QUESTION 3. Sport Caps Co. manufactures and sells caps for different sporting events. The fixed costs of operating the company are Sl50,000 per month, and the variable costs for caps are $5 per unit. The caps are sold for $8 per unit. The fixed costs provide a production capacity of up to 100,000 caps per month. Required (1) Use the formulas in the chapter to compute the following: a. Contribution margin per cap. b. Break-even point in terms of the number of caps produced and sold. c. Amount of net income at 85,000 caps sold per month (ignore taxes). d. Amount of net income at 30,000 caps sold per month (ignore taxes). (2) Use the fornmulas in the chapter to compute the a. Contribution margin ratio. b. Break-even point in terms of sales dollars. c. Dollars of sales needed to provide $45,000 of profit. d. Amount of net income at S600,000 of sales per month (ignore taxes).

QUESTION 3. Sport Caps Co. manufactures and sells caps for different sporting events. The fixed costs of operating the company are Sl50,000 per month, and the variable costs for caps are $5 per unit. The caps are sold for $8 per unit. The fixed costs provide a production capacity of up to 100,000 caps per month. Required (1) Use the formulas in the chapter to compute the following: a. Contribution margin per cap. b. Break-even point in terms of the number of caps produced and sold. c. Amount of net income at 85,000 caps sold per month (ignore taxes). d. Amount of net income at 30,000 caps sold per month (ignore taxes). (2) Use the fornmulas in the chapter to compute the a. Contribution margin ratio. b. Break-even point in terms of sales dollars. c. Dollars of sales needed to provide $45,000 of profit. d. Amount of net income at S600,000 of sales per month (ignore taxes).

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10E: Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22...

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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.)
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.
Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
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Sport Caps Co. manufactures and sells caps for different sporting events. The fixed costs of operating the company are $150,000 per month, and variable costs are $5 per cap. The caps are sold for $8 per unit. The production capacity is 100,000 caps per month. Required 1. Use the formulas in the chapter to compute the following: a. Contribution margin per cap. b. Break-even point in terms of the number of caps produced and sold. c. Amount of income at 30,000 caps sold per month (ignore taxes). d. Amount of income at 85,000 caps sold per month (ignore taxes). e. Number of caps to be produced and sold to provide $60,000 of income (pretax). 2. Draw a CVP chart for the company, showing cap output on the horizontal axis. Identify (a) the breakeven point and (b) the amount of pretax income when the level of cap production is 70,000. 3. Use the formulas in the chapter to compute the a. Contribution margin ratio. b. Break-even point in terms of sales dollars. c. Amount of income at $250,000 of…
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