A.
Break-even Analysis: It refers to an analysis of 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, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:
To compute: Company M’s break-even number of accounts.
B.
To compute: the average weekday profit
C.
To compute: the average weekend day profit
D.
To compute: Company M’s revised break-even number of accounts.
E.
To Explain: Whether the company will still remain profitable for an average weekday under the scenario in (D).
Trending nowThis is a popular solution!
Chapter 19 Solutions
Financial & Managerial Accounting
- Marlin Motors sells a single product with a selling price of $400 with variable costs per unit of $160. The companys monthly fixed expenses are $36,000. 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 November when they will sell 130 units. How many units will Marlin need to sell in order to realize a target profit of $48,000? What dollar sales will Marlin need to generate in order to realize a target profit of $48.000? Construct a contribution margin income statement for the month of February that reflects $200,000 in sales revenue for Marlin Motors.arrow_forwardMaple Enterprises sells a single product with a selling price of $75 and variable costs per unit of $30. The companys monthly fixed expenses are $22,500. What is the companys break-even point in units? What is the companys break-even point in dollars? Construct a contribution margin income statement for the month of September when they will sell 900 units. How many units will Maple need to sell in order to reach a target profit of $45,000? What dollar sales will Maple need in order to reach a target profit of $45,000? Construct a contribution margin income statement for Maple that reflects $150,000 in sales volume.arrow_forwardKerr Manufacturing sells a single product with a selling price of $600 with variable costs per unit of $360. The companys monthly fixed expenses are $72,000. 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 January when they will sell 500 units. How many units will Kerr need to sell in order to realize a target profit of $120,000? What dollar sales will Kerr need to generate in order to realize a target profit of $120,000? Construct a contribution margin income statement for the month of June that reflects $600,000 in sales revenue for Kerr Manufacturing.arrow_forward
- A company produces two products. E and F in batches of 100 units. The production and cost data are: The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the differential profit from producing product E instead of product F for the year? A. $216,000 B. $204,000 C. $12,000 D. $54,000arrow_forwardThrills Amusement Park provides a variety of attractions. Thrills sells tickets at $50 per person as a one-day entrance fee. Variable costs are $28 per person, and fixed costs are $166,500 per month. Compute the breakeven point in tickets and in sales dollars.arrow_forwardWild-Water Works Water Park provides for a fun day by offering a variety of rides. Wild-Water Works Water Park sells tickets at $74 per person as a one-day entrance fee. Variable costs per person are $34 and fixed cost amount to $222,300 per month.Wild-Water Works Water Park expects to sell 7,900 tickets. Find break-even first, then compute the margin of safety in tickets and sales in dollars.arrow_forward
- Raveen Products sells camping equipment. One of the company’s products, a camp lantern, sells for $100 per unit. They managed to sell 10,000 lanterns per month. Variable expenses are $65 per lantern, and fixed expenses associated with the lantern total $140,000 per month. Required: Compute the company’s break-even point in number of lanterns. Compute the company’s break-even point in total sales dollars. Compute the company’s Margin of Safety in sales dollar. Compute the company’s Margin of Safety in percentage. If the variable expenses per lantern increase as a percentage of the selling price, Will it result in a higher or a lower break-even point? (Assume that the fixed expenses remain unchanged.) At present, the company is selling 10,000 lanterns per month. The sales manager is convinced that a 15% reduction in the selling price will result in a 45% increase in the number of lanterns sold each month. Prepare two contribution format income statements, one under present…arrow_forwardRaveen Products sells camping equipment. One of the company’s products, a camp lantern, sells for $100 per unit. They managed to sell 10,000 lanterns per month. Variable expenses are $65 per lantern, and fixed expenses associated with the lantern total $140,000 per month. Required: Compute the company’s break-even point in number of lanterns. Compute the company’s break-even point in total sales dollars. Compute the company’s Margin of Safety in sales dollar. Compute the company’s Margin of Safety in percentage. If the variable expenses per lantern increase as a percentage of the selling price, Will it result in a higher or a lower break-even point? (Assume that the fixed expenses remain unchanged.) Note: Write Higher or Lower in provided Box At present, the company is selling 10,000 lanterns per month. The sales manager is convinced that a 15% reduction in the selling price will result in a 45% increase in the number of lanterns sold each month. Prepare two contribution…arrow_forwardTravel Agency specializes in flights between Toronto and Peru. It books passengers on Toronto Air. North’s fixed costs are $35,000 per month. Toronto Air charges passengers $1,700 per round-trip ticket.Calculate the number of tickets North Travel must sell each month to (a) break even and (b) make a target operating income of $17,000 per month in each of the following independent cases.Required:1. North’s variable costs are $33 per ticket. Toronto Air pays Sunset 5% commission on ticket price.2. North’s variable costs are $37 per ticket. Toronto Air pays Sunset 7% commission on ticket price.3. North’s variable costs are $53 per ticket. Toronto Air pays $68 fixed commission per ticket to North. Comment on the results.4. North’s variable costs are $40 per ticket. It receives $60 commission per ticket from Toronto Air. It charges its customers a delivery fee of $5 per ticket. Comment on the results. (please give the solution of part 4 and part 5 of this question as the previous are…arrow_forward
- Financial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning