Preston Services offers ax and consulting services to individuals and small businesses. Data for fees and costs of three types of tax returns follows. Preston provides services in the ratio of 4:4:2 (easy, moderate, business). Fixed Costs total 20,000 for the tax season. Use this information to determine the following; 1) Selling price per composite unit 2) Variable Costs per compsite unit

Preston Services offers ax and consulting services to individuals and small businesses. Data for fees and costs of three types of tax returns follows. Preston provides services in the ratio of 4:4:2 (easy, moderate, business). Fixed Costs total 20,000 for the tax season. Use this information to determine the following; 1) Selling price per composite unit 2) Variable Costs per compsite unit

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 18E

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Gwen is the managerial accountant in charge of Company A, which sellswater bottles. She previously determined that the fixed costs of Company A consist ofproperty taxes, a lease, and executive salaries, which add up to P500,000. Thevariable cost associated with producing one water bottle is P80 per unit. The waterbottle is sold at a premium price of P500. a. Formulate the total cost function.b. Formulate the revenue function.c. Formulate the profit function.d. Determine the breakeven quantity and the breakeven sales.e. Use the graphical method to determine the breakeven point.
Gwen is the managerial accountant in charge of Company A, which sellswater bottles. She previously determined that the fixed costs of Company A consist ofproperty taxes, a lease, and executive salaries, which add up to P500,000. Thevariable cost associated with producing one water bottle is P80 per unit. The waterbottle is sold at a premium price of P500. d. Determine the breakeven quantity and the breakeven sales.e. Use the graphical method to determine the breakeven point.
Ionic Charge is a newly organized manufacturing business that plans to manufacture and sell 60,000 units per year of a new product. The following estimates have been made of the company's costs and expenses (other than income tax) Fixed Variable per unit Manufacturing costs Direct materials $25 Direct Labor 15 Manufacturing overhead $500,000 8 Period costs Selling expenses 2 Adminstrative expenses 300,000 Totals $800,000 $50 A. What should the company establish as the sales price per unit if it sets a target of earning an operating income of $700,000 by producing and selling 60,000 units during the first year of operations, B. At the unit sales price computed in Part A, how many units must the company produce and sell to break even? C. What will be the margin of safety if the comapny produces and sells 60,000 units at the sales price computed in part A.
A company manufactures a single product with a selling price of ₱180. Fixed expenses total ₱750,000 and the company must sell 15,000 units to breakeven. Tax rate is 25%. If the target profit after tax is ₱350,000, how many units must be sold? A company manufactures a single product with a selling price of ₱180. Fixed expenses total ₱750,000 and the company must sell 15,000 units to breakeven. Tax rate is 25%. If the target profit after tax is ₱350,000, how many units must be sold?