Cost Accounting, Student Value Edition (15th Edition)
15th Edition
ISBN: 9780133428858
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 3, Problem 3.20E
CVP exercises. The Doral Company manufactures and sells pens. Currently 5,000,000 units are sold per year at $0.50 per unit. Fixed costs are $900,000 per year. Variable costs are $0.30 per unit.
Consider each case separately:
- a. What is the current annual operating income?
Required
- b. What is the current breakeven point in revenues?
Compute the new operating income for each of the following changes:
- 1. A $0.04 per unit increase in variable costs
- 2. A 10% increase in fixed costs and a 10% increase in units sold
- 3. A 20% decrease in fixed costs, a 20% decrease in selling price, a 10% decrease in variable cost per unit, and a 40% increase in units sold
Compute the new breakeven point in units for each of the following changes:
- 4. A 10% increase in fixed costs
- 5. A 10% increase in selling price and a $20,000 increase in fixed costs
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CVP exercises. The Doral Company manufactures and sells pens. Currently, 5,000,000 units are sold per year at $0.50 per unit. Fixed costs are $900,000 per year. Variable costs are $0.30 per unit. Consider each case separately:
What is the current annual operating income?
What is the present breakeven point in revenues? Compute the new operating income for each of the following changes:
A $0.04 per unit increase in variable costs
A 10% increase in fixed costs and a 10% increase in units sold
A 20% decrease in fixed costs, a 20% decrease in selling price, a 10% decrease in variable cost per unit, and a 40% increase in units sold Compute the new breakeven point in units for each of the following changes:
A 10% increase in fixed costs
A 10% increase in selling price and a $20,000 increase in fixed costs
Breakeven analysis; target income (LO 1, 2) Reid Recreation Products sells the Amazing Foam Frisbee for $12. The variable cost per unit is $3; fixed costs are $36,000 per month.
Required
a.What is the annual breakeven point in units? In sales dollars?
b.How many frisbees must Reid sell to earn $18,000 in operating income?
c.What operating income must Reid earn to realize net income of $16,200, assuming that the company is in the 40% tax bracket?
d.How many frisbees must Reid sell to earn $16,200 in net income?
2. A firm has the capacity to produce 1,000,000 units of a product per year. At present, it is able to produce
and sell 600,000 units yearly at a total income of P720,000.00. Annual fixed costs are P250,000 and the
variable costs per unit is P0.70.
a. Give the firm's annual profit or loss for this production.
b. Give the number of units that should be sold annually to break even
Chapter 3 Solutions
Cost Accounting, Student Value Edition (15th Edition)
Ch. 3 - Define costvolumeprofit analysis.Ch. 3 - Describe the assumptions underlying CVP analysis.Ch. 3 - Distinguish between operating income and net...Ch. 3 - Prob. 3.4QCh. 3 - Prob. 3.5QCh. 3 - Why is it more accurate to describe the subject...Ch. 3 - CVP analysis is both simple and simplistic. If you...Ch. 3 - Prob. 3.8QCh. 3 - Prob. 3.9QCh. 3 - Give an example of how a manager can decrease...
Ch. 3 - Give an example of how a manager can increase...Ch. 3 - What is operating leverage? How is knowing the...Ch. 3 - There is no such thing as a fixed cost. All costs...Ch. 3 - Prob. 3.14QCh. 3 - In CVP analysis, gross margin is a less-useful...Ch. 3 - Prob. 3.16ECh. 3 - Prob. 3.17ECh. 3 - Prob. 3.18ECh. 3 - Prob. 3.19ECh. 3 - CVP exercises. The Doral Company manufactures and...Ch. 3 - Prob. 3.21ECh. 3 - Prob. 3.22ECh. 3 - Prob. 3.23ECh. 3 - Prob. 3.24ECh. 3 - Prob. 3.25ECh. 3 - Prob. 3.26ECh. 3 - Sales mix, new and upgrade customers. Chartz 1-2-3...Ch. 3 - Prob. 3.28ECh. 3 - Prob. 3.29ECh. 3 - Prob. 3.30ECh. 3 - Prob. 3.31ECh. 3 - Prob. 3.32ECh. 3 - CVP analysis, service firm. Lifetime Escapes...Ch. 3 - Prob. 3.34PCh. 3 - Prob. 3.35PCh. 3 - Prob. 3.36PCh. 3 - Prob. 3.37PCh. 3 - CVP analysis, shoe stores. The HighStep Shoe...Ch. 3 - Prob. 3.39PCh. 3 - Prob. 3.40PCh. 3 - Prob. 3.41PCh. 3 - Prob. 3.42PCh. 3 - Prob. 3.43PCh. 3 - Prob. 3.44PCh. 3 - Prob. 3.45PCh. 3 - Sales mix, two products. The Stackpole Company...Ch. 3 - Prob. 3.47PCh. 3 - Prob. 3.48PCh. 3 - Deciding where to produce. (CMA, adapted) Portal...
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