cercise (Video) Carey Company had sales in 2019 of $1,806,000 on 64,500 units. Variable costs totaled $1,032,000, and fixed costs totaled $508,000. new raw material is available that will decrease the variable costs per unit by 20% (or $3.20). However, to process the new raw material, fixed operating costs will increase by $107,000. Management feels that one-half of the decline in the variable costs per unit she assed on to customers in the form of a sales price reduction. The marketing department expects that this sales price reduction will result in a 5% increase in the number of units sold. (a) Prepare a projected CVP income statement for 2020, assuming the changes have not been made. CAREY COMPANY CVP Income Statement Total CAREY COMPANY CVP Income Statement S b) Prepare a projected CVP income statement for 2020, assuming that changes are made as described. (Round per unit cost to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 1,225.) $ Total Per Unit Per Unit

cercise (Video) Carey Company had sales in 2019 of $1,806,000 on 64,500 units. Variable costs totaled $1,032,000, and fixed costs totaled $508,000. new raw material is available that will decrease the variable costs per unit by 20% (or $3.20). However, to process the new raw material, fixed operating costs will increase by $107,000. Management feels that one-half of the decline in the variable costs per unit she assed on to customers in the form of a sales price reduction. The marketing department expects that this sales price reduction will result in a 5% increase in the number of units sold. (a) Prepare a projected CVP income statement for 2020, assuming the changes have not been made. CAREY COMPANY CVP Income Statement Total CAREY COMPANY CVP Income Statement S b) Prepare a projected CVP income statement for 2020, assuming that changes are made as described. (Round per unit cost to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 1,225.) $ Total Per Unit Per Unit

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter20: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 3CMA: Bolger and Co. manufactures large gaskets for the turbine industry. Bolgers per-unit sales price and...

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Bolger and Co. manufactures large gaskets for the turbine industry. Bolgers per-unit sales price and variable costs for the current year are as follows: Bolgers total fixed costs aggregate to 360,000. Bolgers labor agreement is expiring at the end of the year, and management is concerned about the effects of a new labor agreement on its break-even point in units. The controller performed a sensitivity analysis to ascertain the estimated effect of a 10-per-unit direct labor increase and a 10,000 reduction in fixed costs. Based on these data, the break-even point would: a. decrease by 1,000 units. b. decrease by 125 units. c. increase by 375 units. d. increase by 500 units.
The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include: Fixed costs (salaries, tools): 64,900 per year Variable costs (supplies): 1.35 per maintenance hour Estimated usage by: Actual usage by: Required: 1. Calculate a single charging rate for the Maintenance Department. 2. Use this rate to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year. 3. What if the Assembly Department used 4,000 maintenance hours in the year? How much would have been charged out to the three departments?
Part 2 Waterways Corporation mass-produces a simple water control and timer set. To produce these units, the company incurred variable expenses of $2,053,200 and fixed expenses of $683,338. During 2022, it sold 696,000 units at an average selling price of $4.22 per unit. This was the combination of selling 346,000 units on the market for $5.50 each, and transferring 350,000 units to the installation divisions at variable cost. Top management had directed the use of this transfer price. Capacity for this unit was 736,000 units. Recently, Ryan Smith, the plant manager, was approached by a new customer who offered to pay $5.55 per unit for 60,000 units. Ryan, thinking about his bonus that was based on the department's operating income, readily accepted the order. Now he had to break the news to Lee Williams, the service vice-president in charge of installations. In order to fill the new order, Ryan would have to reduce the installation division's quota by 20,000 units because he was not…
Part 2 Waterways Corporation mass-produces a simple water control and timer set. To produce these units, the company incurred variable expenses of $2,053,200 and fixed expenses of $683,338. During 2022, it sold 696,000 units at an average selling price of $4.22 per unit. This was the combination of selling 346,000 units on the market for $5.50 each, and transferring 350,000 units to the installation divisions at variable cost. Top management had directed the use of this transfer price. Capacity for this unit was 736,000 units. Recently, Ryan Smith, the plant manager, was approached by a new customer who offered to pay $5.55 per unit for 60,000 units. Ryan, thinking about his bonus that was based on the department's operating income, readily accepted the order. Now he had to break the news to Lee Williams, the service vice-president in charge of installations. In order to fill the new order, Ryan would have to reduce the installation division's quota by 20,000 units because he was not…
Required information (The following information applies to the questions displayed below] Astro Company sold 25,000 units of its only product and reported income of $117,600 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $149,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Incone Statenent For Year Ended December 31 Sales ($40 per unit) $ 1,000,000 800,000 Variable costs ($32 per unit) Contribution margin Fixed costs 200,000 82,400 Incone $ 117,600 ces 2 Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,000,000. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) ASTRO…
Required information [The following information applies to the questions displayed below.] Astro Company sold 26,500 units of its only product and reported income of $246,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 60% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $150,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($50 per unit) Variable costs ($35 per unit). Contribution margin Fixed costs Income ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,325,000. (Do not round intermediate calculations. Round your answers to the…
View Policies Current Attempt in Progress Hartley Company produces two products, Flower and Planter. Flower is a high-volume item totaling 20000 units annually. Planter is a low-volume item totaling only 6000 units per year. Flower requires 1 hour of direct labor for completion, while each unit of Planter requires 2 hours. Therefore, total annual direct labor hours are 32000 (20000+ 12000). Expected arnnual manufacturing overhead costs are $660000. Hartley uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of Planter would be assigned overhead of O need more information to compute. O $25.38. O $20.63. O $41.25.
Question Three: East Manufacturing Company was established in February, 2020 to produce and sell only product (X) as a start. The following costs were set by the internal experts of the company for product (X): Monthly fixed costs $750,000 Variable cost per unit $60 Monthly production 20,000 unit Based upon the above information, the management of the Company has set the following targets: Target selling price $150 per unit Monthly target profits $100,000 Requirement 1: Even though the level of competition is low, the president of the company is very concerned about the selling price of the product; he thinks that the price might be high, so he asked you (as a senior manager) to determine the lowest selling price that the company can sell all monthly production and achieve the target profit set by the internal experts. In March, 2020, the company decided to sell product (X) to one customer only. The following customers offered to purchase the following quantities from…
Choose the correct letter of answer Patience company is considering a proposal to replace an existing machine used for the manufacture of Product A. The new machine is expected to increase annual fixed costs by P120,000; however, variable costs should decrease by 20% because of a reduction in direct labor hours and more efficient usage of direct materials. Before this change was under consideration, Patience had budgeted Product A sales and cost for 2021 as follows: (1) Sales, P2,000,000; (b) variable costs, 70% of sales; and (c) fixed costs, P400,000.o Assuming that Patience implemented the above proposal by January 1, 2021, what would be the increase in budgeted operating profit for Product A for 2021? a. P160,000b. 20%c. 47% d. none of the above
QUESTION NO 3: The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. Annual additional tooling costs $250,000 annually. b. Average inventory would decline by 80% from the current level of $1,000,000. c. Insurance, space, materials-handling, and setup costs, which currently total $400,000 annually, would decline by 20%. d. The emphasis on quality inherent in JIT production would reduce rework costs by 25%. The Knot currently incurs $160,000 in annual rework costs. e. Improved product quality under JIT production would enable The Knot to raise the price of its product by $2 per unit. The Knot sells 100,000 units each year. The Knot’s required rate of return on inventory investment is 15% per year. 1. Calculate the net benefit or cost to The Knot if it adopts JIT production at the Spartanburg plant. 2. What nonfinancial and qualitative factors…
Required information [The following information applies to the questions displayed below.] Astro Company sold 28,000 units of its only product and reported income of $161,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $143,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($56 per unit) Variable costs ($42 per unit) Contribution margin Fixed costs Income Contribution margin 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal places.) Contribution Margin Ratio Numerator: 1 1 $ 1,568,000 1,176,000 392,000 231,000 $ 161,000 Break-even point in dollar sales with new machine:…
View Policies O $18.75. O $23.08. Current Attempt in Progress Crane Company produces two products, Flower and Planter. Flower is a high-volume item totaling 20000 units annually. Planter is a low-volume item totaling only 6000 units per year. Flower requires one hour of direct labor for completion, while each unit of Planter requires 2 hours. Therefore, total annual direct labor hours are 32000 (20000+ 12000). Estimated annual manufacturing overhead costs are $600000. Crane uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of Planter would be assigned overhead of O $37.50. need more information to compute. !! OO **