Please I want to learn how to make these problems with a good explanation. One of those there is the possible answer.Thank you Trenton Company is a small but growing manufacturer of telecommunications equipment. Their manufacturing overneadCosts are all fixed. The cost structure of all expenses are inflexible, except sales force cost. The company has no salesforce of its own at the moment; it relies completely on independent sales agents to market its products. The sales agentsare compensated as follows:Commission rate20% of salesTotal fixed marketing expense2$260Jane Petersen, Trenton's controller, has just prepared the company's budgeted income statement for 2021 underthe current plan for salesforce. She also made some notes. The statement follows:Trenton CompanyBudgeted Income StatementFor 2021NotesSales$ 20,200100%Direct materials2,02010%Direct labor3,0302,94015%Fixed manufacturing overheadMarketing expenseNet operating income (before tax)4,30020%+$260$47,91013Trenton is considering starting its own marketing department. The sales people will receive a 10% commission with afixed salary of $2460. Is this a good idea? What is the impact on their net operating income, if everything else stays thesame.A. It is a good idea because their NOI will increase by $30.B. It is a good idea because their NOI will increase by $100.C. It is a bad idea because their NOI will decrease by $180.D. It is a bad idea because their NOI will decrease by $50.E. None of the above14 Trenton would like to increase their income, in particular their after-tax income. Assume that they are still usingindependent sales agents.Tax rate30%Desired after-tax income$ 7,000How much more revenue does Trenton have to generate to achieve the desired after-tax income?А.$1,902В.$43,800С.%245,537D.242,090E. None of the above

Note:dear student as per the bartleby guideline we are required to solve the first question only .…

Trenton Company is a small but growing manufacturer of telecommunications equipment. Their manufacturing overhead costs are all fixed. The cost structure of all expenses are inflexible, except sales force cost. The company has no sares force of its own at the moment; it relies completely on independent sales agents to market its products. The sales agents are compensated as follows: Commission rate 20% of sales Total fixed marketing expense 2$ 260 Jane Petersen, Trenton's controller, has just prepared the company's budgeted income statement for 2021 under the current nlan for coloofougg Ch

Trenton Company is a small but growing manufacturer of telecommunications equipment. Their manufacturing overhead costs are all fixed. The cost structure of all expenses are inflexible, except sales force cost. The company has no sares force of its own at the moment; it relies completely on independent sales agents to market its products. The sales agents are compensated as follows: Commission rate 20% of sales Total fixed marketing expense 2$ 260 Jane Petersen, Trenton's controller, has just prepared the company's budgeted income statement for 2021 under the current nlan for coloofougg Ch

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8PA: Jakarta Company is a service firm with current service revenue of $400,000 and a 40% contribution...

See similar textbooks

Similar questions

Variety Artisans has a bottleneck in their production that occurs within the engraving department. Arjun Naipul, the COO, is considering hiring an extra worker, whose salary will be $45,000 per year, to solve the problem. With this extra worker, the company could produce and sell 3,500 more units per year. Currently, the selling price per unit is $18 and the cost per unit is $5.85. Using the information provided, calculate the annual financial impact of hiring the extra worker.
Shannon, Inc., has two divisions. One produces and sells paper party supplies (napkins, paper plates, invitations); the other produces and sells cookware. A segmented income statement for the most recent quarter is given below: On seeing the quarterly statement, Madge Shannon, president of Shannon, Inc., was distressed and discussed her disappointment with Bob Ferguson, the companys vice president of finance. MADGE: The Party Supplies Division is killing us. Its not even covering its own fixed costs. Im beginning to believe that we should shut down that division. This is the seventh consecutive quarter it has failed to provide a positive segment margin. I was certain that Paula Kelly could turn it around. But this is her third quarter, and she hasnt done much better than the previous divisional manager. BOB: Well, before you get too excited about the situation, perhaps you should evaluate Paulas most recent proposals. She wants to spend 10,000 per quarter for the right to use familiar cartoon figures on a new series of invitations, plates, and napkins and at the same time increase the advertising budget by 25,000 per quarter to let the public know about them. According to her marketing people, sales should increase by 10 percent if the right advertising is doneand done quickly. In addition, Paula wants to lease some new production machinery that will increase the rate of production, lower labor costs, and result in less waste of materials. Paula claims that variable costs will be reduced by 30 percent. The cost of the lease is 95,000 per quarter. Upon hearing this news, Madge calmed considerably and, in fact, was somewhat pleased. After all, she was the one who had selected Paula and had a great deal of confidence in Paulas judgment and abilities. Required: 1. Assuming that Paulas proposals are sound, should Madge Shannon be pleased with the prospects for the Party Supplies Division? Prepare a segmented income statement for the next quarter that reflects the implementation of Paulas proposals. Assume that the Cookware Divisions sales increase by 5 percent for the next quarter and that the same cost relationships hold. 2. Suppose that everything materializes as Paula projected except for the 10 percent increase in salesno change in sales revenues takes place. Are the proposals still sound? What if the variable costs are reduced by 40 percent instead of 30 percent with no change in sales?
Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of 1,350 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of 900 per unit. a. If a transfer price of 1,000 per unit is established and 75,000 units of materials are transferred, with no reduction in the Components Divisions current sales, how much would Ziegler Inc.s total operating income increase? b. How much would the Instrument Divisions operating income increase? c. How much would the Components Divisions operating income increase?
Mallorys Video Supply has changed its focus tremendously and as a result has dropped the selling price of DVD players from $45 to $38. Some units in the work-in-process inventory have costs of $30 per unit associated with them, but Mallory can only sell these units in their current state for $22 each. Otherwise, it will cost Mallory $11 per unit to rework these units so that they can be sold for $38 each. How much is the financial impact if the units are processed further? A. $5 per unit profit 8. $16 per unit profit C. $3 per unit loss D. $12 per unit loss
Jakarta Company is a service firm with current service revenue of $400,000 and a 40% contribution margin. Its fixed costs are $80,000. Maldives Company has current sales of $6,610,000 and a 45% contribution margin. Its fixed costs are $1,800,000. What is the margin of safety for jaka rta and Maldives? Compare the margin of safety in dollars between the two companies. Which is stronger? Compare the margin of safety in percentage between the two companies. Now, which one is stronger? Compute the degree of operating leverage for both companies. Which company will benefit most from a 15% increase in sales? Explain why. Illustrate your findings in an Income Statement that is increased by 15%.
Danna Martin, president of Mays Electronics, was concerned about the end-of-the year marketing report that she had just received. According to Larry Savage, marketing manager, a price decrease for the coming year was again needed to maintain the companys annual sales volume of integrated circuit boards (CBs). This would make a bad situation worse. The current selling price of 18 per unit was producing a 2-per-unit profithalf the customary 4-per-unit profit. Foreign competitors kept reducing their prices. To match the latest reduction would reduce the price from 18 to 14. This would put the price below the cost to produce and sell it. How could these firms sell for such a low price? Determined to find out if there were problems with the companys operations, Danna decided to hire a consultant to evaluate the way in which the CBs were produced and sold. After two weeks, the consultant had identified the following activities and costs: The consultant indicated that some preliminary activity analysis shows that per-unit costs can be reduced by at least 7. Since the marketing manager had indicated that the market share (sales volume) for the boards could be increased by 50% if the price could be reduced to 12, Danna became quite excited. Required: 1. CONCEPTUAL CONNECTION What is activity-based management? What phases of activity analysis did the consultant provide? What else remains to be done? 2. CONCEPTUAL CONNECTION Identify as many nonvalue-added costs as possible. Compute the cost savings per unit that would be realized if these costs were eliminated. Was the consultant correct in the preliminary cost reduction assessment? Discuss actions that the company can take to reduce or eliminate the nonvalue-added activities. 3. Compute the unit cost required to maintain current market share, while earning a profit of 4 per unit. Now compute the unit cost required to expand sales by 50%, assuming a per-unit profit of 4. How much cost reduction would be required to achieve each unit cost? 4. Assume that further activity analysis revealed the following: switching to automated insertion would save 60,000 of engineering support and 90,000 of direct labor. Now, what is the total potential cost reduction per unit available from activity analysis? With these additional reductions, can Mays achieve the unit cost to maintain current sales? To increase it by 50%? What form of activity analysis is this: reduction, sharing, elimination, or selection? 5. CONCEPTUAL CONNECTION Calculate income based on current sales, prices, and costs. Then calculate the income by using a 14 price and a 12 price, assuming that the maximum cost reduction possible is achieved (including Requirement 4s reduction). What price should be selected?
Feinan Sports, Inc., manufactures sporting equipment, including weight-lifting gloves. A national sporting goods chain recently submitted a special order for 4,600 pairs of weight-lifting gloves. Feinan Sports was not operating at capacity and could use the extra business. Unfortunately, the orders offering price of 12.80 per pair was below the cost to produce them. The controller was opposed to taking a loss on the deal. However, the personnel manager argued in favor of accepting the order even though a loss would be incurred; it would avoid the problem of layoffs and would help maintain the community image of the company. The full cost to produce a pair of weight-lifting gloves is presented below. No variable selling or administrative expenses would be associated with the order. Non-unit-level activity costs are a small percentage of total costs and are therefore not considered. Required: 1. Assume that the company would accept the order only if it increased total profits. Should the company accept or reject the order? Provide supporting computations. 2. Suppose that Feinan Sports has negotiated with the potential customer, and has determined that it can substitute cheaper materials, reducing direct materials cost by 0.95 per unit. In addition, the companys engineers have found a way to reduce direct labor cost by 0.50 per unit. Should the company accept or reject the order? Provide supporting computations. 3. Consider the personnel managers concerns. Discuss the merits of accepting the order even if it decreases total profits.
Kimball Company has developed the following cost formulas: Materialusage:Ym=80X;r=0.95Laborusage(direct):Yl=20X;r=0.96Overheadactivity:Yo=350,000+100X;r=0.75Sellingactivity:Ys=50,000+10X;r=0.93 where X=Directlaborhours The company has a policy of producing on demand and keeps very little, if any, finished goods inventory (thus, units produced equals units sold). Each unit uses one direct labor hour for production. The president of Kimball Company has recently implemented a policy that any special orders will be accepted if they cover the costs that the orders cause. This policy was implemented because Kimballs industry is in a recession and the company is producing well below capacity (and expects to continue doing so for the coming year). The president is willing to accept orders that minimally cover their variable costs so that the company can keep its employees and avoid layoffs. Also, any orders above variable costs will increase overall profitability of the company. Required: 1. Compute the total unit variable cost. Suppose that Kimball has an opportunity to accept an order for 20,000 units at 220 per unit. Should Kimball accept the order? (The order would not displace any of Kimballs regular orders.) 2. Explain the significance of the coefficient of correlation measures for the cost formulas. Did these measures have a bearing on your answer in Requirement 1? Should they have a bearing? Why or why not? 3. Suppose that a multiple regression equation is developed for overhead costs: Y = 100,000 + 100X1 + 5,000X2 + 300X3, where X1 = direct labor hours, X2 = number of setups, and X3 = engineering hours. The coefficient of determination for the equation is 0.94. Assume that the order of 20,000 units requires 12 setups and 600 engineering hours. Given this new information, should the company accept the special order referred to in Requirement 1? Is there any other information about cost behavior that you would like to have? Explain.
Barkov Bakeries produces deluxe muffins in its manufacturing facility in Florida. Data concerning these products appear below. Cornbread Blueberry Plain Normal annual sales volume 200,000 300,000 500,000 Unit selling price $ 2.50 $ 3.00 $ 2.00 Variable cost per unit $ 1.80 $ 2.00 $ 1.40 Total fixed expenses for the entire company are $2,500,000 per year. All three products are sold in highly competitive markets, so the company is unable to raise its prices without losing unacceptable numbers of customers. The company has no work in process or finished goods inventories due to an extremely effective just-in-time manufacturing system.…
Cotton Corp. currently makes 12,500 subcomponents a year in one of its factories. The unit costs to produce are: Per unit Direct materials $ 24.00 Direct labor 20.00 Variable manufacturing overhead 19.00 Fixed manufacturing overhead 9.00 Total unit cost $ 72.00 An outside supplier has offered to provide Cotton Corp. with the 12,500 subcomponents at an $76.00 per unit price. Fixed overhead is not avoidable. If Cotton Corp. accepts the outside offer, what will be the effect on short-term profits? Multiple Choice no change $78,750 increase $112,500 increase $162,500 decrease
Because Lanisha Motors operates in a very competitive environment, it is essential for the management team to understand its cost structure and how it affects the company's profitability. For one of the key products, Lanisha notes a selling price of $12 and a variable cost of $4 per unit, fixed costs associated with this product line are $20,000. Lanisha Motors is subject to a tax rate of 25%. If Lanisha wants to generate operating income of $10,000, how many units of this product must be sold? How many must be sold to generate $12,000 of after-tax income?
Premium Beds is a retailer of luxury bed frames located in Los Angeles, California. Due to a recent industry-wide financial crisis, the CFO of Premium Beds fears a significant drop in the firm's upcoming income stream. The CFO asked you to use the company financial information provided below. Sales price per unit $ 3,000.00 Per-unit variable costs: Invoice cost 2,218.80 Sales commissions 281.20 Total per-unit variable costs $ 2,500.00 Total annual fixed costs: Advertising $ 236,000 Rent 178,000 Salaries 386,000 Total annual fixed costs $ 800,000 The annual breakeven point in dollars is: $4,800,000. $4,500,000. $4,100,000. $4,600,000. $4,300,000.