both peso Compute the company's degree of operating leverage at the pre and perčentage form. Compute the company's degree of operating leverage at the pres
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Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
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- Communication Bon Jager Inc. manufactures and sells medical devices used in cardiovascular surgery. The sales team consists of two salespeople, Dean and Martin, A contribution margin report by salesperson was prepared as follows: Bon Jager Inc. Contribution Margin by Salesperson Dean Martin Sales 400,000 480,000 Variable cost of goods sold 184,000 264,000 Manufacturing margin 216,000 216,000 Variable selling expenses: Variable promotion expenses 72,000 43,200 Variable sales commission expenses 56,000 67,200 Total variable selling expenses 128,000 110,400 Contribution margin 88,000 105,600 Manufacturing margin as a percent of sales (manufacturing margin ratio) 54% 4S% Contribution margin ratio 22% 22% Write a brief memo to Anna Berenson, the Vice President of Marketing, evaluating the performance of the company's salespeople and providing recommendations on how the salespeople could improve profitability.An engineer collected average cost and revenue data for Arenson’s FC1 handheld financial calculator.Fixed cost = $ 300,000 per yearCost per unit = $40Revenue per unit = $70 Show the sensitivity of profit to variation in revenue from $55 to $75 per unit using a $5 increment. Perform this analysis at two sales quantities: (1) the breakeven quantity for the collected data, and (2) 20% greater than this breakeven quantity. (Note: Be sure to use the original estimates for FC and cost per unit.)Question Q1Moona Inc. produces Mobile phones. Information of the company's operations last year appear below: Fixed cost:Fixed Manufacturing overhead Rs 40,000Fixed Selling & Administrative Rs 60,000Selling Price per unit Rs 100Variable cost per unit:Direct Materials Rs 30Direct labor Rs 10Variable Manufacturing overhead Rs 5Variable Selling & Administrative Rs 2Units In beginning Inventory 0Units Produced 2000Units Sold 1900 Required: a. Compute the unit product cost under both absorption and variable costing.b. Prepare an income statement for the year using absorption costing.c. Prepare a contribution format income statement for the year using variable costing. d. Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year.
- Hd.31. Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $25 per unit. Variable expenses are $8 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: Sales $ 350,000 Variable expenses 112,000 Contribution margin 238,000 Fixed expenses 160,000 Net operating income $ 78,000 Required: Answer each question independently based on the original data: 1. What is the products CM ratio? 2. Use the CM ratio to determine the break-even point in sales dollars. 3. Assume this year's total sales increase by $40,000. If the fixed expenses do not change, how much will operating income increase? Assume that the operating results for last year were as in the question data. 4-a. Compute the degree of operating leverage based on last year's sales. 4-b. The president expects sales to increase by 16% next year. Using the degree of operating leverage from last year, what percentage increase in the operating income will the…SOLVE THE GIVEN MCQS: 1) Pungent Corporation manufactures and sells a spice rack. Shown below are the actual operating results for the first two years of operations: Year 1 Year 2 Units (spice racks) produced 40,000 40,000 Units (spice racks) sold 37,000 41,000 Absorption costing net operating income $ 44,000 $ 52,000 Variable costing net operating income $ 38,000 ??? Pungent's selling price and unit variable cost and total fixed cost were the same for both years. What is Pungent's variable costing net operating income for Year 2? A $50,000 B $48,000 C $56,000 D $54,000 2) A company produces a single product. Variable production costs are $21 per unit and variable selling and administrative expenses are $4 per unit. Fixed manufacturing overhead totals $30,000 and fixed selling and administration expenses total $36,000. Assuming a beginning inventory of zero, production of 6,000 units and sales of 5,600 units, the dollar value of…Question content area top Part 1 Red Rose Manufacturers Inc. is approached by a potential customer to fulfill a onetimeonly special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $120 Direct labor 100 Manufacturing support 115 Marketing costs 85 Fixed costs: Manufacturing support 155 Marketing costs 55 Total costs 630 Markup (40%) 252 Targeted selling price $882 What is the full cost of the product per unit? A. $420 B. $252 C. $882 D. $630
- (e) Product Blue Product Red £ £Selling £12.00 £24.00Variable cost £ 4.00 £ 8.00Contribution margin £ 8.00 £16.00Fixed costs apportioned £200,000 £400,000Budgeted Sales Units 140,000 60,000Required:Calculate the breakeven points, for each product and the company as a wholeand comment on your findingsQUESTION 2- COST-VOLUME -PROFIT (CVP) Analysis Question ) Telematics Incorporated manufactures flat-screen television sets. The company’s contribution format income statement for 2021 is given below: Total Per Unit Percentage of Sales Sales (25,000 units) $ 2,500,000 $ 100 100% Less variable expenses $ 1,500,000 $ 60 ? % Contribution Margin $ 1,000,000 $ 40 ? % Less Fixed Expenses $ 800,000 Operating Income $ 200,000 Management believes operating income can be further improved and would like you to prepare the following analysis: Required: Compute the company’s Contribution Margin ( CM ) ratio and variable expense ratio.\ Compute the company’s break-even point in both units and sales dollars. Use the equation method Assume that sales increase by $ 600,000 next year. If cost behaviour patterns remain unchanged, by how much will the company’s operating income increase. Use the Contribution Margin (CM) ratio…QUESTION 2- COST-VOLUME -PROFIT (CVP) Analysis Question matics Incorporated manufactures flat-screen television sets. The company’s contribution format income statement for 2021 is given below: Total Per Unit Percentage of Sales Sales (25,000 units) $ 2,500,000 $ 100 100% Less variable expenses $ 1,500,000 $ 60 ? % Contribution Margin $ 1,000,000 $ 40 ? % Less Fixed Expenses $ 800,000 Operating Income $ 200,000 Management believes operating income can be further improved and would like you to prepare the following analysis: Required: Compute the company’s Contribution Margin ( CM ) ratio and variable expense ratio. Compute the company’s break-even point in both units and sales dollars.Use the equation method Assume that sales increase by $ 600,000 next year. If cost behaviour patterns remain unchanged, by how much will the company’s operating income increase. Use the Contribution Margin (CM) ratio to…
- Practice 4: Port-a-Home Ltd (PL) produces two lines of mobile homes: Doublewide and singlewide. Unit cost and revenue data pertaining to each product are shown below: Double Wide SingleWide Selling Price $70000 $40000 Total Variable Cists $45000 $20000 Each doublewide home requires 350 different labor hours and 125 machine hours. Each singlewide home requires 175 direct labor hours and 150 machine hours. Demand for each line of homes far exceeds the company's total production capacity. If PL's production capacity is constrained by limited direct labor hours, which line of homes should it produce? If PL's total production capacity is constrained by machine hours, which line of homes should it produce? Assume PL now has a labor capacity for the coming year of 875,000 hours. New market information has determined that the demand for single-wide trailers will be 3000 and the…CVP – Basic Analysis Raveen Products sells camping equipment. One of the company’s products, a camp lantern, sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month. Required: a) Compute the company’s break-even point in number of lanterns and in total sales dollars, Compute the company’s Margin of Safety in sales dollar and in percentage,At present, the company is selling 8,000 lanterns per month. The sales manager is convinced that a 10% reduction in the selling price will result in a 25% increase in the number of lanterns sold each month. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. Show both total and per unit data on your statements. b) Refer to the data in above. How many lanterns would have to be sold at the new selling price to yield a minimum net…Q1) The required engine to be product with high qulaity to be part of oilfied balatform. The production of (x engines) within the following costs details: |ExedCosts | | Variable Costs | Rents 105,000.0 Direct Insurance 9,600.0 materials 28 General Salaries 64,400.0 Labors 11 Maintenance 21,0000 Overtimes 9.9 Food costs 0.1 Revenue from selling prices per unit (59). product of (X Engine) 52 | 118 138 144 190 193 200 207 290 327 347 Required: A) Find all lines of Break Even . how the produaction reach to B.E.P. B) Plotting all details. C) If you suppose to use F.C to be 150,000 inseatd of the previous total fixed cost. Make the comparison between two obatining results (only ) on Break.Even.Points. Give your opinon on both figuers. Q2) The two projects as part of oil industrial their cash flows in tables belwo: project A:r=8% project B: r=8% year cash flow (CF) cash flow (CF) 0 -398 -242 1 120 105 2 175 105 3 280 115 Required: a) Find NPV for both project on base of r = 8%? b) Find the…