Hello! Please help me fill in the blanks in the last empty chart and answer question number 3 at the very end in bold. Thank you! :) Units Produced Total Lumber Cost Total Utilities Cost Total Machine Depreciation Cost 7,000 shelves $70,000 $9,550 $135,000 14,000 shelves 140,000 17,600 135,000 28,000 shelves 280,000 33,700 135,000 35,000 shelves 350,000 41,750 135,000 Cost Fixed Portion of Cost Variable Portion of Cost (per Unit) Lumber 0 10 Utilities 1,500 1.15 Depreciation 135,000 0 Question Content Area Units Produced Total Cost January 4,360 units $65,600 February 275 6,250 March 1,000 15,000 April 6,775 136,250 May 1,750 32,500 June 3,015 48,000 1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs = (Variable Cost Per Unit x Number of Units Produced) + Fixed Cost. Complete the following table. Total Fixed Cost Variable Cost per Unit 750 20 Total Cost 3,500 70750 4,360 87950 6,775 136250 a. The high-low method is accurate only for months in which production is at full capacity. b. The high-low method only gives accurate data when fixed costs are zero. c. The high-low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest. d. The high-low method gives accurate data only for levels of production outside the relevant range. Question Content Area Contribution Margin Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 80,800 units during the year. Cover-to-Cover Company Biblio Files Company Contribution margin ratio (percent) 20 40 Unit contribution margin 1 2 Break-even sales (units) 20,200 50,500 Break-even sales (dollars) 101,000 252,500 Question Content Area Income Statement - Cover-to-Cover Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 Sales $404,000 Variable costs: Manufacturing expense $242,400 Selling expense 20,200 Administrative expense 60,600 (323,200) Contribution margin $80,800 Fixed costs: Manufacturing expense $5,000 Selling expense 4,000 Administrative expense 11,200 (20,200) Operating income $60,600 Income Statement - Biblio Files Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 Sales $404,000 Variable costs: Manufacturing expense $161,600 Selling expense 16,160 Administrative expense 64,640 (242,400) Contribution margin $161,600 Fixed costs: Manufacturing expense $83,000 Selling expense 8,000 Administrative expense 10,000 (101,000) Operating income $60,600 Sales Mix Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Type of Bookshelf Sales Price per Unit Variable Cost per Unit Basic $5.00 $1.75 Deluxe 9.00 8.10 The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called “Combined,” the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $330,330. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table. Type of Bookshelf Percent of Sales Mix Break-Even Sales in Units Break-Even Sales in Dollars Basic Deluxe Question Content Area Target Profit Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions (1) - (3) that follow, assuming that all data for the coming year is the same as the current year, except for the amount of sales. 1. If Cover-to-Cover Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be? $504,000 2. If Biblio Files Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be? $454,000 3. What would explain the difference between your answers for (1) and (2)? a. Biblio Files Company has a higher contribution margin ratio, and so more of each sales dollar is available to cover fixed costs and provide operating income. b. Cover-to-Cover Company’s contribution margin ratio is lower, meaning that it’s more efficient in its operations. c. The companies have goals that are not in the relevant range. d. The answers are not different; each company has the same required sales amount for the coming year to achieve the desired target profit.
Hello! Please help me fill in the blanks in the last empty chart and answer question number 3 at the very end in bold. Thank you! :)
Units Produced |
Total Lumber Cost |
Total Utilities Cost |
Total Machine Cost |
| 7,000 shelves | $70,000 | $9,550 | $135,000 |
| 14,000 shelves | 140,000 | 17,600 | 135,000 |
| 28,000 shelves | 280,000 | 33,700 | 135,000 |
| 35,000 shelves | 350,000 | 41,750 | 135,000 |
Cost |
Fixed Portion of Cost |
Variable Portion of Cost (per Unit) |
| Lumber | 0 | 10 |
| Utilities | 1,500 | 1.15 |
| Depreciation | 135,000 | 0 |
Question Content Area
| Units Produced | Total Cost | ||
| January | 4,360 | units | $65,600 |
| February | 275 | 6,250 | |
| March | 1,000 | 15,000 | |
| April | 6,775 | 136,250 | |
| May | 1,750 | 32,500 | |
| June | 3,015 | 48,000 |
1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs = (Variable Cost Per Unit x Number of Units Produced) + Fixed Cost. Complete the following table.
| Total Fixed Cost | Variable Cost per Unit |
| 750 | 20 |
Total Cost |
|
| 3,500 | 70750 |
| 4,360 | 87950 |
| 6,775 | 136250 |
a. The high-low method is accurate only for months in which production is at full capacity.
b. The high-low method only gives accurate data when fixed costs are zero.
c. The high-low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest.
d. The high-low method gives accurate data only for levels of production outside the relevant range.
Question Content Area
Contribution Margin
Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 80,800 units during the year.
| Cover-to-Cover Company |
Biblio Files Company |
|
| Contribution margin ratio (percent) | 20 | 40 |
| Unit contribution margin | 1 | 2 |
| Break-even sales (units) | 20,200 | 50,500 |
| Break-even sales (dollars) | 101,000 | 252,500 |
Question Content Area
Income Statement - Cover-to-Cover
| Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 |
||
| Sales | $404,000 | |
| Variable costs: | ||
| Manufacturing expense | $242,400 | |
| Selling expense | 20,200 | |
| Administrative expense | 60,600 | (323,200) |
| Contribution margin | $80,800 | |
| Fixed costs: | ||
| Manufacturing expense | $5,000 | |
| Selling expense | 4,000 | |
| Administrative expense | 11,200 | (20,200) |
| Operating income | $60,600 |
Income Statement - Biblio Files
| Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 |
||
| Sales | $404,000 | |
| Variable costs: | ||
| Manufacturing expense | $161,600 | |
| Selling expense | 16,160 | |
| Administrative expense | 64,640 | (242,400) |
| Contribution margin | $161,600 | |
| Fixed costs: | ||
| Manufacturing expense | $83,000 | |
| Selling expense | 8,000 | |
| Administrative expense | 10,000 | (101,000) |
| Operating income | $60,600 |
Sales Mix
Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings.
| Type of Bookshelf |
Sales Price per Unit |
Variable Cost per Unit |
| Basic | $5.00 | $1.75 |
| Deluxe | 9.00 | 8.10 |
The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called “Combined,” the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $330,330. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table.
| Type of Bookshelf | Percent of Sales Mix | Break-Even Sales in Units | Break-Even Sales in Dollars |
| Basic | |||
| Deluxe |
Question Content Area
Target Profit
Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions (1) - (3) that follow, assuming that all data for the coming year is the same as the current year, except for the amount of sales.
1. If Cover-to-Cover Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be?
$504,000
2. If Biblio Files Company wants to increase its profit by $20,000 in the coming year, what must their amount of sales be?
$454,000
3. What would explain the difference between your answers for (1) and (2)?
a. Biblio Files Company has a higher contribution margin ratio, and so more of each sales dollar is available to cover fixed costs and provide operating income.
b. Cover-to-Cover Company’s contribution margin ratio is lower, meaning that it’s more efficient in its operations.
c. The companies have goals that are not in the relevant range.
d. The answers are not different; each company has the same required sales amount for the coming year to achieve the desired target profit.
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