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final Project ACC 102

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Thomas Edison State College
Principles of Managerial Accounting (ACC-102)
Final Project

1. Cost-volume-profit relationships (15 points)

The following data are available for a product manufactured and sold by Logan Company:

Compute the following:
(a) Contribution margin per unit: $_______________

Solution: Computation of the Contribution margin per unit

Contribution margin per unit = Selling price per unit – Variable Cost per unit

Where as

Selling price per unit = 212

Variable Cost per unit =128

Contribution margin per unit = 212 – 128

Contribution margin per unit = $84

(b) Number of units that must be sold to break-even: _______________ units
Solution: Computation of the Number of units that must be sold to break-even…show more content…
It is therefore a sunk cost.

The $320,000, on the other hand, is a fixed cost associated with the proposed addition.

This cost has not yet been incurred. Because it is necessary to the proposed addition it is an out-of-pocket cost

(b) Calculate by how much the proposed addition will either increase or reduce operating income. Show all work.

Solution: Computation of the following
Operating income = ($750,000 Sales - $450,000 variable costs - $320,000 fixed costs).
Operating income = ($750,000 - $450,000 - $320,000).
Operating income = -$20,000
The proposed addition will decrease operating income by $20,000;

3. Responsibility income statement-preparation (20 points)
Gameland Village is segmented into two sales departments: software and video games. During April, these two departments reported the following operating results:

Complete the following segmented income statement for Gameland Village. Follow the contribution margin approach, and show percentages as well as dollar amounts. Conclude your income statement with the company’s income from operations

GAMELAND VILLAGE
Income Statement by Product Lines
For the Month Ended April 30, 20__

Segments

Gameland Village
Software
Video Games

Dollars

%
Dollars

%
Dollars

%
Sales
$

$400,000

100
$200,000

100
Variable Costs

65

56

$

$
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