Bundle: Financial & Managerial Accounting, 13th + CengageNOWv2, 2 terms (12 months) Printed Access Card
13th Edition
ISBN: 9781305618909
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 19, Problem 8DQ
Both Austin Company and Hill Company had the same unit sales, total costs, and income from operations for the current fiscal year; yet, Austin Company had a lower break-even point than Hill Company. Explain the reason for this difference in break-even points.
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During the current year, the net sales of Ridgeway, Inc., were
10 percent below last year’s level. You should expect Ridge-way’s semivariable costs to:
a. Decrease in total, but increase as a percentage of net sales.b. Increase in total and increase as a percentage of net sales.c. Decrease in total and decrease as a percentage of net sales.d. Increase in total, but decrease as a percentage of net sales.
Tami Tyler opened Tami's Creations, Incorporated, a small manufacturing company, at
the beginning of the year. Getting the company through its first quarter of operations
placed a considerable strain on Ms. Tyler's personal finances. The following income
statement for the first quarter was prepared by a friend who has just completed a course
in managerial accounting at State University.
Tami's Creations, Incorporated
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For the Quarter Ended March 31
$ 1,128,000
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Variable expenses:
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Variable selling and administrative
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$ 431,460
172,020
603,480
524,520
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536,520
$ (12,000)
286,920
Net operating loss
Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she
had planned to use the statement as support for a bank loan. Another friend, a CPA,
insists that the company should be using absorption…
Once a company exceeds its breakeven level, operating income can be calculated by multiplying:
The sales price by unit sales in excess of breakeven units.
Unit sales by the difference between the sales price and fixed cost per unit.
The contribution margin ratio by the difference between unit sales and breakeven sales.
The contribution margin per unit by the difference between unit sales and breakeven sales.
Chapter 19 Solutions
Bundle: Financial & Managerial Accounting, 13th + CengageNOWv2, 2 terms (12 months) Printed Access Card
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
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- Both Austin Company and Hill Company had the same unit sales, total costs, and income from operations for the current fiscal year; yet, Austin Company had a lower break-even point than Hill Company. Explain the reason for this difference in break-even points.arrow_forwardUse the information from the previous exercises involving JJ Manufacturing to determine their break-even point in sales dollars.arrow_forwardThere would be a difference between the absorption operating income and variable operating income, if: Select one: O O a. There was an increase in period costs. b. A company sold less than the number of units produced in a given period. c. A company used the contribution margin statement instead of the conventional income statement. d. There was no beginning or ending inventories.arrow_forward
- Which of the following is true regarding the contribution margin ratio of asingle product company? a. As fixed expenses decrease, the contribution margin ratio increases b. The contribution margin ratio increases as the number of units sold increase c. The contribution margin ratio multiplied by the variable expense per unit equals thecontribution margin per unit d. If sales increase, the peso increase in net operating income can be computed bymultiplying the contribution margin ratio by the peso increase in salesarrow_forwardOnce a company exceeds its breakeven level, operating income can be calculated by multiplying: a. The sales price by unit sales in excess of breakeven units. b. Unit sales by the difference between the sales price and fixed cost per unit. c. The contribution margin ratio by the difference between unit sales and breakeven sales. d. The contribution margin per unit by the difference between unit sales and breakeven sales.arrow_forwardBreak-Even Sales and Cost-Volume-Profit Chart Last year Hever Inc. had sales of $1,000,000, based on a unit selling price of $400. The variable cost per unit was $320, and fixed costs were $88,000. The maximum sales within Hever Inc.'s relevant range are 3,200 units. Hever Inc. is considering a proposal to spend an additional $36,000 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 Maximum income…arrow_forward
- The following income statement applies to Franklin Company for the current year: Income Statement Sales revenue (410 units × $31) Variable cost (410 units × $16) Contribution margin Fixed cost Net income Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Franklin Company will earn If It experiences a 10 percent increase in revenue. The sales price per unit is not affected. c-1. Verify your answer to Requirement b by constructing an income statement based on a 10 percent increase in sales revenue. The sales price is not affected. c-2. Calculate the percentage change in net income for the two income statements. Req A and B Complete this question by entering your answers in the tabs below. Req C1 a. Operating leverage b. Net income $ $12,710 (6,560) 6,150 (4,100) $2,050 > Answer is complete but not entirely correct. Req C2 a. Use the…arrow_forwardWhich of the following is true regarding the contribution margin ratio of a single product company? As fixed expenses decrease, the contribution margin ratio increases. The contribution margin ratio multiplied by the variable expense per unit equals the contribution margin per unit. The contribution margin ratio increases as the number of units sold increases. If sales increase, the dollar increase in net operating income can be computed by multiplying the contribution margin ratio by the dollar increase in sales.arrow_forwardAn examination of the accounting records of Larredo Company disclosed a high contribution margin ratio and production at a level below maximum capacity. Based on this information, suggest a likely means of improving operating income. If the unit cost of direct materials is decreased, what effect will this change have on the break-even point? What does operating leverage measure, and how is it computed?arrow_forward
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