Genie's Lamps, a Philippine-based manufacturer and exporter of decorative lamps to the Kingdom of Saudi Arabia, has the following weekly data for its lamp sales: Sales (100 lamps @ Php500) Less cost of goods sold: Php50,000 Variable manufacturing costs Fixed manufacturing costs Php20,000 5,000 25,000 Php25,000 Gross Margin Less selling and admin expenses: Variable Php10,000 5,000 Fixed 15,000 Php10,000 Net Income 1. Find the firm's break-even level. 2. Determine the necessary output level if the firm wants to increase its weekly net income by 75% withou changing the price. 3. Find the firm's new break-even output if it builds a new plant that will raise fixed manufacturing costs to Php10,000 but decreases variable manufacturing cost to Php150 per unit. Assume average variable selling expenses, fixed selling expenses, and selling price remain the same.

Genie's Lamps, a Philippine-based manufacturer and exporter of decorative lamps to the Kingdom of Saudi Arabia, has the following weekly data for its lamp sales: Sales (100 lamps @ Php500) Less cost of goods sold: Php50,000 Variable manufacturing costs Fixed manufacturing costs Php20,000 5,000 25,000 Php25,000 Gross Margin Less selling and admin expenses: Variable Php10,000 5,000 Fixed 15,000 Php10,000 Net Income 1. Find the firm's break-even level. 2. Determine the necessary output level if the firm wants to increase its weekly net income by 75% withou changing the price. 3. Find the firm's new break-even output if it builds a new plant that will raise fixed manufacturing costs to Php10,000 but decreases variable manufacturing cost to Php150 per unit. Assume average variable selling expenses, fixed selling expenses, and selling price remain the same.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Jakarta Company is a service firm with current service revenue of $400,000 and a 40% contribution margin. Its fixed costs are $80,000. Maldives Company has current sales of $6,610,000 and a 45% contribution margin. Its fixed costs are $1,800,000. What is the margin of safety for jaka rta and Maldives? Compare the margin of safety in dollars between the two companies. Which is stronger? Compare the margin of safety in percentage between the two companies. Now, which one is stronger? Compute the degree of operating leverage for both companies. Which company will benefit most from a 15% increase in sales? Explain why. Illustrate your findings in an Income Statement that is increased by 15%.
Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)
Brahma Industries sells vinyl replacement windows to home improvement retailers nationwide. The national sales manager believes that if they invest an additional $25,000 in advertising, they would increase sales volume by 10,000 units. Prepare a forecasted contribution margin income statement for Brahma if they incur the additional advertising costs, using this information:
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.
Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals 146,000. Each door handle sells for 12 and has variable cost of 9; each trim kit sells for 8 and has variable cost of 5. Required: 1. What are the contribution margin per unit and the contribution margin ratio for door handles and for trim kits? 2. If Polaris sells 20,000 door handles and 40,000 trim kits, what is the operating income? 3. How many door handles and how many trim kits must be sold for Polaris to break even? 4. CONCEPTUAL CONNECTION Assume that Polaris has the opportunity to rearrange its plant to produce only trim kits. If this is done, fixed costs will decrease by 35,000, and 70,000 trim kits can be produced and sold. Is this a good idea? Explain.
Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90. The companys monthly fixed expenses are $180,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of October when they will sell 10,000 units. How many units will Cadre need to sell in order to realize a target profit of $300,000? What dollar sales will Cadre need to generate in order to realize a target profit of $300,000? Construct a contribution margin income statement for the month of August that reflects $2,400,000 in sales revenue for Cadre, Inc.
Marlin Motors sells a single product with a selling price of $400 with variable costs per unit of $160. The companys monthly fixed expenses are $36,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of November when they will sell 130 units. How many units will Marlin need to sell in order to realize a target profit of $48,000? What dollar sales will Marlin need to generate in order to realize a target profit of $48.000? Construct a contribution margin income statement for the month of February that reflects $200,000 in sales revenue for Marlin Motors.
Kerr Manufacturing sells a single product with a selling price of $600 with variable costs per unit of $360. The companys monthly fixed expenses are $72,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of January when they will sell 500 units. How many units will Kerr need to sell in order to realize a target profit of $120,000? What dollar sales will Kerr need to generate in order to realize a target profit of $120,000? Construct a contribution margin income statement for the month of June that reflects $600,000 in sales revenue for Kerr Manufacturing.
Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of $30. The companys monthly fixed expenses are $22,500. What is the companys break-even point in units? What is the companys break-even point in dollars? Construct a contribution margin income statement for the month of September when they will sell 900 units. How many units will Maple need to sell in order to reach a target profit of $45,000? What dollar sales will Maple need in order to reach a target profit of $45,000? Construct a contribution margin income statement for Maple that reflects $150,000 in sales volume.
nick limited sells creme, a cream suitable for variety of first aid uses. The company commenced operations earlier this year and expects to sell 100,000 tubes of Super crème. The following Information is available: Selling price per tube 7.00Direct material cost per tube 2.10 Direct labour cost per tube 1.35Variable overhead cost per tube 0.75Total fixed costs for the year. 210,000RequiredWhat is the Break-even point (BEP) in tubes and sales revenue? 4) If the company wanted to earn a profit of UGX 46,200 for the year how many tubes of Super crème must be sold? By what percentage should expected sales revenue fall before NICK Limited starts to make a loss? State the assumptions and limitations of break-even analysis
Smirnoff Corp. invested P31,250,000 in a cabinet-making business. It expects to earn a 25% return on its investment in equipment used in the manufacturing the cabinets. Its consultants estimate that 10,000 units of cabinets next year. Estimated costs per unit of cabinet at this level follows: Variable manufacturing costs = P1,562.50; Fixed selling and administrative costs = P625.00; Fixed manufacturing costs = P312.50. To accomplish the company objective, one cabinet should be priced at: