, there is concern at the company with the fixed cost of operations. Marlene Herbert, the plant superintendent, said, “As we have automated our operation, we have experienced increases in fixed overhead and even variable overhead. And, we will have to add more equipment since it appears that we need even more plant capacity. We are operating over our normal capacity as it is.” (Case 2B). With the new production costs added in, will
Case: Sorrell Ridge a. What are Sorrell Ridge's sources of negotiating power and weaknesses? What about Bromar’s? This case is about the slotting allowance when Allied Old English Company wants to introduce the Sorrell Ridge spreadable fruit product into the California market. Considering the factors including product itself,
f) To evaluate the material misstatement in the accounts, I think both of the consolidated income statement and the three financial statements are useful. We need to use the information properly from all the financial statements. However the consolidated income statement is the most useful one. If there is a significant change in an account balance comparing with preceding two years, the auditor will examine whether there a material misstatement exists. For instance, the bad debt expense as a percent of net sales in 2011, 2010 and 2009 are 0.56%, 0.70% and 0.69%, respectively. There should
Question 2 2. Revised Computer paper Napkins Place mats Poster board Total Volume 35000 120000 45000 80000 Selling price 14 7 12 8.5 Material Cost $7.00 4.5 $4.00 2.5 Units per hour 6 10 5 4 Variable overhead 9 6 12 8 Variable overhead per unit 1.5 .6 2.4 2 Total sales 490000 840000 540000 680000 2550000 Material cost 245000 540000 180000 200000 Variable overhead 52500 72000 108000 160000 Contribution margin 192500 228000 252000 320000 992500 CM per unit 5.50 1.90 5.60 4.00 In this table, it reflects the changes in fixed plant overhead from $420,000 to $378,000. The company still has the fixed selling and administrative expense per quarter of $118,000. The new company fixed overhead is now at $496,000 from the past $538,000 ($42,000) change from past to
The rise in revenue was rapid starting from the year of operations. The key period of business was from April to September were revenues were equal to 65% of total revenue as the product was seasonal. The basis of forecasting for the year 1981 & 1982 is the expectations of sales by Mr. Turner & Mr. Rose. It is given that total sales were $ 15.80 million in first half of year 1981 and the total sales in 1981 to reach $ 30 million. Profit after tax was expected to be $ 1 million for 1st half and we assumed for the next half, profit will be in proportion to first half & expected to be amounting to $ 0.90 million. For year 1982, the sales expectation by Mr. Rose was around more than $ 71 million &
Formulation Max 10A + 10B + 10C Subject to: 3A + B + 5C ≤ 300 (constraint #1) 2A + 4B ≤ 400 (constraint #2) 4A + 2B + 3.5C ≤ 200 (constraint #3) C ≥ 10 (constraint #4) A, B, C ≥ 0 9) Which constraints are binding? A) 1 and 2 B) 1 and 4 C) 2 and 3 D) 3 and 4 E) 2 and 4 Answer: D Page Ref: 130 Topic: Sensitivity Analysis Using Graphs Difficulty: Easy 10) What is the optimal objective function value? A) 925 B) 825 C) 100 D) 92.5 E) none of the above Answer: A Page Ref: 130 Topic: Sensitivity Analysis Using Graphs Difficulty: Easy 11) By how much would the profit contribution of product A has to increase before it will be profitable to produce A?
HEALTHY SPRING WATER COMPANY PROBLEM 1a DEFINING THE PRICE-VOLUME TRADEOFF FOR A 20% PRICE INCREASE The Health Spring Water Company sells bottled water for offices and homes. The price of the water is $20 per 10 gallon bottle and the company currently sells 2,000 bottles per day. Following is a summary of
* Variable costs: Assumed from exhibit 6. It will increase the same 8% as the variable revenue.