Bundle: Financial & Managerial Accounting, Loose-leaf Version, 14th + Working Papers For Warren/reeve/duchac's Corporate Financial Accounting, 14th + ... Financial & Managerial Accounting,
14th Edition
ISBN: 9781337802000
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 19, Problem 19.4APR
1.
To determine
Cost-Volume-Profit Analysis: It is a method followed to analyze the relationship between the sales, costs, and the related profit or loss at various levels of units sold. In other words, it shows the effect of the changes in the cost and the sales volume on the operating income of the company.
To construct: a cost-volume-profit chart indicating the break-even sales for last year.
2(A)
To determine
The income from operations for last year
2(B)
To determine
The maximum income from operations realized during the year.
2(A)
To determine
To verify: the answers using the mathematical approach to cost-volume-profit analysis.
2(B)
To determine
the maximum income from operations that could have been realized during the year.
3.
To determine
To construct: a cost-volume-profit chart indicating the break-even sales for the current year.
4(A)
To determine
the income from operations for sales 2,000 units
4(B)
To determine
The maximum income from operations that could have been realized during the year.
4(A)
To determine
To verify: the answers using the mathematical approach to cost-volume-profit analysis.
4(B)
To determine
the maximum income from operations that could have been realized during the year.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Break-Even Sales and Cost-Volume-Profit Chart
Last year, Hever Inc. had sales of $500,000, based on a unit selling price of $250o. The variable cost per unit was $175, and fixed costs were $75,000. The maximum sales within Hever Inc.'s relevant range are
2,500 units. Hever Inc. is considering a proposal to spend an additional $33,750 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity.
Required:
1. Construct a cost-volume-profit chart on your own paper, indicating the break-even sales for last year.
Break-even sales
(dollars)
Break-even sales (units)
2. Using the cost-volume-profit chart prepared in part (1), determine (a) the operating income for last year and (b) the maximum operating income that could have been realized during the year.
Operating income
Maximum operating income
3. Construct a cost-volume-profit chart (on your own paper) indicating the break-even sales for the current year, assuming that a noncancellable…
Break-Even Sales and Cost-Volume-Profit Chart
Last year, Hever Inc. had sales of $167,400, based on a unit selling price of $90. The variable cost per unit was $70, and fixed costs were $25,800. The maximum sales within Hever's relevant range are 2,300 units. Hever Inc. is considering a proposal to spend an additional $8,000 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity.
Required:
1. Construct a cost-volume-profit chart on your own paper, indicating the break-even sales for last year. In your computations, do not round the contribution margin percentage.
Break-even sales (dollars)
Break-even sales (units)
2. Using the cost-volume-profit chart prepared in part (1), determine (a) the income from operations for last year and (b) the maximum income from operations that could have been realized during the year. In your computations, do not round the contribution margin percentage.
Income from operations…
Break-Even Sales and Cost-Volume-Profit Chart
Last year Hever Inc. had sales of $920,000, based on a unit selling price of $400. The variable cost per unit was $300, and fixed costs were $110,000. The maximum sales within Hever Inc.’s relevant range are 3,000 units. Hever Inc. is considering a proposal to spend an additional $45,000 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity.
Required:
1. Construct a cost-volume-profit chart on your own paper, indicating the break-even sales for last year. In your computations, do not round the contribution margin percentage.
Break-even sales (dollars)
Break-even sales (units)
2. Using the cost-volume-profit chart prepared in part (1), determine (a) the income from operations for last year and (b) the maximum income from operations that could have been realized during the year. In your computations, do not round the contribution margin percentage.
Income from operations…
Chapter 19 Solutions
Bundle: Financial & Managerial Accounting, Loose-leaf Version, 14th + Working Papers For Warren/reeve/duchac's Corporate Financial Accounting, 14th + ... Financial & Managerial Accounting,
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 - Contribution margin Lanning Company sells 160,000...Ch. 19 - Prob. 19.3BECh. 19 - Prob. 19.4BECh. 19 - Prob. 19.5BECh. 19 - Prob. 19.6BECh. 19 - Margin of safety Liu Company has sales of...Ch. 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 Ziegler Inc. has decided to use...Ch. 19 - High-low method for a service company Boston...Ch. 19 - Contribution margin ratio A. Young Company budgets...Ch. 19 - Contribution margin and contribution margin ratio...Ch. 19 - Prob. 19.11EXCh. 19 - Prob. 19.12EXCh. 19 - Break-even sales Currently, the unit selling price...Ch. 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 - 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. 1ADMCh. 19 - Break-even subscribers for a video service Star...Ch. 19 - Prob. 3ADMCh. 19 - Prob. 19.1TIFCh. 19 - Prob. 19.3TIF
Knowledge Booster
Similar questions
- Poleski Manufacturing, which maintains the same level of inventory at the end of each year, provided the following information about expenses anticipated for next year: The selling price of Poleskis single product is 16. In recent years, profits have fallen and Poleskis management is now considering a number of alternatives. Poleski wants to have a net income next year of 250,000, but expects to sell only 120,000 units unless some changes are made. The president of Poleski has asked you to calculate the companys projected net income (assuming 120,000 units are sold) and the sales needed to achieve the companys net income objective for next year. Also, compute Poleskis contribution margin per unit, contribution margin ratio, and break-even point for next year. The worksheet CVP has been provided to assist you. Note that the data from the problem have already been entered into the Data Section of the worksheet.arrow_forwardBreak-Even Sales and Cost-Volume-Profit Graph Last year, Ridgecrest Inc. had sales of $3,221,680, based on a unit selling price of $440. The variable cost per unit was $280, and fixed costs were $836,800. The maximum sales within Ridgecrest Inc.'s relevant range are 13,000 units. Ridgecrest Inc. is considering a proposal to spend an additional $168,000 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity. Using the cost-volume-profit graph prepared in part (1), determine (a) the operating income for last year and (b) the maximum operating income that could have been realized during the year. Operating income $ Maximum operating income $arrow_forwardLast year company A introduced a new product and sold 25,900 units at $97.00 per unit. The product variable expense $67.00 per unit with a fixed price expense of $835,500 per year. a. What is the product's net income or loss last year? b. What is the product break-even point in unit sales and dollar sales? c. Assume the company has conducted a market study that estimates it can increase sales by 5,000 units for each $2.00 reduction in its selling price. If the company would only consider increments of $2.00(e.g. $68,$66, etc) What is the maximum annual profit that can be earned on this product? What sales volume and selling price per unit generate the maximum profit? d. What would be the break-even point in unit sales and dollar sales using the selling price that was determined in the required letter c above? Thank you,arrow_forward
- Profit-Volume Chart For the coming year, Loudermilk Inc. anticipates fixed costs of $600,000, a unit variable cost of $75, and a unit selling price of $125. The maximum sales within the relevant range are $2,500,000. a. Determine the maximum possible operating loss. b. Compute the maximum possible operating profit. c. Construct a profit-volume chart on paper. Indicate whether each of the following levels of sales is in the operating profit area, operating loss area, or at the break-even point. 4,800 units 8,000 units 12,000 units 16,000 units 20,000 units d. Estimate the break-even sales (units) by using the profit-volume chart constructed in part (c). unitsarrow_forwardMusic Corporation recorded sales of $2,235,245 for the most recent year. The company's breakeven sales point (in dollars) is $1,650,000, and its margin of safety ratio (MOS%) at the current sales level is 26%. What sales (in dollars) would be needed to increase the company's MOS% to 38%? Multiple Choice $2,277,000. $2,661,290. $2,932,640. $3,024,050. $2,660,000.arrow_forwardMinden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each $2 reduction in the selling price. The company’s present selling price is $95 per unit, and variable expenses are $65 per unit. Fixed expenses are $835,800 per year. The present annual sales volume (at the $95 selling price) is 25,900 units. 3. Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit? 4. What would be the break-even point in unit sales and in dollar sales using the selling price you determined in (3) above (e.g., the selling price at the level of maximum profits)arrow_forward
- Following is the last year data of X company: Selling price Variable expenses per unit $40 unit $80 per Fixed expenses for the year $180,000 The company sold 45,000-unit last year. Managers of X company believes that the sales can be doubled when expenditure on advertising is increased by $1.50 per unit, keeping the selling price same as last year. Determine the amount by which advertising can be increased with profits remaining unchanged? a. $1,665,000 b. $1,800,000 c. $1,500,000 d. $1,660,000arrow_forwardLast year Minden Company introduced a new product and sold 15,500 units at a price of $74 per unit. The product's variable expenses are $44 per unit and its fixed expenses are $517,800 per year. Required: 1. What was this product's net operating income (loss) last year? 2. What is the product's break-even point in unit sales and dollar sales? 3. Assume the company conducted a marketing study that estimates it can increase annual sales of this product by 5,000 units for each $2 reduction in its selling price. If the company will only consider price reductions in increments of $2 (e.g., $72, $70, etc.), what is the maximum annual profit it can earn on this product? What sales volume and selling price per unit generate the maximum profit? 4. What would be the break-even point in unit sales and dollar sales using the selling price you calculated in requirement 3?arrow_forwardLast year Minden Company Introduced a new product and sold 25,100 units of It at a price of $95 per unit. The product's varlable expenses are $65 per unit and its fixed expenses are $835,500 per year. Required: 1. What was this product's net operating Income (loss) last year? 2 What Is the product's break-even polnt in unit sales and dollar sales? 3. Assume the company has conducted a marketing study that estimates It can Increase annual sales of this product by 5.000 units for each $2 reduction In Its selling price. If the company will only consider price reductions in Increments of $2 (e.g. $68. $6, etc.). what is the maximum annual profit that It can earn on this product? What sales volume and selling price per unit generate the maximum profit? 4. What would be the break-even polnt In unit sales and In dollar sales using the selling price that you determined In requirement 3? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required…arrow_forward
- Last year Minden Company introduced a new product and sold 25,500 units of it at a price of $99 per unit. The product's variable expenses are $69 per unit and its fixed expenses are $836,400 per year. Required: 1. What was this product's net operating income (loss) last year? 2. What is the product's break-even point in unit sales and dollar sales? 3. Assume the company has conducted a marketing study that estimates it can increase annual sales of this product by 5,000 units for each $2 reduction in its selling price. If the company will only consider price reductions in increments of $2 (e.g., $68, $66, etc.), what is the maximum annual profit that it can earn on this product? What sales volume and selling price per unit generate the maximum profit? 4. What would be the break-even point in unit sales and in dollar sales using the selling price that you determined in requirement 3? subpart number 4arrow_forwardLast year Minden Company introduced a new product and sold 25,500 units of it at a price of $99 per unit. The product's variable expenses are $69 per unit and its fixed expenses are $836,400 per year. Required: 1. What was this product's net operating income (loss) last year? 2. What is the product's break-even point in unit sales and dollar sales? 3. Assume the company has conducted a marketing study that estimates it can increase annual sales of this product by 5,000 units for each $2 reduction in its selling price. If the company will only consider price reductions in increments of $2 (e.g., $68, $66, etc.), what is the maximum annual profit that it can earn on this product? What sales volume and selling price per unit generate the maximum profit? 4. What would be the break-even point in unit sales and in dollar sales using the selling price that you determined in requirement 3?arrow_forwardLast year Minden Company introduced a new product and sold 25,800 units of it at a price of $95 per unit. The product's variable expenses are $65 per unit and its fixed expenses are $830,400 per year. Required: 1. What was this product's net operating income (loss) last year? 2. What is the product's break-even point in unit sales and dollar sales? 3. Assume the company has conducted a marketing study that estimates it can increase annual sales of this product by 5,000 units for each $2 reduction in its selling price. If the company will only consider price reductions in increments of $2 (e.g., $68, $66, etc.), what is the maximum annual profit that it can earn on this product? What sales volume and selling price per unit generate the maximum profit? 4. What would be the break-even point in unit sales and in dollar sales using the selling price that you determined in requirement 3? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3…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
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning