Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 16E
To determine
Break-even point: The point where the total cost line intersects the sales line is called the break-even point on the graph. It is point where a company is neither making profit nor incurring any loss.
1. The Break-Even point in persons
2. The ticket price per person to break-even
3. The CVP graph
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Problem 1c: Consider the following information for Rosebud Lane Hospital. The number of admissions for the year are expected to equal 1000, but could vary from 750 to 1250. Rosebud's fee-for-service is $2,000 under a prospective payment system. Under a capitation reimbursement system, Rosebud must cover 1000 patients at a capitation payment of $2,000. Rosebud's annual fixed costs are $500,000 and it variable cost per admission is $1,500.
1c. Calculate Rosebud's net profit under the Fee For Service Reimbursement method if admissions are 1250. (Answer to the nearest dollar. Do not include the dollar sign in your answer.)
1d. Calculate Rosebud's net profit under Capitation if admissions are 1250. (Answer to the nearest dollar. Do not include the dollar sign in your answer.)
NEED ASAP WITH COMPLETE SOLUTION!
A particular university was considering whether to offer a seminar for executives. The tuition would be USD 650 per person. Variable costs, including meals, parking, and materials, would be USD 80 per person. Certain costs offering the seminarIncluding advertising, instructors' fees, room rent, audiovisual equipment rent would not be affected by the number of people attending Such costs. which could be thought of as fixed costs amounted to USD 8,000 for the seminar.
If the university wants to have a profit of USD 7,000, how much revenue should they expect?
a) $17,105.26
b)$ 17.108.27
c) none of these
Q7. c) Contribution statement for komfwe dry cleaning Ltd Product A(ZMW) Product B(ZMW) Unit budgeted 1000 1000 Sales 1000 500 Variable costs 600 300 Contribution 400 200 Fixed costs 200 200 Profit 100 - Calculate i) Break-even point for each product
ii) Contribution ratio for each product
iii) Can you close product B and why? Explain
Chapter 6 Solutions
Introduction To Managerial Accounting
Ch. 6.A - The Cheyenne Hotel in Big Sky, Montana, has...Ch. 6.A - Least-Squares Regression LOS11 Bargain Rental Car...Ch. 6.A - Prob. 3ECh. 6.A - Archer Company is a wholesaler of custom-built...Ch. 6.A - George Caloz&Freres, located in Grenchen,...Ch. 6.A - Least-Square. Regression; Scattergraph; Comparison...Ch. 6.A - Cost Behaviour; High4æw Method; Contribution...Ch. 6.A - Nova Company’s total overhead cost at various...Ch. 6.A - High-Low Method; Contribution Format Income...Ch. 6.A - Least-Squares Regression Method; Scattergraph;...
Ch. 6.A - Mixed Cost Analysis and the Relevant Range LOS-10...Ch. 6.A - Prob. 12PCh. 6 - What is the meaning of contribution margin ratio?...Ch. 6 - Prob. 2QCh. 6 - In all respects, Company A and Company B are...Ch. 6 - What is the meaning of operating leverage?Ch. 6 - What is the meaning of break-even point?Ch. 6 - In response to a request from your immediate...Ch. 6 - What is the meaning of margin of safety?Ch. 6 - Prob. 8QCh. 6 - Explain how a shift in the sales mix could result...Ch. 6 - The Excel worksheet form that appears be1o is to...Ch. 6 - The Excel work sheet from that appears below is to...Ch. 6 - Prob. 3AECh. 6 - The Excel worksheet form that appears be1o is to...Ch. 6 - Prob. 5AECh. 6 - Oslo Company prepared the following contribution...Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - Prob. 11F15Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - Oslo Company prepared the following contribution...Ch. 6 - The Effect of Cha noes ¡n Activity on Net...Ch. 6 - Prob. 2ECh. 6 - Prepare a Profit Graph L062 Jaffre Enterprises...Ch. 6 - Computing and Using the CM Ratio L063 Last month...Ch. 6 - Changes in Venable Costs, Fixed Costs, Selling...Ch. 6 - Prob. 6ECh. 6 - Lin Corporation has a single product 1ose selling...Ch. 6 - Compute the Margin of Safety LO6-7 Molander...Ch. 6 - Compute and Use the Degree 01 Operating Leverage...Ch. 6 - Prob. 10ECh. 6 - Missing Data; Basic CVP Concepts L061, L069 Fill...Ch. 6 - Prob. 12ECh. 6 - Change in selling price, Sales Volume, Variable...Ch. 6 - Prob. 14ECh. 6 - Operating Leverage 1061. 1068 Magic Realm, Inc.,...Ch. 6 - Prob. 16ECh. 6 - Break-Even and Target Profit Analysis 1064, 1066,...Ch. 6 - Break-Even and Target Profit Analysis; Margin of...Ch. 6 - Prob. 19PCh. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - CVP Applications; Contribution Margin Ratio:...Ch. 6 - Break-Even and Target Profit Analysis LO6-6, L066...Ch. 6 - Prob. 25PCh. 6 - Prob. 26PCh. 6 - Prob. 27PCh. 6 - Sales Mix; Commission Structure; Multiproduct...Ch. 6 - Changes in Cost Structure; Break-Even Analysis;...Ch. 6 - Graphing; Incremental Analysis; Operating Leverage...Ch. 6 - Interpretive Questions on the CVP Graph L062, L065...
Knowledge Booster
Similar questions
- Contribution margin reporting and analysis for a service company The management of East Coast Railroad Company introduced in Exercise 20 improved the profitability of the Atlanta/Baltimore route in May by reducing the price of a railcar from 600 to 500. This price reduction increased the demand for rail services. Thus, the number of railcars increased by 275 railcars to a total of 700 railcars. This was accomplished by increasing the size of each train but not the number of trains. Thus, the number of train-miles was unchanged. All the activity rates remained unchanged. A. Prepare a contribution margin report for the Atlanta/Baltimore route for May. Calculate the contribution margin ratio in percentage terms to one decimal place. B. Prepare a contribution margin analysis to evaluate managements actions in May. Assume that the May planned quantity, price, and unit cost were the same as April.arrow_forwardExercise 22-17 a-d Carla Vista Bucket Co., a manufacturer of rain barrels, had the following data for 2019. Sales 2,960 units Sales price $60 per unit Variable costs $42 per unit Fixed costs $26,640 What is the contribution margin ratio? Contribution margin ratio % LINK TO TEXT LINK TO TEXT LINK TO TEXT What is the break-even point in dollars? Break-even point $ LINK TO TEXT LINK TO TEXT LINK TO TEXT What is the margin of safety in dollars and as a ratio? Margin of safety $ Margin of safety ratio % LINK TO TEXT LINK TO TEXT LINK TO TEXT If the company wishes to increase its total dollar contribution margin by 30% in 2020, by how much will it need to increase its sales if selling price per unit, variable price per…arrow_forwardQUESTION 9 QRC Company is trying to decide which one of two alternatives it will accept. The costs and revenues associated with each alternative are listed below: Alternative A Alternative B Projected revenue $ 62,500 $ 75,000 Unit-level costs 12,500 18,000 Batch-level costs 6,250 12,000 Product-level costs 7,500 8,500 Facility-level costs 5,000 6,250 What is the differential revenue for this decision? $62,500 $25,000 $75,000 $12,500arrow_forward
- Required information Skip to question [The following information applies to the questions displayed below.] The Hartford Symphony Guild is planning its annual dinner-dance. The dinner-dance committee has assembled the following expected costs for the event: Dinner (per person) $ 23 Favors and program (per person) $ 4 Band $ 780 Rental of ballroom $ 390 Professional entertainment during intermission $ 260 Tickets and advertising $ 1,170 The committee members would like to charge $40 per person for the evening’s activities. Required: 1. What is the break-even point for the dinner-dance (in terms of the number of persons who must attend)? 2. Assume that last year only 100 persons attended the dinner-dance. If the same number attend this year, what price per ticket must be charged in order to break even? (Round your answer to the nearest whole dollar amount.)arrow_forwardCVP – Basic Analysis Raveen Products sells camping equipment. One of the company’s products, a camp lantern, sells for $90 per unit. Variable expenses are $63 per lantern, and fixed expenses associated with the lantern total $135,000 per month. Required: At present, the company is selling 8,000 lanterns per month. The sales manager is convinced that a 10% reduction in the selling price will result in a 25% increase in the number of lanterns sold each month. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. Show both total and per unit data on your statements. Refer to the data in (1) above. How many lanterns would have to be sold at the new selling price to yield a minimum net operating income of $72,000 per month?arrow_forwardİzmir Forwarding’s transport price for one pallet of paint is TL80/km. in a certain route. Variable costs per unit equal TL32. The company expects total fixed costs to be TL72,000 for the next month at the projected transport level of 2,000 pallets. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. a) Suppose management believes that a TL16,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by how much to cover additional expenditure? b) Suppose that management believes that a 10% decrease in the selling price will result in a 10% increase in sales. If this proposed decrease in selling price is implemented, compute the change in the operating income. c) Write an alternative action for the company your own, to improve the performance, compute the change in the operating income. d) Which alternative (A, B, C) should be chosen?…arrow_forward
- [Question 2] Whittier Company plans to sell 1,000 mowers at $400 each in the coming year.Total variable expense per unit is $325. Total fixed expense is $45,000.Required:1. Calculate the sales revenue and units that Whittier Company must make to breakeven. 2. Check your answer by preparing a contribution margin income statementbased on the break-even point calculated. 3. Find the new break units and sales even under the following conditions i. sales price increase by 25 % ii. variable expenses reduced by $25 iii. Fixed cost has increased by 20 %arrow_forwardDon't use chatgpt, I will 5 upvotes question 5 For the current year, Electric Corporation expected to sell 42,300 industrial power cords. Fixed costs were expected to total $1,651,500; unit sales price was expected to be $3,900; and unit variable costs were budgeted at $2,400. Electric Corporation's margin of safety (MOS) in sales dollars is: (Do not round intermediate calculations.) A. $160,676,100. B. $194,851,099. C. $166,596,097. D. $178,401,100. E. $150,226,100. A B C D Earrow_forward3.1 REQUIRED Calculate the following from the information given below: 3.1.1 Break-even quantity. 3.1.2 Break-even value using the marginal income 3.1.3 Margin of safety 3.1.4 Total Marginal Income and Net Profit/Loss if the sales price is reduced to R90 per unit.INFORMATION Dynamo Ltd manufactures calculators. The following information was extracted from the budget for the year ended 31 December 2023: Sales volume 20 000 units Selling price per unit R100 Variable manufacturing cost per unit R50 Variable marketing cost per unit 10% of the unit selling price Fixed manufacturing cost R400 000 Fixed administration and marketing costs R200 000arrow_forward
- u messageQ&A notifications account_circle Business AccountingQ&A LibraryAn operations manager narrowed the search for a new facility location to four communities. The annual fixed costs (land, property taxes, insurance, equipment, and buildings) and the variable costs (labor, materials, transportation, and variable overhead) are as follows:Community Fixed Costs per Year Variable Costs per UnitA $150,000 $62B $300,000 $38C $500,000 $24D $600,000 $30Notice that no community dominates the set of alternatives; that is, no community has both the lowest fixed costs and the lowest variable costs per unit. If that were so, that community would be the best location.Step 1. Plot the total cost curves for all the communities on a single graph. Identify on the graph the approximate volume range…arrow_forwardex3. Differential Analysis for Sales Promotion Proposal Sole Mates Inc. is planning a one-month campaign for July to promote sales of one of its two shoe products. A total of $100,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign: Tennis Shoe Walking Shoe Unit selling price $85 $100 Unit production costs: Direct materials $19 $32 Direct labor 8 12 Variable factory overhead 7 5 Fixed factory overhead 16 11 Total unit production costs $50 $60 Unit variable selling expenses 6 10 Unit fixed selling expenses 20 15 Total unit costs $76 $85 Operating income per unit $9 $15 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 7,000 additional units of tennis…arrow_forwardQuestion Three: East Manufacturing Company was established in February, 2020 to produce and sell only product (X) as a start. The following costs were set by the internal experts of the company for product (X): Monthly fixed costs $750,000 Variable cost per unit $60 Monthly production 20,000 unit Based upon the above information, the management of the Company has set the following targets: Target selling price $150 per unit Monthly target profits $100,000 Requirement 1: Even though the level of competition is low, the president of the company is very concerned about the selling price of the product; he thinks that the price might be high, so he asked you (as a senior manager) to determine the lowest selling price that the company can sell all monthly production and achieve the target profit set by the internal experts. In March, 2020, the company decided to sell product (X) to one customer only. The following customers offered to purchase the following quantities from…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial & Managerial AccountingAccountingISBN:9781285866307Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial & Managerial Accounting
Accounting
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning