Marwick's Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,499 per unit and then sells th to retail customers for an average price of $2,600 each. The company's selling and administrative costs for a typical month are presented below: Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative: Executive salaries Cost Formula $ 954 per month $ 4,809 per month, plus 4% of sales $ 57 per piano sold $ 663 per month $ 4,953 per month $ 13,405 per month. $ 687 per month $ 2,514 per month, plus $39 per piano sold $ 852 per month Insurance Clerical Depreciation of office equipment During August, Marwick's Pianos, Incorporated, sold and delivered 56 pianos. Required: 1. Prepare a traditional format income statement for August. 2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per unit basis down through contribution margin.

Marwick's Pianos, Incorporated, purchases pianos from a large manufacturer for an average cost of $1,499 per unit and then sells th to retail customers for an average price of $2,600 each. The company's selling and administrative costs for a typical month are presented below: Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative: Executive salaries Cost Formula $ 954 per month $ 4,809 per month, plus 4% of sales $ 57 per piano sold $ 663 per month $ 4,953 per month $ 13,405 per month. $ 687 per month $ 2,514 per month, plus $39 per piano sold $ 852 per month Insurance Clerical Depreciation of office equipment During August, Marwick's Pianos, Incorporated, sold and delivered 56 pianos. Required: 1. Prepare a traditional format income statement for August. 2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per unit basis down through contribution margin.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 18MCQ: 2-18 Use the following information for Multiple- Choice Questions 2-13 through 2-18: Last year,...

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2-18 Use the following information for Multiple- Choice Questions 2-13 through 2-18: Last year, Barnard Company incurred the following costs: Barnard produced and sold 10,000 units at a price of 31 each. Refer to the information for Barnard Company on the previous page. Operating income is a. 34,000. b. 110,000. c. 234,000. d. 270,000. e. 74,000.
Choose the correct letter of answer In 20x2 the Cranky Processing Company had the following data coming from its income statement (in Pesos): Sales, P1,200,000; Variable costs: (a) Goods sold, P400,000 and (b) S&A Expenses, P100,000; Fixed costs: (a) Factory overhead, P110,000, and S&A Expenses, P80,000. Income tax rate is 15%. Determine the required peso sales to provide an after-tax net income of P150,000. a. P261,765b. P176,471c. P366,471d. P628,235
14. Micky2, Inc. sells two products X and Y. Data concerning the company for July follow: Product X: sales - P200,000; variable expense - P50,000; and traceable fixed expenses - P80,000. For Product Y: sales - P300,000, variable expenses - P100,000 and traceable fixed expenses - P150,000. In addition there were common fixed expenses of P70,000 in July. What was the entire company's net income ? P50,000 P70,000 P150,000 P120,000
Ma2. Q4 Bundoora Enterprises operates a single-product entity. Data relating to the product for 2020 were as follows: Annual Volume 45,000 Units Selling price per unit $65 Variable manufacturing cost per unit $25 Annual fixed manufacturing costs $155,000 Variable marketing and distribution costs per unit $15 Annual fixed non-manufacturing costs $445,000 a) Calculate and interpret the break-even in units for 2020. b) Calculate and interpret the margin of safety in both units and sales dollars. c) Calculate and interpret the profit achieved in 2020.d) Changes in marketing strategy are planned for 2021. This would increase variable marketing and distribution costs by $15 per unit and reduce fixed non-manufacturing costs by $100,000 per year. Calculate and interpret the units that would need to be sold in 2021 to achieve the same profit as in 2020.
3-16 Jack’s Jax has total fixed costs of $25,000. If the company’s contribution margin is 60%, the incometax rate is 25% and the selling price of a box of Jax is $20, how many boxes of Jax would the company needto sell to produce a net income of $15,000?a. 5,625 b. 4,445c. 3,750 d. 3,3333-17 During the current year, XYZ Company increased its variable SG&A expenses while keeping fixedSG&A expenses the same. As a result, XYZ’s:a. Contribution margin and gross margin will be lower.b. Contribution margin will be higher, while its gross margin will remain the same.c. Operating income will be the same under both the financial accounting income statement and contributionincome statement.d. Inventory amounts booked under the financial accounting income statement will be lower than underthe contribution income statement.3-18 Under the contribution income statement, a company’s contribution margin will be:a. Higher if fixed SG&A costs decrease.b. Higher if variable SG&A costs…
Choose the letter of answer: Bente Company, which pays a 10% commission to its salespeople, reported sales revenues of P210,000 for the period just ended. If fixed and variable sales expenses totaled P56,000, what would these expenses total at sales of a. P168,000?b. P16,800.c. P35,000.d. P44,800.e. P51,800.
3-47 CVP analysis, income taxes, sensitivity. (CMA, adapted) Thompson Engine Company manufacturesand sells diesel engines for use in small farming equipment. For its 2017 budget, Thompson Engine Companyestimates the following:Selling price $ 7,000Variable cost per engine $ 2,000Annual fixed costs $5,560,000Net income $ 900,000Income tax rate 40%The first-quarter income statement, as of March 31, reported that sales were not meeting expectations.During the first quarter, only 300 units had been sold at the current price of $7,000. The income statementshowed that variable and fixed costs were as planned, which meant that the 2017 annual net income projectionwould not be met unless management took action. A management committee was formed and presentedthe following mutually exclusive alternatives to the president:a. Reduce the selling price by 15%. The sales organization forecasts that at this significantly reducedprice, 1,400 units can be sold during the remainder of the year. Total…
Subject - Acounting Last month when Holiday Creations, Incorporated, sold 41,000 units, total sales were $164,000, total variable expenses were $137,760, and fixed expenses were $37,400. Required: 1. What is the company’s contribution margin (CM) ratio? 2. What is the estimated change in the company’s net operating income if it can increase sales volume by 450 units and total sales by $1,800? (Do not round intermediate calculations.)
Problem II. Omega Enterprises sells two products, Model E100 and F900. Monthly sales and the contribution margin ratios for the two products, follow: Product E100 F900 Total Sales P 700,000 P 300,000 P 1,000,000 Contribution margin ratio 60% 70% The Company’s fixed expenses total P598,500 per month. What is the company’s total contribution margin ratio? What is the company’s total net operating income? The break-even point for the company based on the current sales mix is ______.
Adams Furniture receives a special order for 10 sofas for a special price of $6,000. The direct materials and direct labor for each sofa are $140. In addition, supervision and other fixed overhead costs average $160 per sofa. Required: a1. What is the impact on operating income from accepting the special order? a2. Based solely on a short-term financial analysis, should Adams accept the special order? b1. If Adams is currently operating at full capacity, what would be the opportunity cost per unit for lost sales to regular customers if the special sales order is accepted and the selling price per unit on regular sales equals $900? b2. Based solely on a short-term financial analysis, should Adams accept the special order if it is currently operating at full capacity?
Zulfiqar Incorporation produces and sells a single product, has provided its contribution format income statement for April. Sales (1,500 units Rs. 1,500,0 Variable Expens 1,102,5 Contribution Marg 397,5 Fixed Co 272,9 Net Prof 124,5 Calculate the Break Even Sales in Rs. for Zulfiqar 50it50st00in00es00) a 50it50st00in00es00) I 50it50st00in00es00) n 50it50st00in00es00) c 50it50st00in00es00) o 50it50st00in00es00) r 50it50st00in00es00) p 50it50st00in00es00) o 50it50st00in00es00) r 50it50st00in00es00) a 50it50st00in00es00) t 50it50st00in00es00) i 50it50st00in00es00) o 50it50st00in00es00) n 50it50st00in00es00) or Zulfiqar Incorporation?
Biblio Files CompanyContribution Margin Income StatementFor the Year Ended December 31, 20Y8 Sales $379,000 Variable costs: Manufacturing expense $151,600 Selling expense 15,160 Administrative expense 60,640 (227,400) Contribution margin $151,600 Fixed costs: Manufacturing expense $76,750 Selling expense 8,000 Administrative expense 10,000 (94,750) Operating income $56,850 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 ofBookshelf Sales Priceper Unit Variable Costper 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…