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AccountingManagerial Accounting: The Cornerstone of Business Decision-MakingSales Needed to Earn Target Income Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Head-First must make to earn operating income of $81,900 by using the point in sales equation. 2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1.
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Sales Needed to Earn Target Income Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Head-First must make to earn operating income of $81,900 by using the point in sales equation. 2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1.

BuyFind

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
Publisher: Cengage Learning
ISBN: 9781337115773
BuyFind

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
Publisher: Cengage Learning
ISBN: 9781337115773

Solutions

Chapter
Section
Problem 1DQ
Problem 2DQ
Problem 3DQ
Problem 4DQ
Problem 5DQ
Problem 6DQ
Problem 7DQ
Problem 8DQ
Problem 9DQ
Problem 10DQ
Problem 11DQ
Problem 12DQ
Problem 13DQ
Problem 14DQ
Problem 15DQ
Problem 1MCQ
Problem 2MCQ
Problem 3MCQ
Problem 4MCQ
Problem 5MCQ
Problem 6MCQ
Problem 7MCQ
Problem 8MCQ
Problem 9MCQ
Problem 10MCQ
Problem 11MCQ
Problem 12MCQ
Problem 13BEA
Problem 14BEA
Problem 15BEA
Problem 16BEA
Problem 17BEA
Problem 18BEA
Problem 19BEA
Problem 20BEA
Problem 21BEA
Problem 22BEA
Problem 23BEA
Problem 24BEB
Problem 25BEB
Problem 26BEB
Problem 27BEB
Problem 28BEB
Problem 29BEB
Problem 30BEB
Problem 31BEB
Problem 32BEB
Problem 33BEB
Problem 34BEB
Problem 35E
Problem 36E
Problem 37E
Problem 38E
Problem 39E
Problem 40E
Problem 41E
Problem 42E
Problem 43E
Problem 44E
Problem 45E
Problem 46E
Problem 47E
Problem 48E
Problem 49E
Problem 50E
Problem 51P
Problem 52P
Problem 53P
Problem 54P
Problem 55P
Problem 56P
Problem 57P
Problem 58P
Problem 59P
Problem 60P
Problem 61P
Problem 62P
Problem 63P
Problem 64P
Problem 66C
Problem 1MTC
Problem 2MTC
Problem 3MTC
Problem 4MTC
Problem 5MTC
Problem 6MTC
Chapter 7, Problem 18BEA
Textbook Problem

Sales Needed to Earn Target Income

Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense).

Required:

  1. 1. Calculate the sales revenue that Head-First must make to earn operating income of $81,900 by using the point in sales equation.
  2. 2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1.

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Chapter 7,
Problem 17BEA
Chapter 7,
Problem 19BEA

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Chapter 7 Solutions

Managerial Accounting: The Cornerstone of Business Decision-Making
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Ch. 7 - Explain how CVP analysis can be used for...Ch. 7 - Describe the difference between the units sold...Ch. 7 - Define the term break-even point.Ch. 7 - Explain why contribution margin per unit becomes...Ch. 7 - What is the variable cost ratio? The contribution...Ch. 7 - Suppose a firm with a contribution margin ratio of...Ch. 7 - Define the term sales mix. Give an example to...Ch. 7 - Explain how CVP analysis developed for single...Ch. 7 - Since break-even analysis focuses on making zero...Ch. 7 - How does targeted profit enter into the break-even...
Ch. 7 - Explain how a change in sales mix can change a...Ch. 7 - Define the term margin of safety. Explain how it...Ch. 7 - Explain what is meant by the term operating...Ch. 7 - How can sensitivity analysis be used in...Ch. 7 - Why is a declining margin of safety over a period...Ch. 7 - If the variable cost per unit goes down,Ch. 7 - The amount of revenue required to earn a targeted...Ch. 7 - Break-even revenue for the multiple-product firm...Ch. 7 - In the cost-volume-profit graph, a. the break-even...Ch. 7 - An important assumption of cost-volume-profit...Ch. 7 - The use of fixed costs to extract higher...Ch. 7 - If the margin of safety is 0, then a. the company...Ch. 7 - The contribution margin is the a. amount by which...Ch. 7 - Dartmouth Company produces a single product with a...Ch. 7 - Dartmouth Company produces a single product with a...Ch. 7 - If a companys total fixed cost decreases by...Ch. 7 - Solemon Company has total fixed cost of 15,000,...Ch. 7 - Variable Cost, Fixed Cost, Contribution Margin...Ch. 7 - Break-Even Point in Units Head-First Company plans...Ch. 7 - Variable Cost Ratio, Contribution Margin Ratio...Ch. 7 - Break-Even Point in Sales Dollars Head-First...Ch. 7 - Units to Earn Target Income Head-First Company...Ch. 7 - Sales Needed to Earn Target Income Head-First...Ch. 7 - Break-Even Point in Units for a Multiple-Product...Ch. 7 - Break-Even Sales Dollars for a Multiple-Product...Ch. 7 - Margin of Safety Head-First Company plans to sell...Ch. 7 - Degree of Operating Leverage Head-First Company...Ch. 7 - Impact of Increased Sales on Operating Income...Ch. 7 - Variable Cost, Fixed Cost, Contribution Margin...Ch. 7 - Break-Even Point in Units Chillmax Company plans...Ch. 7 - Variable Cost Ratio, Contribution Margin Ratio...Ch. 7 - Break-Even Point in Sales Dollars Chillmax Company...Ch. 7 - Units to Earn Target Income Chillmax Company plans...Ch. 7 - Sales Needed to Earn Target Income Chillmax...Ch. 7 - Suppose that Chillmax Company now sells both pairs...Ch. 7 - Break-Even Sales Dollars for a Multiple-Product...Ch. 7 - Margin of Safety Chillmax Company plans to sell...Ch. 7 - Degree of Operating Leverage Chillmax Company...Ch. 7 - Impact of Increased Sales on Operating Income...Ch. 7 - Basic Break-Even Calculations Suppose that Larimer...Ch. 7 - Price, Variable Cost per Unit, Contribution...Ch. 7 - Contribution Margin Ratio, Variable Cost Ratio,...Ch. 7 - Income Statement, Break-Even Units, Units to Earn...Ch. 7 - Units Sold to Break Even, Unit Variable Cost, Unit...Ch. 7 - Margin of Safety Comer Company produces and sells...Ch. 7 - Contribution Margin, Unit Amounts, Break-Even...Ch. 7 - Sales Revenue Approach, Variable Cost Ratio,...Ch. 7 - Cherry Blossom Products Inc. produces and sells...Ch. 7 - Cherry Blossom Products Inc. produces and sells...Ch. 7 - Texas-Q Company produces and sells barbeque...Ch. 7 - Lotts Company produces and sells one product. The...Ch. 7 - Klamath Company produces a single product. The...Ch. 7 - Margin of Safety and Operating Leverage Medina...Ch. 7 - Parker Pottery produces a line of vases and a line...Ch. 7 - Jellico Inc.s projected operating income (based on...Ch. 7 - Break-Even Units, Contribution Margin Ratio,...Ch. 7 - Break-Even Units, Operating Income, Margin of...Ch. 7 - Aldovar Company produces a variety of chemicals....Ch. 7 - Basu Company produces two types of sleds for...Ch. 7 - Cost-Volume-Profit Equation, Basic Concepts,...Ch. 7 - Contribution Margin Ratio, Break-Even Sales,...Ch. 7 - Carlyle Lighting Products produces two different...Ch. 7 - Polaris Inc. manufactures two types of metal...Ch. 7 - Cost-Volume-Profit, Margin of Safety Victoria...Ch. 7 - Abraham Company had revenues of 830,000 last year...Ch. 7 - Solve the following independent problems....Ch. 7 - Candyland Inc. produces a particularly rich...Ch. 7 - Income statements for two different companies in...Ch. 7 - Suppose that Kicker had the following sales and...Ch. 7 - Danna Lumus, the marketing manager for a division...Ch. 7 - Cost-Volume-Profit Analysis, Single-Product...Ch. 7 - Cost-Volume-Profit Analysis, Single-Product...Ch. 7 - The hotels accounting system data show an average...Ch. 7 - Cost Classification a. Classify the manufacturing...Ch. 7 - Sensitivity Cost-Volume-Profit Analysis and...Ch. 7 - Calculate the hotels margin of safety (both in...

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