Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
6th Edition
ISBN: 9780134486857
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 20, Problem 44BP
White Company sells flags with team logos. White has fixed costs of $639,600 per year plus variable costs of $4.20 per flag. Each flag sells for $12.00.
Requirements
- 1. Use the equation approach to compute the number of flags White must sell each year to break even.
- 2. Use the contribution margin ratio approach to compute the dollar sales White needs to earn $32,500 in operating income for 2018. (Round the contribution margin to two decimal places.)
- 3. Prepare White’s contribution margin income statement for the year ended December 31, 2018, for sales of 73,000 flags. (Round your final answers up to the next whole number.)
- 4. The company is considering an expansion that will increase fixed costs by 23% and variable costs by $0.60 per flag. Compute the new breakeven point in units and in dollars. Should White undertake the expansion? Give your reasoning. (Round your final answers up to the next whole number.)
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Chapter 20 Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
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