D.22. Basic Cost-Volume-Profit ConceptsKlamath Company produces a single product. The projected income statement for the coming year is as follows:Sales (40,000 units @ $31.00)$1,240,000Total variable cost483,600Contribution margin$ 756,400Total fixed cost816,912Operating income$ (60,512)1. Compute the unit contribution margin and the units that must be sold to break even.Unit contribution marginBreak-even units2. Suppose 10,000 units are sold above breakeven. What is the operating income?3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in salesrevenue.Contribution margin ratioBreak-even sales revenueSuppose that revenues are $200,000 more than expected for the coming year. What would the total operating incomebe?

CVP analysis, or cost-volume-profit analysis, is a management accounting technique used to analyze…

Basic Cost-Volume-Profit Concepts Klamath Company produces a single product. The projected income statement for the coming year is as follows: Sales (40,000 units @ $31.00) Total variable cost Contribution margin Total fixed cost Operating income $ (60,512) 1. Compute the unit contribution margin and the units that must be sold to break even. Unit contribution margin Break-even units $1,240,000 483,600 $756,400 816,912 2. Suppose 10,000 units are sold above breakeven. What is the operating income? 3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue. Contribution margin ratio Break-even sales revenue Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income be?

Basic Cost-Volume-Profit Concepts Klamath Company produces a single product. The projected income statement for the coming year is as follows: Sales (40,000 units @ $31.00) Total variable cost Contribution margin Total fixed cost Operating income $ (60,512) 1. Compute the unit contribution margin and the units that must be sold to break even. Unit contribution margin Break-even units $1,240,000 483,600 $756,400 816,912 2. Suppose 10,000 units are sold above breakeven. What is the operating income? 3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue. Contribution margin ratio Break-even sales revenue Suppose that revenues are $200,000 more than expected for the coming year. What would the total operating income be?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 47E: Klamath Company produces a single product. The projected income statement for the coming year is as...

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Cost-Volume-Profit, Margin of Safety Victoria Company produces a single product. Last years income statement is as follows: Required: 1. Compute the break-even point in units and sales dollars calculated using the break-even units. 2. What was the margin of safety for Victoria last year in sales dollars? 3. Suppose that Victoria is considering an investment in new technology that will increase fixed cost by 250,000 per year but will lower variable costs to 45% of sales. Units sold will remain unchanged. Prepare a budgeted income statement assuming that Victoria makes this investment. What is the new break-even point in sales dollars, assuming that the investment is made?
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Klamath Company produces a single product. The projected income statement for the coming year is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. 2. Suppose 10,000 units are sold above break-even. What is the operating income? 3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue. (Note: Round the contribution margin ratio to four decimal places, and round the sales revenue to the nearest dollar.) Suppose that revenues are 200,000 more than expected for the coming year. What would the total operating income be?
Contribution margin, break-even sales, cost-volume-profit chart, margin of safety, and operating leverage Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: It is expected that 12,000 units will be sold at a price of 240 a unit. Maximum sales within the relevant range are 18,000 units. Instructions 1. Prepare an estimated income statement for 20Y7. 2. What is the expected contribution margin ratio? 3. Determine the break-even sales in units and dollars. 4. Construct a cost-volume-profit chart indicating the break-even sales. 5. What is the expected margin of safety in dollars and as a percentage of sales? (Round to one decimal place.) 6. Determine the operating leverage.