Bundle: Financial & Managerial Accounting, Loose-leaf Version, 13th + CengageNOWv2, 1 term (6 months) Printed Access Card Corporate Financial ... Access Card for Managerial Accounting, 13th
13th Edition
ISBN: 9781305781429
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 19, Problem 19.2BPR
1.
To determine
Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:
the total fixed costs and the total variable costs for the current year.
2(A)
To determine
the unit variable cost for the current year.
3.
To determine
To compute: the break-even sales (units) for the current year.
4.
To determine
To compute: the break-even sales (units) under the proposed program for the following year.
5.
To determine
the amount of sales (units) if the company desires a target profit of $692,500.
6.
To determine
the maximum income from operations possible with the expanded plant.
7.
To determine
the income or loss from operations for the following year if the proposal is accepted and the sales remains same.
8.
To determine
To explain: whether to recommend for accepting the proposal.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Break-Even Sales Under Present and Proposed Conditions
Darby Company, operating at full capacity, sold 135,300 units at a price of $72 per unit during the current year. Its income statement is as follows:
Sales
$9,741,600
Cost of goods sold
3,456,000
Gross profit
$6,285,600
Expenses:
Selling expenses
$1,728,000
Administrative expenses 1,032,000
Total expenses
2,760,000
Income from operations
$3,525,600
The division of costs between variable and fixed is as follows:
Variable
Fixed
Cost of goods sold
60%
40%
Selling expenses
50%
50%
Administrative
30%
70%
expenses
Management is considering a plant expansion program for the following year that will permit an increase of $792,000 in yearly sales. The expansion will increase fixed costs by $105,600, but will not affect the relationship between sales and variable costs.
Required:
1. Determine the total variable costs and the total fixed costs for the aurrent year.
Total variable costs
Total fixed costs
2. Determine (a) the unit variable cost…
Break-Even Sales Under Present and Proposed Conditions
Darby Company, operating at full capacity, sold 124,200 units at a price of $84 per unit during the current year. Its income statement is as follows:
Sales
$10,432,800
Cost of goods sold
3,696,000
Gross profit
$6,736,800
Expenses:
Selling expenses
$1,848,000
Administrative expenses
1,120,000
Total expenses
2,968,000
Income from operations
$3,768,800
The division of costs between variable and fixed is as follows:
Variable
Fixed
Cost of goods sold
60%
40%
Selling expenses
50%
50%
Administrative expenses
30%
70%
Management is considering a plant expansion program for the following year that will permit an increase of $924,000 in yearly sales. The expansion will increase fixed costs by $123,200, but will not affect the relationship between sales and variable costs.
Required:
7. If the proposal is accepted and sales remain at the current level, what will…
Break-Even Sales Under Present and Proposed Conditions
Darby Company, operating at full capacity, sold 124,200 units at a price of $84 per unit during the current year. Its income statement is as follows:
Sales
$10,432,800
Cost of goods sold
3,696,000
Gross profit
$6,736,800
Expenses:
Selling expenses
$1,848,000
Administrative expenses
1,120,000
Total expenses
2,968,000
Income from operations
$3,768,800
The division of costs between variable and fixed is as follows:
Variable
Fixed
Cost of goods sold
60%
40%
Selling expenses
50%
50%
Administrative expenses
30%
70%
Management is considering a plant expansion program for the following year that will permit an increase of $924,000 in yearly sales. The expansion will increase fixed costs by $123,200, but will not affect the relationship between sales and variable costs.
4. Compute the break-even sales (units) under the proposed program for the following…
Chapter 19 Solutions
Bundle: Financial & Managerial Accounting, Loose-leaf Version, 13th + CengageNOWv2, 1 term (6 months) Printed Access Card Corporate Financial ... Access Card for Managerial Accounting, 13th
Ch. 19 - Describe how total variable costs and unit...Ch. 19 - Which of the following costs would be classified...Ch. 19 - Describe how total fixed costs and unit fixed...Ch. 19 - In applying the high-low method of cost estimation...Ch. 19 - If fixed costs increase, what would be the impact...Ch. 19 - Prob. 6DQCh. 19 - If the unit cost of direct materials is decreased,...Ch. 19 - Both Austin Company and Hill Company had the same...Ch. 19 - Prob. 9DQCh. 19 - Prob. 10DQ
Ch. 19 - High-low method The manufacturing costs of...Ch. 19 - Prob. 19.1BPECh. 19 - Prob. 19.2APECh. 19 - Prob. 19.2BPECh. 19 - Prob. 19.3APECh. 19 - Prob. 19.3BPECh. 19 - Prob. 19.4APECh. 19 - Prob. 19.4BPECh. 19 - Sales mix and break-even analysis Wide Open...Ch. 19 - Prob. 19.5BPECh. 19 - Operating leverage SungSam Enterprises reports the...Ch. 19 - Prob. 19.6BPECh. 19 - Prob. 19.7APECh. 19 - Prob. 19.7BPECh. 19 - Classify costs Following is a list of various...Ch. 19 - Identify cost graphs The following cost graphs...Ch. 19 - Prob. 19.3EXCh. 19 - Identify activity bases From the following list of...Ch. 19 - Identify fixed and variable costs Intuit Inc....Ch. 19 - Prob. 19.6EXCh. 19 - High-low method Diamond Inc. has decided to use...Ch. 19 - High-low method for a service company Boston...Ch. 19 - Contribution margin ratio a. Segar Company budgets...Ch. 19 - Contribution margin and contribution margin ratio...Ch. 19 - Prob. 19.11EXCh. 19 - Prob. 19.12EXCh. 19 - Prob. 19.13EXCh. 19 - Prob. 19.14EXCh. 19 - Prob. 19.15EXCh. 19 - Break even analysis for a service company Sprint...Ch. 19 - Prob. 19.17EXCh. 19 - Prob. 19.18EXCh. 19 - Prob. 19.19EXCh. 19 - Prob. 19.20EXCh. 19 - Prob. 19.21EXCh. 19 - Break-even sales and sales mix for a service...Ch. 19 - Margin of safety A. If Canace Company, with a...Ch. 19 - Prob. 19.24EXCh. 19 - Operating leverage Beck Inc. and Bryant Inc. have...Ch. 19 - Prob. 19.26EXCh. 19 - Variable costing income statement On July 31,...Ch. 19 - Absorption costing income statement On June 30,...Ch. 19 - Classify costs Seymour Clothing Co. manufactures a...Ch. 19 - Break-even sales under present and proposed...Ch. 19 - Prob. 19.3APRCh. 19 - Prob. 19.4APRCh. 19 - Prob. 19.5APRCh. 19 - Contribution margin, break-even sales,...Ch. 19 - Classify costs Cromwell Furniture Company...Ch. 19 - Prob. 19.2BPRCh. 19 - Break even sales and cost-volume-profit chart For...Ch. 19 - Prob. 19.4BPRCh. 19 - Sales mix and break even sales Data related to the...Ch. 19 - Prob. 19.6BPRCh. 19 - Prob. 19.1CPCh. 19 - Break-even analysis Somerset Inc. has finished a...Ch. 19 - Prob. 19.4CPCh. 19 - Prob. 19.5CP
Knowledge Booster
Similar questions
- Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 114,800 units at a price of $108 per unit during the current year. Its income statement is as follows: Sales $12,398,400 Cost of goods sold 4,392,000 Gross profit $8,006,400 Expenses: Selling expenses $2,196,000 Administrative expenses 1,332,000 Total expenses 3,528,000 Income from operations $4,478,400 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $972,000 in yearly sales. The expansion will increase fixed costs by $129,600, but will not affect the relationship between sales and variable costs. 4. Compute the break-even sales (units) under the proposed program for the following…arrow_forwardBreak-even sales under present and proposed conditions Howard Industries Inc., operating at full capacity, sold 64,000 units at a price of $45 per unit during the current year. Its income statement is as follows: Line Item Description Amount Amount Sales $2,880,000 Cost of goods sold (1,400,000) Gross profit $1,480,000 Expenses: Selling expenses $400,000 Administrative expenses 387,500 Total expenses (787,500) Operating income $692,500 The division of costs between variable and fixed is as follows: Line Item Description Variable Fixed Cost of goods sold 75% 25% Selling expenses 60% 40% Administrative expenses 80% 20% Management is considering a plant expansion program for the following year that will permit an increase of $900,000 in yearly sales. The expansion will increase fixed costs by $212,500 but will not affect the relationship between sales and variable costs. Required: 6. Determine the maximum operating…arrow_forwardBreak-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 103,400 units at a price of $120 per unit during the current year. Its income statement is as follows: Sales $12,408,000 Cost of goods sold 4,400,000 Gross profit $8,008,000 Expenses: Selling expenses $2,200,000 Administrative expenses 1,320,000 Total expenses 3,520,000 Income from operations $4,488,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $960,000 in yearly sales. The expansion will increase fixed costs by $128,000, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current…arrow_forward
- Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 143,000 units at a price of $111 per unit during the current year. Its income statement is as follows: Sales Cost of goods sold $15,873,000 5,624,000 Gross profit Expenses: Selling expenses $2,812,000 Administrative expenses 1,702,000 Total expenses $10,249,000 4,514,000 $5,735,000 Income from operations The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative 30% 70% expenses Management is considering a plant expansion program for the following year that will permit an increase of $1,443,000 in yearly sales. The expansion will increase fixed costs by $192,400, but will not affect the relationship between sales and variable costs. Required: 5. Determine the amount of sales (units) that would be 1. Determine the total variable costs and the total fixed costs for the current ye that was earned in…arrow_forwardBreak-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 161,800 units at a price of $132 per unit during the current year. Its income statement is as follows: Sales $21,357,600 Cost of goods sold 7,568,000 Gross profit $13,789,600 Expenses: Selling expenses $3,784,000 Administrative expenses 2,288,000 Total expenses 6,072,000 Income from operations $7,717,600 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $1,980,000 in yearly sales. The expansion will increase fixed costs by $264,000, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the…arrow_forwardBreak-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 143,000 units at a price of $102 per unit during the current year. Its income statement is as follows: Sales $14,586,000 Cost of goods sold 5,168,000 Gross profit $9,418,000 Expenses: Selling expenses $2,584,000 Administrative expenses 1,564,000 Total expenses 4,148,000 Income from operations $5,270,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $1,326,000 in yearly sales. The expansion will increase fixed costs by $176,800, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current…arrow_forward
- Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 127,900 units at a price of $51 per unit during the current year. Its income statement is as follows: Sales $6,522,900 Cost of goods sold 2,312,000 Gross profit $4,210,900 Expenses: Selling expenses $1,156,000 Administrative expenses 697,000 Total expenses 1,853,000 Income from operations $2,357,900 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $510,000 in yearly sales. The expansion will increase fixed costs by $68,000, but will not affect the relationship between sales and variable costs. Required: Compute the break-even sales (units) under the proposed program for the following…arrow_forwardBreak-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 127,900 units at a price of $51 per unit during the current year. Its income statement is as follows: Sales $6,522,900 Cost of goods sold 2,312,000 Gross profit $4,210,900 Expenses: Selling expenses $1,156,000 Administrative expenses 697,000 Total expenses 1,853,000 Income from operations $2,357,900 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $510,000 in yearly sales. The expansion will increase fixed costs by $68,000, but will not affect the relationship between sales and variable costs. Required:arrow_forwardBreak-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 112,800 units at a price of $81 per unit during the current year. Its income statement is as follows: Sales $9,136,800 Cost of goods sold 3,240,000 Gross profit $5,896,800 Expenses: Selling expenses $1,620,000 Administrative expenses 972,000 Total expenses 2,592,000 Income from operations $3,304,800 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $810,000 in yearly sales. The expansion will increase fixed costs by $108,000, but will not affect the relationship between sales and variable costs. 5. Determine the amount of sales (units) that would be necessary under the proposed program to…arrow_forward
- Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 112,800 units at a price of $81 per unit during the current year. Its income statement is as follows: Sales $9,136,800 Cost of goods sold 3,240,000 Gross profit $5,896,800 Expenses: Selling expenses $1,620,000 Administrative expenses 972,000 Total expenses 2,592,000 Income from operations $3,304,800 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $810,000 in yearly sales. The expansion will increase fixed costs by $108,000, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current…arrow_forwardBreak-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 152,400 units at a price of $120 per unit during the current year. Its income statement is as follows: Sales $18,288,000 Cost of goods sold 6,480,000 Gross profit $11,808,000 Expenses: Selling expenses $3,240,000 Administrative expenses 1,960,000 Total expenses 5,200,000 Income from operations $6,608,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $1,440,000 in yearly sales. The expansion will increase fixed costs by $192,000, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the…arrow_forwardBreak-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 169,200 units at a price of $90 per unit during the current year. Its income statement is as follows: Sales $15,228,000 Cost of goods sold 5,400,000 Gross profit $9,828,000 Expenses: Selling expenses $2,700,000 Administrative expenses 1,620,000 Total expenses 4,320,000 Income from operations $5,508,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative 30% 70% expenses Management is considering a plant expansion program for the following year that will permit an increase of $1,350,000 in yearly sales. The expansion will increase fixed costs by $180,000, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs Total fixed costs 2. Determine (a) the unit variable…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,