MANAGERIAL ACCOUNTING FUND. W/CONNECT
5th Edition
ISBN: 9781259688713
Author: Wild
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 5, Problem 25E
To determine
Concept introduction:
A contribution margin income statement is a statement which shows the profit or loss for a entity for a particular product or overall performance.
The contribution margin ratio means calculated contribution in terms of percentage. The numerator part will be contribution amount and denominator part will have net sales.
The break-even point formula is calculated as the total fixed costs of production part in numerator and price per unit less the variable costs to produce the product in denominator.
Requirement 1:
The degree of operating leverage for 2015.
To determine
Concept introduction:
A contribution margin income statement is a statement which shows the profit or loss for a entity for a particular product or overall performance.
The contribution margin ratio means calculated contribution in terms of percentage. The numerator part will be contribution amount and denominator part will net sales.
The break-even point formula is calculated as the total fixed costs of production part in numerator and price per unit less the variable costs to produce the product in denominator.
Requirement 2:
The pretax income for the company.
To determine
Concept introduction:
A contribution margin income statement is a statement which shows the profit or loss for a entity for a particular product or overall performance.
The contribution margin ratio means calculated contribution in terms of percentage. The numerator part will be contribution amount and denominator part will net sales.
The break-even point formula is calculated as the total fixed costs of production part in numerator and price per unit less the variable costs to produce the product in denominator.
Requirement 3:
The contribution margin statement.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
PROBLEM 11-17 Return on Investment (ROI) and Residual Income LO11-1, LO11-2
Financial data for Joel de Paris, Inc., for last year follow:
Joel de Paris, Inc.
Balance Sheet
Beginning
Ending
Balance
Balance
Assets
Cash
$ 140,000
$ 120,000
Accounts receivable
450,000
530,000
Inventory
320,000
380,000
Plant and equipment, net
680,000
620,000
Investment in Buisson, S.A.
280,000
170,000
250,000
Land (undeveloped)
180,000
Total assets
$2,020,000
$2,100,000
Liabilities and Stockholders' Equity
Accounts payable.
$ 360,000
$ 310,000
Long-term debt
Stockholders' equity
1,500,000
1,500,000
160,000
290,000
Total liabilities and stockholders' equity
$2,020,000
$2,100,000
Joel de Paris, Inc.
Income Statement
Sales
$4,050,000
Operating expenses
Net operating income
3,645,000
405,000
Interest and taxes:
Interest expense
$150,000
Таx expense
110,000
260,000
Net income
$ 145,000
The
company paid dividends of $15,000 last year. The "Investment in Buisson, S.A.," on the
balance sheet represents an…
Calculate Return on Investment (ROI) and Economic Value Added (EVA).Use the following data for Eastern Investments Company to calculate ROI and EVA for 2013 and 2014. Analyze the results. Eastern Investments 2013 2014 Sales $325,000,000 $395,000,000Net Operating Profit After Tax $55,000,000 $60,000,000Net Income $35,000,000 $42,000,000Invested Capital $125,000,000 $145,000,000Adjusted Average Invested Capital $350,000,000 $380,000,000Cost of Capital 11% 11%Required:Calculate ROI for 2013 and 2014Calculate EVA for 2013 and 2014Is Eastern Investments performance improving year on year? Why?
Suppose a firm has had the following historic sales figures. What would be the forecast for next year's sales
using the average approach?
You must use the built-in Excel function to answer this question.
Input area:
Year
Sales
2016
2017
2018
es es e
$
1,500,000
$
1,750,000
$
1,400,000
2019
$
2,000,000
2020
$
1,600,000
Output area:
Next year's sales
Chapter 5 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
Ch. 5 - Prob. 1MCQCh. 5 - Prob. 2MCQCh. 5 - Prob. 3MCQCh. 5 - Prob. 4MCQCh. 5 - Prob. 5MCQCh. 5 - Prob. 1DQCh. 5 - Prob. 2DQCh. 5 - When output volume increases, do fixed costs per...Ch. 5 - How is the cost-volume-profit analysis useful?Ch. 5 - Prob. 5DQ
Ch. 5 - Prob. 6DQCh. 5 - Prob. 7DQCh. 5 - Prob. 8DQCh. 5 - Prob. 9DQCh. 5 - Prob. 10DQCh. 5 - Prob. 11DQCh. 5 - Prob. 12DQCh. 5 - Prob. 13DQCh. 5 - Prob. 14DQCh. 5 - Prob. 15DQCh. 5 - Prob. 16DQCh. 5 - Prob. 17DQCh. 5 - Prob. 18DQCh. 5 - Prob. 19DQCh. 5 - APPLE Should Apple use single product or...Ch. 5 - Prob. 21DQCh. 5 - Prob. 1QSCh. 5 - Prob. 2QSCh. 5 - The following information is available for a...Ch. 5 - Prob. 4QSCh. 5 - Prob. 5QSCh. 5 - Prob. 6QSCh. 5 - Prob. 7QSCh. 5 - Prob. 8QSCh. 5 - Prob. 9QSCh. 5 - Prob. 10QSCh. 5 - Prob. 11QSCh. 5 - Prob. 12QSCh. 5 - Prob. 13QSCh. 5 - Prob. 14QSCh. 5 - Prob. 15QSCh. 5 - Prob. 16QSCh. 5 - Prob. 17QSCh. 5 - Following are five graphs representing various...Ch. 5 - Prob. 2ECh. 5 - Prob. 3ECh. 5 - Prob. 4ECh. 5 - Prob. 5ECh. 5 - Prob. 6ECh. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Prob. 10ECh. 5 - Prob. 11ECh. 5 - Prob. 12ECh. 5 - Prob. 13ECh. 5 - Prob. 14ECh. 5 - Copper Company expect to sell 200,000 units of its...Ch. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Prob. 18ECh. 5 - Prob. 19ECh. 5 - Prob. 20ECh. 5 - Prob. 21ECh. 5 - Prob. 22ECh. 5 - Prob. 23ECh. 5 - Prob. 24ECh. 5 - Prob. 25ECh. 5 - The following costs result from the production and...Ch. 5 - Prob. 2PSACh. 5 - Prob. 3PSACh. 5 - Astro Co. sold 20,000 units of its only product...Ch. 5 - Prob. 5PSACh. 5 - Prob. 6PSACh. 5 - Patriot Co. manufactures and sells three products:...Ch. 5 - Prob. 1PSBCh. 5 - Prob. 2PSBCh. 5 - Prob. 3PSBCh. 5 - Rivera Co. sold 20,000units of its only product...Ch. 5 - Prob. 5PSBCh. 5 - Prob. 6PSBCh. 5 - Prob. 7PSBCh. 5 - Prob. 5SPCh. 5 - Apple offers extended service contracts that...Ch. 5 - Prob. 2BTNCh. 5 - Prob. 3BTNCh. 5 - Prob. 4BTNCh. 5 - Prob. 5BTNCh. 5 - Prob. 6BTNCh. 5 - Fast Yeti Custom Tees, Launched by entrepreneurs...Ch. 5 - Prob. 8BTNCh. 5 - Access and review Samsungs website...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- If a firm has a contribution margin of $59,690 and a net income of $12,700 for the current month, what is their degree of operating leverage? A. 0.18 B. 1.18 C. 2.4 D. 4.7arrow_forwardLaAnn Sands wants to conduct revenue breakeven analyses of Salza Technology Corporation for 2013. For 2013, the firm’s cost of goods sold is considered to be variable costs, and operating expenses are considered to be fixed cash costs. Depreciation expenses in 2013 are expected to be fixed costs. Interest expenses in 2013 are expected to be fixed costs. Calculate Salza’s EBDAT breakeven in terms of survival revenues for 2013.arrow_forwardHal's Ice Cream Stands $ Thousands Assets Cash and cash equivalents Accounts receivable Inventories Total Current Assets Equipment Less accumulated depreciation Land Holdings Total Assets Liabilities & Shareholders' Equity Accounts Payable Short-term Debt Total Current Liabilities Long-Term Debt Total Liabilities Shareholders' Equity Liabilities & Shareholders' Equity Hal's Income Statement for the Year Ending 12/31/2021 ($ 000s except for earnings per share) Sales Cost of Goods Sold Payroll and employee benefits Gross Operating Profit Selling, general and administrative expenses Income from Operations Interest expense Income taxes Net Income Earnings per share of common stock ($) 2021 $100 50 75 $225 300 (5) 15 $535 200 50 250 100 350 ??? $535 $500 100 200 200 100 100 5 20 $75 $0.25arrow_forward
- Find online the annual 10-K report for Costco Wholesale Corporation (COST) for fiscal year 2015 (filed in October 2015). a. Compute Costco's net profit margin, total asset turnover, and equity multiplier. b. Verify the DuPont Identity for Costco's ROE. c. If Costco's managers wanted to increase its ROE by 1 percentage point, how much higher would their asset turnover need to be? a. Compute Costco's net profit margin, total asset turnover, and equity multiplier. The net profit margin is %. (Round to two decimal places.) The total asset turnover is (Round to two decimal places.) The equity multiplier is (Round to two decimal places.) b. Verify the DuPont Identity forCostco's ROE. The ROE is %. (Round to two decimal places.) c. If Costco's managers wanted to increase its ROE by 1 percentage point, how much higher would their asset turnover need to be? The total assets turnover should be (Round to two decimal places.) The total asset turnover should be % (Round to two decimal places and…arrow_forwardA service company has the following financial information (in millions of $)a. What is the profit leverage effect of reducing the cost of the facilitating goods in this company?b. It has been suggested that the in-house services costs could be reduced by 10 percent in the coming year by implementing lean systems. What effect would thisohave on earnings increase in percentage?c. What is the profit leverage effect of in-house services relative to profits?arrow_forwardDetermine P/V Ratio %, Fixed Cost and BEP with the help of following information: Description 2014-15 2015-16 Sales) 2,00,000 10,00,000 Profits() 25,000 2,25,000arrow_forward
- Variable Costs, Contribution Margin, Contribution Margin Ratio Super-Tees Company plans to sell 20,000 T-shirts at $19 each in the coming year. Product costs include: Direct materials per T-shirt $6.65 $1.33 Direct labor per T-shirt Variable overhead per T-shirt $0.57 Total fixed factory overhead $43,000 Variable selling expense is the redemption of a coupon, which averages $0.95 per T-shirt; fixed selling and administrative expenses total $13,000.arrow_forwardA company has the following items for the fiscal year 2020: Revenue =10 million Cost of goods sold = 3 million EBITDA = 5 million EBIT = 4 million Net income = 2 million Calculate the company’s net profit margin Write the formula for the following ratios and what each ratio measures: Current Ratio Quick Ratioarrow_forwardWhat is the comparison (analysis) of the Profit Margin of Industry Average Ratio and the Company A Ratio? The Profit Margin has decreased and increased. Why? Industry Average Profit Margin 2015: 23.43% 2016: 29.54% 2017: 15.81% 2018: 30.59% 2019: 22.42% Company A Profit Margin 2015: 14.67% 2016: 8.06% 2017: 9.70% 2018: 13.74% 2019: 7.65%arrow_forward
- I need assistance calculating ratios with the attached income statement and balance sheet: Fiscal 2017 Fiscal 2016 Gross margin, as reported 35.6% 35.2% Mark-to-market effects (0.1) (0.4) Restructuring costs 0.3 0.5 Project-related costs 0.3 0.3 Adjusted gross margin 36.1% 35.6% Calculate the following financial ratios for 2016 and 2017 1. Gross profit percentage 2. Return on sales 3. Asset turnover (2015, total assets = $21,932.0 million)arrow_forwardDuring the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the same. As a result, XYZ's: a) Contribution margin and gross margin will be lower. b) Contribution margin will be higher, while its gross margin will remain the same. c) Operating income will be the same under both the financial accounting income statement and contribution income statementarrow_forwardWhat is the comparison (analysis) of the Operating Margin of Industry Average Ratio and the Company A Ratio? The Operating Margin ratios has decreased and increased. Why? Industry Average Operating Margin 2015: 30.10% 2016: 37.75% 2017: 21.39% 2018: 18.92% 2019: 25.38% Company A Operating Margin 2015: 23.33% 2016: 15.69% 2017: 18.15% 2018: 25.06% 2019: 16.82%arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License