Required informationExercise 6-5 Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO6-4][The following information applies to the questions displayed below.]Data for Hermann Corporation are shown belowPer Unit$ 140Percent ofSales100%Selling priceVariable expenses9165Contribution margin$ 4935%Fixed expenses are $88,000 per month and the company is selling 3,000 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-qualitycomponents that increase the variable expense by $6 per unit and increase unit sales by 20%.2-b. Should the higher-quality components be used?Complete this question by entering your answers in the tabs below.Req 2AReq 2BShould the higher-quality components be used?OYesONO

The contribution margin income statement is prepared by deducting the amount of variable expenses…

Answered: Required information Exercise 6-5…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.2.4P

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Break-even sales under present and proposed conditions Kearney Company, operating at full capacity, sold 400,000 units at a price of $246.60 per unit during 20Y5. Its income statement for 20Y5 is as follows: The division of costs between fixed and variable is as follows: Management is considering a plant expansion program that will permit an increase of $8,631,000 (35.000 units at $246.60) in yearly sales. The expansion will increase fixed costs by $3,600,000 but will not affect the relationship between sales and variable costs. Instructions Determine for 20Y5 the total fixed costs and the total variable costs.
Exercise 6-5 Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO6-4] Skip to question [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 125 100 % Variable expenses 80 64 Contribution margin $ 45 36 % Fixed expenses are $85,000 per month and the company is selling 2,700 units per month. rev: 06_04_2020_QC_CS-205709, 06_18_2020_QC_CS-216765, 07_14_2020_QC_CS-216765 Exercise 6-5 Part 1 Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,000 and monthly sales increase by $20,000? 1-b. Should the advertising budget be increased?
E6.3 (LO 1), AP Barnes Company reports the following operating results for the month of August: sales $325,000 (units 5,000); variable costs $210,000; and fixed costs $75,000. Management is considering the following independent courses of action to increase net income. Increase selling price by 10% with no change in total variable costs or sales volume.Reduce variable costs to 58% of sales.Reduce fixed costs by $15,000.Instructions Compute the net income to be earned under each alternative. Which course of action will produce the highest net income? Compute break-even point and prepare CVP income statement.
8. You are More than a Grade (YMG) manufactured 10,000 units in the previous year. An excerpt from their financial statement has been provided below: o Sales Revenue $1,000,000 o Cost of Goods Sold ($400,000) o SG&A expenses ($100,000) o Operating income $500,000 Of the amounts reported on the financial statements, 20% of the cost of goods sold and 60% of the SG&A expenses are variable costs. What is the per unit variable cost? $5.00 unit variable cost $6.00 unit variable cost $14.00 unit variable cost $4.00 unit variable cost
Exercise 5-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO5-4] [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 105 100% Variable expenses 63 60 Contribution margin $ 42 40% Fixed expenses are $81,000 per month and the company is selling 3,800 units per month. Exercise 5-5 (Algo) Part 2 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $4 per unit and increase unit sales by 20%. 2-b. Should the higher-quality components be used?
(5) Stryker Industries received an offer from an exporter for 24,000 units of product at $17 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $21 Unit manufacturing costs: Variable 10 Fixed 3 What is the differential cost from the acceptance of the offer? a.$408,000 b.$240,000 c.$504,000 d.$72,000
Lee Gon Corporation has the following revenue and cost characteristics on their only product: Selling price per unit P6.00 Variable cost per unit P4.20 Annual fixed costs P360,000 Annual volume 270,000 units Required: For each of the following independent cases, determine the new contribution margin ratio, break-even point in pesos, and net profit. 5% increase in selling price 20% increase in variable costs 50% increase in fixed costs 5% increase in sales and production volume Decrease of P30,000 in fixed costs Decrease in variable costs of P0.20 Decrease in variable costs of P0.60 and 20% increase in selling price 20% decrease in fixed costs and 20% increase in variable cost. 9. Which among the various changes above will be the most beneficial to the company and which one will be the most detrimental? Justify your answer.
In 20A, Santos presented total variable costs at P687.50; total fixed costs at P6,750,000; sales price per unit P1,250; sold 20,000 units; tax rate at 40%. What is the maximum amount that can be spent on additional advertising at the sales level 22,000 units in 20B if an after tax net income P3,000,000 is desired. P500,000 P562,500 P625,000 None of the above
In 20A, Santos presented total variable costs at $687.50; total fixed costs at $6,750,000; sales price per unit $1,250; sold 20,000 units; tax rate at 40%. What is the required sales amount to equal 20A net income after tax if the company is the entity is to spend $562,500 in 20B? $22,250,000 $24,450,000 $26,250,000 None of the above
Q6 – B Hambar Co. has a unit selling price of $800, variable costs per unit of $520 and fixed costs of $420,000. The company’s sales units are 600,000 for this year. Instructions: a) Determine the contribution margin per unit. b) Using the contribution margin technique, compute the break-even point in units.
Page 4 NUBD Co.’s break-even sales are P528,000. The variable costs ratio to sales is 60%, while the net income percentage is 8%. Compute for the: a. Net income. b. Degree of operating leverage
EB5. 2.2 Baxter Company has a relevant range of production between 15,000 and 30,000 units. The following cost data represents average variable costs per unit for 25,000 units of production. Using the costs data from Rose Company, answer the following questions: Average Cost per Unit DM 10 DL 9 Indirect Materials 3 Fixed MOH 6 Variable MOH 2 Fixed S&A Expense 8 Variable Sales Commission 14 A. If 15,000 units are produced, what is the variable cost per unit? B. If 28,000 units are produced, what is the variable cost per unit? C. If 21,000 units are produced, what are the total variable costs? D. If 29,000 units are produced, what are the total variable costs? E. If 17,000 units are produced, what are the total manufacturing overhead costs incurred? F. If 23,000 units are produced, what are the total manufacturing overhead costs incurred? G. If 30,000 units are produced, what are the per unit…

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