Question 1Tiny Tots Daycare Centre provides daycare for children Mondays through Fridays. Thebusiness had $140,000 of net income in 2015, when 50 students were enrolled and data forvariable costs per child and total fixed costs were as follows:Cost Schedule:Variable Costs:Lunch & snacksEducation SuppliesOther supplies (toiletries etc.)$1,000750250$2,000Fixed Costs:RentUtilitiesInsuranceSalariesMiscellaneous$20,0003,0003,00030,0004.000$60,000Required:Compute the charge per child, using the equation method.What is the contribution per child? What is the contribution margin ratio?а)b)c)Calculate Tiny Tot's break-even point in number of children and in sales dollars.d)Calculate the margin of safety in number of children and sales dollars.Given the expected enrolment of 50 children, prepare a contribution margin incomestatement for the year ended December 31, 2015, detailing the components of totalfixed costs, and clearly showing contribution and operating income.e)Assuming that normal enrollment at the Daycare Centre is 50 children; construct af)break-even chart, clearly showing the break-even point in units and sales dollars andthe margin of safety in units and in sales dollars.Assume that Tiny Tots target operating income is $156,000 per month. Calculate the8)number of children that must be enrolled for this goal to be realized. Is this a realisticgoal?h) Tiny Tots lost its lease and had to move to another building. Monthly rental for thenew building is $28,000. At the suggestion of the parents, Tiny Tots plans to take thechildren on outings. Monthly cost for the outing is $10,000. By how much should TinyTots increase monthly fees to meet the target operating income of $156,000 permonth, assuming the expected enrolment of 50 children?

Answered: Image /qna-images/answer/6e5af6e0-9e28-48af-a8d9-4daad037561a.jpg

a) Compute the charge per child, using the equation method. b) What is the contribution per child? What is the contribution margin ratio? Calculate Tiny Tot's break-even point in number of children and in sales dollars. .1. dollars

a) Compute the charge per child, using the equation method. b) What is the contribution per child? What is the contribution margin ratio? Calculate Tiny Tot's break-even point in number of children and in sales dollars. .1. dollars

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Tiny Tots Daycare Centre provides daycare for children Mondays through Fridays. The business had $140,000 of net income in 2015, when 50 students were enrolled and data for variable costs per child and total fixed costs were as follows: CostSchedule : Variable Costs: Lunch & snacks $1,000 Education Supplies 750 Other supplies (toiletries etc.) 250 $2,000 Fixed Costs: Rent $20,000 Utilities 3,000 Insurance 3,000 Salaries 30,000 Miscellaneous 4,000 $60,000 Required: d) Calculate the margin of safety in number of children and sales dollars. e) Given the expected enrolment of 50 children, prepare a contribution margin income statement for the year ended December 31, 2015, detailing the components of total fixed costs, and clearly showing contribution and operating income. f) Assuming that normal enrollment at the Daycare Centre is 50 children; construct a…
Question 3Study the scenario and complete the questions that follow:Nonna Greco LimitedNonna Greco Limited manufactures and sells Italian HIP sunglasses. The following information relatesto January 2020:Units manufactured and sold: 500Income statement:RSales 261 500Less: Manufacturing costs 223 000Material 75 000Labour 50 000Manufacturing overheads (@ R20 per machine hour) 98 00038 500Less: Selling and administrative expenses (60% fixed) 17 500Net profit 21 000The following changes will come into effect on 1 February 2020: A sales price increase of 10%, resulting in a 5% decrease in sales volume. Due to negotiations with the labour union, the labour rate per hour will increase by 6%. It is expected that material costs will increase by 10%.The variable budget for manufacturing overheads indicates a total cost ofR94 400 at a capacity utilisation of 4 600 hours.Source: Hunde, T. (2020)Required:3.1 Calculate the total marginal income and marginal income per unit for the year ended 1…
Tiny Tots Daycare Centre provides daycare for children Mondays through Fridays. The business had $140,000 of net income in 2015, when 50 students were enrolled and data for variable costs per child and total fixed costs were as follows: CostSchedule : Variable Costs: Lunch & snacks $1,000 Education Supplies 750 Other supplies (toiletries etc.) 250 $2,000 Fixed Costs: Rent $20,000 Utilities 3,000 Insurance 3,000 Salaries 30,000 Miscellaneous 4,000 $60,000 Assume that Tiny Tots target operating income is $156,000 per month. Calculate the number of children that must be enrolled for this goal to be realized. Is this a realistic goal? Tiny Tots lost its lease and had to move to another building. Monthly rental for the new building is $28,000. At the suggestion of the parents, Tiny Tots plans to take the children on outings. Monthly cost for the outing is $10,000. By how much should…
Tiny Tots Daycare Centre provides daycare for children Mondays through Fridays. The business had $140,000 of net income in 2015, when 50 students were enrolled and data for variable costs per child and total fixed costs were as follows: CostSchedule : Variable Costs: Lunch & snacks $1,000 Education Supplies 750 Other supplies (toiletries etc.) 250 $2,000 Fixed Costs: Rent $20,000 Utilities 3,000 Insurance 3,000 Salaries 30,000 Miscellaneous 4,000 $60,000 Required: a) Compute the charge per child, using the equation method. b) What is the contribution per child? What is the contribution margin ratio? c) Calculate Tiny Tot’s break-even point in number of children and in sales dollars. d) Calculate the margin of safety in number of children and sales dollars. e) Given the expected enrolment of 50 children, prepare a contribution margin…
Required:a) Refer to the original data, if the lunch and snack expenses increase by 20% due toincreasing price of raw material. Compute the number of children if the MESRA Kidsto meet the target operating income of RM5,000 per month.b) Briefly explain THREE benefits Cost Volume Profit analysis to the business.
Q1 Bauss Company, a manufacturer of bicycles, started its production in December 2019. For the preceding 5 years Boss Co. had been a retailer of bicycles. After a thorough survey of bicycles markets, management of the Bauss Co. decided to turn its retail store into a bicycles manufacturing factory. Cost of steel frame for a bicycles will total to $80 per unit. The cost of tires for every bicycle would be $25. Workers on the production lines are on average paid $35 per hour. A bicycle usually takes 8 hours to complete. In addition, the rent on the equipment used to assemble bicycle amounts to $6,000 per month. Indirect materials cost $7 per bicycle. A supervisor was hired to oversee production; her monthly salary is $3,500. Factory cleaning costs are $1,500 monthly. Utility costs amounts to $250 per month. Advertising costs to sell bicycles will be 10,500 per year. The factory building depreciation expense is $2,400 per month. Property taxes on the factory building will be $9,900 per…
Question 2: Zeroll Ice Cream company produces and sells premium ice cream cones in Coles supermarkets. The following table shows selling price and cost information of ice cream cones: Price per cone: $ 5.00 Variable cost per cone:Ingredients $1.35Direct labour $0.45Overhead $0.20Fixed cost per month $3,000Required: a. Calculate the breakeven point in units and in dollars. Click or tap here to enter text.b. The company’s general director has determined a target profit of $6,000 for next year. Given the price and cost information above, what are the required sales in units and in dollars for the company to achieve this target? Click or tap here to enter text.c. Calculate Zeroll’s new break-even point (in units and in dollars) for each of the following independent scenarios:  Selling price decreases by $0.50 per cone. Click or tap here to enter text. Fixed costs decrease by $300 per month. Click or tap here to enter text. Variable costs increase by $0.50 per cone Click or tap here to…
Figure 4-2.Pauley Company provides home health care. Pauley charges $35/hour for professional care. Variable costs are $21/hour and fixed costs are $78,000. Next year, Pauley expects to charge out 12,000 hours of home health care.Refer to Figure 4-2. What is the break-even point in hours? (round to the nearest whole hour) 2,229 1,393 3,714 5,571 12,000
Q3. Joe's Tax Service prepares tax returns for low-to middle-income taxpayers. Its service operates January 2 through April 15 at a counter in a local grocery store. All jobs are classified into one of three categories: standard, multiform, and complex. Following is information for last year. Also, last year, the fixed cost of rent, utilities, and so forth were $50,000. Standard Multiform Complex Billing rate $60 $125 $250 Average variable costs (30) (75) (150) Average contribution margin $20 $50 $100 Number of returns prepared 1,750 600 350 (a.) Determine Joe's break-even dollar sales volume. Product , Weighted Selling Price , Weighted Contribution Margin Standard Multiform Complex Total Contribution margin ratio: Break-even sales volume: (b.) Determine Joe's margin of safety in sales dollars.
3-46 CVP, alternative cost structures. Classical Glasses operates a kiosk at the local mall, sellingsunglasses for $30 each. Classical Glasses currently pays $1,000 a month to rent the space and pays twofull-time employees to each work 160 hours a month at $10 per hour. The store shares a manager with aneighboring kiosk and pays 50% of the manager’s annual salary of $60,000 and benefits of $12,000. Thewholesale cost of the sunglasses to the company is $10 a pair.1. How many sunglasses does Classical Glasses need to sell each month to break even?2. If Classical Glasses wants to earn an operating income of $5,300 per month, how many sunglasses doesthe store need to sell?3. If the store’s hourly employees agreed to a 15% sales-commission-only pay structure, instead of theirhourly pay, how many sunglasses would Classical Glasses need to sell to earn an operating incomeof $5,300?4. Assume Classical Glasses pays its employees hourly under the original pay structure, but is able topay the…
Identifying variable, fixed, and mixed costs Holly’s Day Care has been in operation for several years. Identify each cost as variable (V), fixed (F), or mixed (M), relative to number of students enrolled. 1. Building rent. 2. Toys. 3. Compensation of the office manager, who receives a salary plus a bonus based on number of students enrolled. 4. Afternoon snacks. 5. Lawn service contract at $200 per month. 6. Holly’s salary. 7. Wages of afterschool employees. 8. Drawing paper for student artwork. 9. Straight-line depreciation on furniture and playground equipment. 10. Fee paid to security company for monthly service.
Question 2 The kopitiam restaurant is open 24 hours a day and serves breakfast,lunch ,and dinner.The owner of the business has determined that fixed costs are RM24,000 per month.variable costs are estimated at RM9.60 per meal.The average total bill (excluding tax and tip) is $15 per customer. a) compute the break -even point in meals and volume in dollars. b) compute the number of meals that must be served if leeAnn family restaurant wishes to earn a profit of RM10,000 c) Assume that fixed costs increase to RM30,000. How many additional meals must be served if the restaurant wishes to earn the same profit?