Computers VG Systems Total Sales $700,000 $300,000 $1,000,000 Variable costs 420,000 210,000 630,000 Contribution margin $280,000 $90,000 370,000 Fixed costs 296,000 Net income $74,000 Determine the sales mix and contribution margin ratio for each division. Calculate the company's weighted-average contribution margin ratio. Calculate the company's break-even point in dollars. Determine the sales level, in dollars, for each division at the break-even point.

Computers VG Systems Total Sales $700,000 $300,000 $1,000,000 Variable costs 420,000 210,000 630,000 Contribution margin $280,000 $90,000 370,000 Fixed costs 296,000 Net income $74,000 Determine the sales mix and contribution margin ratio for each division. Calculate the company's weighted-average contribution margin ratio. Calculate the company's break-even point in dollars. Determine the sales level, in dollars, for each division at the break-even point.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 14EB: Company A has current sales of $4,000,000 and a 45% contribution margin. Its fixed costs are...

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Company A has current sales of $4,000,000 and a 45% contribution margin. Its fixed costs are $600,000. Company B is a service firm with current service revenue of $2,800,000 and a 15% contribution margin. Company Bs fixed costs are $375,000. Compute the degree of operating leverage for both companies. Which company will benefit most from a 15% increase in sales? Explain why.
Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000 for reworking products. A good estimate of nonvalue-added costs would be a. 70,000. b. 130,000. c. 40,000. d. 90,000. e. 100,000.
Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of $30,000, and invested assets of $600000. What is the return on investment for Division A? A. 20% B. 25% C. 33% D. 40%
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6. Howell CompanyBelow is an income statement for Howell Company: Sales $600,000 Variable costs (150,000) Contribution margin $450,000 Fixed costs (300,000) Profit before taxes $150,000 Refer to Howell Company. What was Howell’s margin of safety? Select one: a. $300,000 b. $200,000 c. $150,000 d. $175,000
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14. A company operates with two departments: Department AA and Department BB. The manager is considering to drop Department BB because of the income statement prepared by the bookkeeper shown below: Dept. AA Dept. BB Sales P3,000,000 P1,000,000 Less: Variable costs 900,000 400,000 Contribution Margin 2,100,000 600,000 Less: Total Fixed costs 1,400,000 800,000 Operating Profit/(loss) P 700,000 (P200,000) Of the total fixed costs, P350,000 allocated to Det. BB is considered ass sunk cost. In, addition if Dept. BB will be eliminated 10% decrease of sales in Dept. AA will occur. a. What is the segment margin of Department BB? b. If Dept. BB will be dropped, what will be the amount of operating income of the company?
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Q1. Jassim Compagny is producing only one product. Two types of direct materials are used to produce this product: direct material type A and direct material type B. The estimated data for Jassim Compagny is as following: Sales $90,000 Costs: Direct materials type A $40,000 Hourly employees 15,000 Manager’s salary 10,000 Direct materials type B 5,000 Marketing 10,000 Total Costs 80,000 Budgeted pretax profit $ 10,000 Compute the revenues needed to achieve a target after-tax income of $30,000. The income tax rate is 20%. What is the margin of safety in revenue?
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