Managerial Accounting, Binder Ready Version: Tools for Business Decision Making
7th Edition
ISBN: 9781118338421
Author: Weygandt, Jerry J.; Kimmel, Paul D.; Kieso, Donald E.
Publisher: WILEY
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 6.14BE
To determine
Break-Even Point:
The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.
To Compute: The break-even point in dollars for each company, and to comment on it.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Required information
[The following information applies to the questions displayed below.]
Information for Pueblo Company follows:
Sales Revenue
Less: Total Variable Cost
Contribution Margin
Product A
$ 51,000
$ 11,500
$ 39,500
Target sales
Product B
$ 68,000
$ 30,150
$ 37,850
Required:
The total fixed costs are $30,000.
Determine target sales needed to earn a $26,000 target profit.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
genow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSession Lo...
r
Operating Leverage
Teague Co. reports the following data:
Sales
Variable costs
Contribution margin
Fixed costs
$480,000
264,000
$216,000
175,200
$40,800
Income from operations
Determine Teague Co.'s operating leverage. Round your answer to one decimal place.
Cesar Company has three product lines: A, B and C. The information given
below is available. Assume Cesar Company drops Product C. Cesar
Company then doubles the production and sales of Product B without
?increasing fixed costs. What will happen to operating income
Sales
Variable costs
Contribution margin
Avoidable fixed costs
Unavoidable fixed costs
Operating income(loss)
Product A
S100,000
76,000
24,000
9,000
6.000
$9.000
Product B
$90,000
48,000
42,000
18,000
9,000
$15.000
Product C
$44,000
35,000
9,000
3,000
7.700
S(1,700)
increase by $18,000 O
increase by ST15,000 ()
increase by $36,000
increase by $24,000
increase by $42,000 )
Chapter 6 Solutions
Managerial Accounting, Binder Ready Version: Tools for Business Decision Making
Ch. 6 - What is meant by CVP analysis?Ch. 6 - Provide three examples of management decisions...Ch. 6 - Prob. 3QCh. 6 - Describe the features of a CVP income statement...Ch. 6 - The traditional income statement for Wheat Company...Ch. 6 - Prob. 6QCh. 6 - What is meant by the term sales mix? How does...Ch. 6 - Prob. 8QCh. 6 - Prob. 9QCh. 6 - Prob. 10Q
Ch. 6 - What is the theory of constraints? Provide some...Ch. 6 - What is meant by "cost structure? Explain how a...Ch. 6 - What is operating leverage? How does a company...Ch. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - Distinguish between absorption costing and...Ch. 6 - Prob. 18QCh. 6 - Prob. 19QCh. 6 - Prob. 20QCh. 6 - Prob. 21QCh. 6 - Prob. 22QCh. 6 - Determine missing amounts for contribution margin....Ch. 6 - Hamby Inc. has sales of 2,000,000 for the first...Ch. 6 - Prob. 6.3BECh. 6 - Prob. 6.4BECh. 6 - Prob. 6.5BECh. 6 - Prob. 6.6BECh. 6 - NoFly Corporation sells three different models of...Ch. 6 - Information for NoFly Corporation is given in...Ch. 6 - Prob. 6.9BECh. 6 - Prob. 6.10BECh. 6 - In Marshall Company, data concerning two products...Ch. 6 - Prob. 6.12BECh. 6 - Prob. 6.13BECh. 6 - Prob. 6.14BECh. 6 - Prob. 6.15BECh. 6 - Compute product costs under variable costing. (LO...Ch. 6 - Compute product costs under absorption costing....Ch. 6 - Prob. 6.18BECh. 6 - Prob. 6.19BECh. 6 - Victoria Company reports the following operating...Ch. 6 - Prob. 6.2DICh. 6 - Zoom Corporation manufactures and sells three...Ch. 6 - Prob. 6.4DICh. 6 - Prob. 6.1ECh. 6 - In the month of June, Jose Heberts Beauty Salon...Ch. 6 - Compute net income under different alternatives....Ch. 6 - Prob. 6.4ECh. 6 - Prob. 6.5ECh. 6 - Yard Tools manufactures lawnmowers, weed-trimmers,...Ch. 6 - PDQ Repaint has 200 auto-maintenance service...Ch. 6 - Express Delivery is a rapidly growing delivery...Ch. 6 - Prob. 6.9ECh. 6 - Determine break-even point in dollars for two...Ch. 6 - Mars Company manufactures and sells three...Ch. 6 - Compute contribution margin and determine the...Ch. 6 - Helena Company manufactures and sells two...Ch. 6 - The CVP income statements shown below are...Ch. 6 - Casas Modernas of Juarez, Mexico, is contemplating...Ch. 6 - Prob. 6.16ECh. 6 - Compute product cost and prepare an income...Ch. 6 - Prob. 6.18ECh. 6 - Crate Express Co. produces wooden crates used for...Ch. 6 - Midlands Inc. had a bad year in 2016. For the...Ch. 6 - Lorge Corporation has collected the following...Ch. 6 - Determine break-even sales under alternative sales...Ch. 6 - Prob. 6.4APCh. 6 - The following CVP income statements are available...Ch. 6 - Bonita Beauty Corporation manufactures cosmetic...Ch. 6 - Prepare income statements under absorption costing...Ch. 6 - Dilithium Batteries is a division of Enterprise...Ch. 6 - CURRENT DESIGNS Current Designs manufactures two...Ch. 6 - Prob. 6.1BYPCh. 6 - Managerial Analysis For nearly 20 years,...Ch. 6 - Real-World Focus In a recent report, the Del Monte...Ch. 6 - The June 8, 2009, edition of the Wall Street...Ch. 6 - Prob. 6.6BYPCh. 6 - Ethics Case Brett Stem was hired during January...Ch. 6 - Prob. 6.9BYP
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
- What is the correct choice? Datamatix Company has gathered the following data: Unit Sales Price Unit Variable Costs Unit Sales Product 1 $18.00 $10.00 24,500 Product 2 27.00 17.00 17,500 Product 3 35.00 28.00 28,000 Fixed costs are $233,280. The weighted-average breakeven point is a. 34,500 units. b. 28,800 units. c. 25,200 units. d. 29,900 units.arrow_forwardThe following information is for Alex Corp: Product X: Revenue Variable Cost Product Y: Revenue Variable Cost Total fixed costs $12.00 $4.50 $25.00 $10.00 $40,500 What is the operating income, assuming actual sales total 120,000 units, and the sales mix is two units of Product X and one unit of Product Y? 1,960,000 1,240,500 1,200,000 1,159,500arrow_forwardThe equation which reflects a CVP income statement is a. Sales Variable costs - Fixed costs = Net income. b. Sales + Fixed costs = Variable costs + Net income. c. None d. Sales Variable costs + Fixed costs = Net income. e. Sales Cost of goods sold + Operating expenses + Net income. Clear my choice Reliable Manufacturing wants to sell a sufficient quantity of products to earn a profit of $80 000. If the unit sales price is $10, unit variable cost is $8, and total fixed costs are $160 000, how many units must be sold to earn income of $80 000? a. 30 000 units b. 1 200 000 units c. 80 000 units d. 120 000 units None Clear my choice A company desires to sell a sufficient quantity of products to earn a profit of $300 000. If the unit sales price is $20, unit variable cost is $12, and total fixed costs are $600 000, how many units must be sold to earn net income of $300 000? 90 000 units a. b. None c. 67 500 units d. 112 500 units e. 168 750 units Clear my choicearrow_forward
- 6. Compare the following two companies: Company A is a retail merchandise firm with current sales of $4,000,000 and a 45% contribution margin. Company A's fixed costs are $600,000. Company B is a service firm with current service revenue of $2,800,000 and a 15% contribution margin. Company B’s fixed costs are $375,000. The following names are to be considered when completing this problem: Operating Income Variable Costs Sales Fixed Costs per Unit Selling Price per Unit Variable Cost per Unit Contribution Margin Fixed Costs Operating Loss to help complete this problem. All amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Based on the information given, prepare a complete contribution margin income statement for Company A: Company A Contribution Margin Income Statement Projected Based on the information given, prepare a complete contribution margin income statement for Company B: Compute…arrow_forward3. income statement for the diff. companies in the same industry are as follows: trimax, inc. quintex, inc. sales p 500,000 p 500,000 less: variable costs 250,000 100,000 contribution margin p 250,000 p 400,000 less: fixed costs 200,000 350,000 operating income p 50,000 p 50,000 required: 1. compute the degree of operating leverage for each company. 2. compute the break-even point for each company. explain why the break-even point for quintex, inc. is higher. 3. suppose that both companies experience a 50 percent increase in revenues. compute the percentage change in profits for each company.arrow_forwardThe total cost formula for a company can be modeled by TC = 12570+ 50x where x represents the number of items sold. A formula for the company's total income is modeled with TR 80x, where a represents the number of items sold. This company will breakeven when its total costs equal its total income. - How many items must this company sell to breakeven? Answer:arrow_forward
- a. Given the following graphs, calculate the total fixed costs, variable costs per unit, andsales price for Firm A. Firm B’s fixed costs are $120,000, its variable costs per unit are$4, and its sales price is $8 per unit.b. Which firm has the higher operating leverage at any given level of sales? Explain.c. At what sales level, in units, do both firms earn the same operating profit?arrow_forwardA CVP graph such as the one shown below is a useful technique for showing relationships among an organization's costs, volume, and profits. 8. Required: Identify the numbered components in the CVP graph. Answer Number 1 Number 2 Number 3 Number 4 Number 5 Number 6 Number 7 Number 8 Number 9 State the effect of each of the following actions on the break-even point. Answer |The unit selling price is increased from $ 18 to $20. |Unit variable expenses are decreased from $12 to $10. |Fixed expenses are increased by $3,000 per period Two thousand more units are sold during the period than were budgeted Due to paying salespersons a commission rather than a flat salary, fixed expenses are reduced by $8,000 per period and unit variable expenses are increased by $3 Due to an increase in the cost of materials, both unit variable expenses and the selling price are increased by $2. Advertising costs are increased by $10,000 per period, resulting in a 10% increase in the number of units sold. Due…arrow_forwardCost Relationships The following costs are for Optical View Inc., a contact lens manufacturer:Output in Units Fixed Costs Variable Costs Total Costs250 $4,750 $ 7,500 $12,250 300 4,750 9,000 13,750350 4,750 10,500 15,250400 4,750 12,000 16,750Required1. Calculate and graph total costs, total variable cost, and total fixed cost.2. For each level of output calculate the per-unit total cost, per-unit variable cost, and per-unit fixed cost.3. Using the results from requirement 2, graph the per-unit total cost, per-unit variable cost, and per-unitfixed cost, and discuss the behavior of the per-unit costs over the given output levels.arrow_forward
- Cesar Company has three product lines: A, B and C. The information given below is available. Assume Cesar Company drops Product C. Cesar Company then doubles the production and sales of Product B without ?increasing fixed costs. What will happen to operating income Product B Product C Sales Variable costs Contribution margin Avoidable fixed costs Unavoidable fixed costs Operating income(loss) Product A $100,000 76,000 24,000 9,000 6,000 $9.000 $90,000 48,000 42,000 18,000 9,000 $15.000 $44,000 35,000 9,000 3,000 7,700 S(1,700) increase by $42,000 O increase by $18,000 increase by $36,000 increase by $15,000 ) increase by $24,000arrow_forwardThe following information is for Alex Corp: Product X: Revenue $12.00 Variable Cost $4.50 Product Y: Revenue $44.50 Variable Cost $9.50 Total fixed costs $75,000 What is the breakeven point assuming the sales mix consists of two units of Product X and one unit of Product Y?arrow_forwardOperating Leverage Income statements for two different companies in the same industry are as follows: Trimax, Inc. Quintex, Inc. $400,000 $562,500 200,000 112,500 $200,000 $450,000 150,000 400,000 $50,000 $50,000 Sales Less: Variable costs Contribution margin Less: Fixed costs Operating income Required: 1. Compute the degree of operating leverage for each company. Trimax Quintex 2. Compute the break-even point in dollars for each company. Trimax, Inc. Quintex, Inc. Why is the break-even point for Quintex, Inc., higher? 3. Suppose that both companies experience a 40 percent increase in revenues. Compute the percentage change in profits for each company, Trimax Quintexarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
GE McKinsey Matrix for SBU Strategies; Author: Wolters World;https://www.youtube.com/watch?v=FffD1Ze76JQ;License: Standard Youtube License