EBK HORNGREN'S COST ACCOUNTING
16th Edition
ISBN: 9780134475998
Author: Rajan
Publisher: YUZU
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Textbook Question
Chapter 3, Problem 3.32E
Sales mix, new and upgrade customers. Chartz 1-2-3 is a top-selling electronic spreadsheet product. Chartz is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Chartz 1-2-3 4.0 or earlier versions). Although the same physical product is provided to each customer group, sizable differences exist in selling prices and variable marketing costs:
The fixed costs of Chartz 1-2-3 5.0 are $16,500,000. The planned sales mix in units is 60% new customers and 40% upgrade customers.
- 1. What is the Chartz 1-2-3 5.0 breakeven point in units, assuming that the planned 60%/40% sales mix is attained?
Required
- 2. If the sales mix is attained, what is the operating income when 170,000 total units are sold?
- 3. Show how the breakeven point in units changes with the following customer mixes:
- a. New 40% and upgrade 60%
- b. New 80% and upgrade 20%
- c. Comment on the results.
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5 Revenue mix, new and upgrade customers. Zapo 1-2-3 is a top-selling spreadsheet product. Zapo is about to release Version 5.0. It groups its customers into two
groups new customers and upgrade customers (those who previously purchased Zapo 1-2-3 Version 4.0 or earlier). Although the same physical product is
provided to each customer group, sizable differences exist in their selling prices and variable marketing costs:
Selling price
Variable cost:
Manufacturing
Marketing
New
Customers
$25
65
$210
90
a. New 50%/upgrade 50%.
b. New 90% / upgrade 10%
Upgrade
Customers
$120
$25
15
40
The fixed costs of Zapo 5.0 are $14,000,000.
The planned revenue mix in units is 60% new customers and 40% upgrade customers.
REQUIRED
1. What is the Zapo 1-2-3 Version 5.0 breakeven point in units, assuming that the planned 60/40 mix is maintained?
2. If the mix is maintained, what is the operating income when 200,000 units are sold?
3. Show how the breakeven point in units changes with the following…
(Q.7) Data 1-2-3 is a top-selling electronic spreadsheet product Data is about to release version 5.0. 11
divides its customers into two groups: new customers and upgrade customers (those who previously
purchased Data 1-2-3, 4.0 or earlier versions). Although the same physical product is provided to each
customer group, sizable differences exist in selling prices and variable marketing costs:
New Customers
$275
Selling price
Variable costs
Manufacturing
Marketing
Contribution margin
$35
65
100
$175
Upgrade Customers
$100
$35
15
50
$ 50
The fixed costs of Data 1-2-3, 5.0 are $15,000,000. The planned sales mix in units is 60% new
customers and 40% upgrade customers.
Questions:
1. Calculate the Data 1-2-3, 5.0 breakeven point in units (number of bundles, new customers, upgrade
customers) assuming that the planned 60% 40% sales mix is attained?
2. If the sales mix is altained, what is the operating income when 220,000 total units are sold?
9
Swippy Software offers three software products: a word processing software, a spreadsheet software, and an accounting software. Information for the stand-alone selling prices and costs of its individual products is as follows:
Stand-Alone Selling Price,
Cost
Word Processing (WP)
$75
$18
Spreadsheet (SS)
$90
$20
Accounting Software (AS)
$65
$25
Recently, Swippy Software has begun offering software bundles, which includes all three programs at a discounted price. The bundle price for the software is $185.00
Using the unit cost as the weights, allocate the bundled price to the three programs using the stand-alone revenue-allocation method.
Allocate the bundled price to the three types products using the incremental revenue-allocation method. Assume Spreadsheets is the primary product, followed by Word Processing, and then Accounting Software.
Chapter 3 Solutions
EBK HORNGREN'S COST ACCOUNTING
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 - Jacks Jax has total fixed costs of 25,000. If the...Ch. 3 - During the current year, XYZ Company increased its...Ch. 3 - Under the contribution income statement, a...Ch. 3 - A company needs to sell 10,000 units of its only...Ch. 3 - Once a company exceeds its breakeven level,...Ch. 3 - Prob. 3.21ECh. 3 - CVP computations. Garrett Manufacturing sold...Ch. 3 - CVP analysis, changing revenues and costs. Sunset...Ch. 3 - CVP exercises. The Deli-Sub Shop owns and operates...Ch. 3 - CVP exercises. The Doral Company manufactures and...Ch. 3 - CVP analysis, income taxes. Westover Motors is a...Ch. 3 - CVP analysis, income taxes. The Home Style Eats...Ch. 3 - CVP analysis, sensitivity analysis. Perfect Fit...Ch. 3 - CVP analysis, margin of safety. Suppose Morrison...Ch. 3 - Operating leverage. Cover Rugs is holding a 2-week...Ch. 3 - CVP analysis, international cost structure...Ch. 3 - Sales mix, new and upgrade customers. Chartz 1-2-3...Ch. 3 - Prob. 3.33ECh. 3 - Prob. 3.34ECh. 3 - Contribution margin, decision making. Welch Mens...Ch. 3 - Contribution margin, gross margin, and margin of...Ch. 3 - Uncertainty and expected costs. Kindmart is an...Ch. 3 - CVP analysis, service firm. Lifetime Escapes...Ch. 3 - CVP, target operating income, service firm....Ch. 3 - CVP analysis, margin of safety. Marketing Docs...Ch. 3 - CVP analysis, income taxes. (CMA, adapted) J.T....Ch. 3 - CVP, sensitivity analysis. The Derby Shoe Company...Ch. 3 - CVP analysis, shoe stores. The HighStep Shoe...Ch. 3 - CVP analysis, shoe stores (continuation of 3-43)....Ch. 3 - Prob. 3.45PCh. 3 - Prob. 3.46PCh. 3 - CVP analysis, income taxes, sensitivity. (CMA,...Ch. 3 - Choosing between compensation plans, operating...Ch. 3 - Prob. 3.49PCh. 3 - Multiproduct CVP and decision making. Crystal...Ch. 3 - Sales mix, two products. The Stackpole Company...Ch. 3 - Prob. 3.52PCh. 3 - Ethics, CVP analysis. Megaphone Corporation...Ch. 3 - Deciding where to produce. (CMA, adapted) Portal...
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