Question 4Palladium (Pty) Ltd has given you the following information relating to normal (budgeted)information and its expected promotional information:Normal DataWeekly sales (units)Normal variable cost per unitContribution margin %Palladium (Pty) Ltd would like to boost the sales of its products and predicts that by applying apromotional discount of 20% to its product and incurring an additional fixed cost of R250 000, unit150 000RO,3080%will be 2 and a halfhigher than normal sales. Normal variable cost per nit is expectedto remain the same for the promotional period. The promotional period is expected to last six (6)weeks.REQUIRED:Q.4.1 Calculate the incremental profit (loss) that may arise from the promotion.

Concept of Cost ,Volume and Price shall be applied to determine the sales price per Unit…

Palladium (Pty) Ltd has given you the following information relating to normal (budgeted) information and its expected promotional information: Normal Data Weekly sales (units) Normal variable cost per unit Contribution margin % 150 000 R0,30 80% Palladium (Pty) Ltd would like to boost the sales of its products and predicts that by applying a

Palladium (Pty) Ltd has given you the following information relating to normal (budgeted) information and its expected promotional information: Normal Data Weekly sales (units) Normal variable cost per unit Contribution margin % 150 000 R0,30 80% Palladium (Pty) Ltd would like to boost the sales of its products and predicts that by applying a

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

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 56P: Contribution Margin Ratio, Break-Even Sales, Operating Leverage Elgart Company produces plastic...

See similar textbooks

Similar questions

Brief Exercise 3-28 Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period that Differs from the Data Period Refer to the information for Speedy Petes on the previous page. Assume that this information was used to construct the following formula for monthly delivery cost. TotalDeliveryCost=41,850+(12.00NumberofDeliveries) Required: Assume that 3,000 deliveries are budgeted for the coming year. Use the total delivery cost formula to make the following calculations: 1. Calculate total variable delivery cost for the coming year. 2. Calculate total fixed delivery cost for the year. 3. Calculate total delivery cost for the year. Use the following information for Brief Exercises 3-26 through 3-29: Speedy Petes is a small start-up company that delivers high-end coffee drinks to large metropolitan office buildings via a cutting-edge motorized coffee cart to compete with other premium coffee shops. Data for the past 8 months were collected as follows:
Jasmine Companys expected sales were 2,000 units at 100 per unit. During 20x1, it had actual sales of 1,800 units at 110 per unit. Budgeted variable costs were 60 per unit. What is Jasmines sales price variance? a. 8,000 (U) b. 20,000 (U) c. 18,000 (F) d. 2,000 (U)
Contribution Margin Ratio, Break-Even Sales, Operating Leverage Elgart Company produces plastic mailboxes. The projected income statement for the coming year follows: Required: 1. Compute the contribution margin ratio for the mailboxes. 2. How much revenue must Elgart earn in order to break even? 3. What is the effect on the contribution margin ratio if the unit selling price and unit variable cost each increase by 15%? 4. CONCEPTUAL CONNECTION Suppose that management has decided to give a 4% commission on all sales. The projected income statement does not reflect this commission. Recompute the contribution margin ratio, assuming that the commission will be paid. What effect does this have on the break-even point? 5. CONCEPTUAL CONNECTION If the commission is paid as described in Requirement 4, management expects sales revenues to increase by 80,000. How will this affect operating leverage? Is it a sound decision to implement the commission? Support your answer with appropriate computations.
Caribbean Hammocks currently sells 75.000 units at $50 per unit. Its expenses are: Management believes it can increase sales by 5,000 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 5,000 units. Prepare a flexible budgeted income statement for 75,000-, 80,000-, and 85,000-unit sales.
Cost-Volume-Profit, Margin of Safety Victoria Company produces a single product. Last years income statement is as follows: Required: 1. Compute the break-even point in units and sales dollars calculated using the break-even units. 2. What was the margin of safety for Victoria last year in sales dollars? 3. Suppose that Victoria is considering an investment in new technology that will increase fixed cost by 250,000 per year but will lower variable costs to 45% of sales. Units sold will remain unchanged. Prepare a budgeted income statement assuming that Victoria makes this investment. What is the new break-even point in sales dollars, assuming that the investment is made?
(Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30 minutes per unit. The budgeted conversion costs for the manufacturing cell are 2,700,000 per year. The total labor minutes available are 600,000. During the year, the cell was able to produce 1.5 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per unit (the amount of conversion cost actually assigned to the product). 3. CONCEPTUAL CONNECTION Discuss how this approach to assigning conversion costs can improve delivery time performance.
Variable Cost Ratio, Contribution Margin Ratio Chillmax Company plans to sell 3,500 pairs of shoes at 60 each in the coming year. Unit variable cost is 21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Fixed factory overhead is 30,000 and fixed selling and administrative expense is 48,000. Required: 1. Calculate the variable cost ratio. 2. Calculate the contribution margin ratio. 3. Prepare a contribution margin income statement based on the budgeted figures for next year. In a column next to the income statement, show the percentages based on sales for sales, total variable cost, and total contribution margin.
QUESTION 1 B Limited produces and sells the following three products: Product X Y Z Selling price per unit (N$) 16 20 10 Variable cost per unit(N$) 5 15 7 Contribution per unit(N$) 11 5 3 Budgeted Sales Volume (units) 50,000 10,000 100,000 The company expects the fixed costs to be N$300000, for the coming year. Assume that sales arise throughout the year in a constant mix. Required: (a) Draw a multiproduct profit volume chart assuming the budget is achieved.
Finance management PnA calculators. The following information was extracted from the budget for the yearended 31 December 2023: $Sales 10 400Selling price per calculator350Variable production cost per unit216Fixed production costs154 000Variable selling and administrative costs per unit29Fixed selling and administrative costs82 000 Calculate the following:a) Break-even quantityb) Break-even value using the marginal income ratioc) Margin of safety (in terms of units)d) Expected total marginal income and net profit
QUESTION2 A company manufactures a single product. Budget and Standard cost details for next year include: Selling Price per unit R24.00 Variable Production cost per unit R8.60 Fixed production costs R650 000 Fixed selling and distrivution costs R230 400 Sales commission 5% of selling price Sales 90 000 units Required 1. Calculate the break-even point in units 2. Calculate the breakeven point in rands 3. Calculate the percentage by which the budgeted sales can fall before The company begins to make a loss 4. The marketing manager has suggested that the selling price per unit can be increased to R25.00.If the sales…
Q10. A company has prepared the following budget for a given month: Product Selling Price (per unit) Variable Cost (per unit) Unit Sales A $10 $4 15k B $15 $9 21k C $19 $8 4k Assuming that total fixed expenses will be $150.9 and the sales mix remains constant, determine the firm’s dollar sales to break-even. Note: The term “k” is used to represent thousands (× $1,000).
QUESTION2 A company manufactures a single product. Budget and Standard cost details for next year include: Selling Price per unit R24.00 Variable Production cost per unit R8.60 Fixed production costs R650 000 Fixed selling and distribution costs R230 400 Sales commission 5% of selling price Sales 90 000 units Required The marketing manager has suggested that the selling price per unit can be increased to R25.00.If the sales commission is increased to 8% percent of selling price and a further R10 000 is speny on advertising Calculate the revised breakeven point based on the marketing managers suggestion