Current Attempt in Progress Vaughn Co. sells product P-14 at a price of $47 a unit. The per-unit cost data are direct materials $15, direct labour $10, and overhead $12 (75 % variable). Vaughn Co. has sufficient capacity to accept a special order for 38,700 units, but at a discount of 25% from the regular price. Selling costs associated with this order would be $3 per unit. Determine whether Vaughn Co, should accept the special order. (Enter loss with a negative sign preceding the number, eg-15,000 or parenthesis, eg. (15,0001) Incremental income (loss) $ Vaughn Co. should not accept the 0.49 MS18 der

Current Attempt in Progress Vaughn Co. sells product P-14 at a price of $47 a unit. The per-unit cost data are direct materials $15, direct labour $10, and overhead $12 (75 % variable). Vaughn Co. has sufficient capacity to accept a special order for 38,700 units, but at a discount of 25% from the regular price. Selling costs associated with this order would be $3 per unit. Determine whether Vaughn Co, should accept the special order. (Enter loss with a negative sign preceding the number, eg-15,000 or parenthesis, eg. (15,0001) Incremental income (loss) $ Vaughn Co. should not accept the 0.49 MS18 der

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 4CE: Olivian Company wants to earn 420,000 in net (after-tax) income next year. Its product is priced at...

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Lotts Company produces and sells one product. The selling price is 10, and the unit variable cost is 6. Total fixed cost is 10,000. Required: 1. Prepare a CVP graph with Units Sold as the horizontal axis and Dollars as the vertical axis. Label the break-even point on the horizontal axis. 2. Prepare CVP graphs for each of the following independent scenarios: (a) Fixed cost increases by 5,000, (b) Unit variable cost increases to 7, (c) Unit selling price increases to 12, and (d) Fixed cost increases by 5,000 and unit variable cost is 7.
Artic Camping Gears currently sells 35,000 units at $73 per unit. Its expenses are as follows: Management believes it can increase sales by 2,000 units for every $5 decrease in sales price. It also believes the additional sales will allow a decrease in direct material of $1 for each additional 2,000 units. Prepare a flexible budgeted income statement for 35,000-, 37,000-, and 39,000-unit sales.
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.
Olivian Company wants to earn 420,000 in net (after-tax) income next year. Its product is priced at 275 per unit. Product costs include: Variable selling expense is 14 per unit; fixed selling and administrative expense totals 290,000. Olivian has a tax rate of 40 percent. Required: 1. Calculate the before-tax profit needed to achieve an after-tax target of 420,000. 2. Calculate the number of units that will yield operating income calculated in Requirement 1 above. (Round to the nearest unit.) 3. Prepare an income statement for Olivian Company for the coming year based on the number of units computed in Requirement 2. 4. What if Olivian had a 35 percent tax rate? Would the units sold to reach a 420,000 target net income be higher or lower than the units calculated in Requirement 3? Calculate the number of units needed at the new tax rate. (Round dollar amounts to the nearest dollar and unit amounts to the nearest unit.)