Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 9, Problem 9.6E
Exercise 9.6
LO 1
Calculate earned revenues Kirkland Theater sells season tickets for six events at a price of $180. In pricing the tickets, the planners assigned the leadoff event a value of $45 because the program was an expensive symphony orchestra. The last five events were priced equally; 1,500 season tickets were sold for the 2016 season.
Required:
- Calculate the theater’s earned revenue after the first three events have been presented.
- About 95% of the season ticket holders attended the first event. Subsequent events were attended by about 80% of the season ticket holders. To what extent, if any, should the attendance data impact revenue recognition? Explain your answer.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
ex3.
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…
Exercise 6-10 Multiproduct Break-Even Analysis [LO6-9]
Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below:
Claimjumper
Makeover
Total
Sales
$
30,000
$
70,000
$
100,000
Variable expenses
20,000
50,000
70,000
Contribution margin
$
10,000
$
20,000
30,000
Fixed expenses
24,000
Net operating income
$
6,000
Required:
1. What is the overall contribution margin (CM) ratio for the company?
2. What is the company's overall break-even point in dollar sales?
3. Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products.
xlsx 3.5
Sargent, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90. The company’s monthly fixed expenses are $180,000.
A. What is the company’s break-even point in units?
B. What is the company’s break-even point in dollars?
C. Prepare a contribution margin income statement for the month of October when they will sell 10,000 units.
D. How many units will Sargent need to sell in order to realize a target profit of $300,000?
E. What dollar sales will Sargent need to generate in order to realize a target profit of $300,000?
F. Construct a contribution margin income statement for the month of August that reflects $2,400,000 in sales revenue for Sargent, Inc.
Chapter 9 Solutions
Accounting: What the Numbers Mean
Ch. 9 - Prob. 9.1MECh. 9 - Mini-Exercise 9.2 LO 5 Calculate operating income...Ch. 9 - Mini-Exercise 9.3 LO 6 Calculate basic EPS Net...Ch. 9 - Mini-Exercise 9.4
LO 10
Calculate cash flows from...Ch. 9 - Exercise 9.5
LO 1
Calculate earned revenues Big...Ch. 9 - Exercise 9.6 LO 1 Calculate earned revenues...Ch. 9 - Exercise 9.7 LO 2 Effects of inventory error If...Ch. 9 - Exercise 9.8 LO 2 Effects of inventory error...Ch. 9 - Prob. 9.9ECh. 9 - Prob. 9.10E
Ch. 9 - Exercise 9.11 LO 5 Operating income versus net...Ch. 9 - Prob. 9.12ECh. 9 - Prob. 9.13ECh. 9 - Prob. 9.14ECh. 9 - Prob. 9.15ECh. 9 - Prob. 9.16ECh. 9 - Prob. 9.17ECh. 9 - Prob. 9.18ECh. 9 - Problem 9.19 LO 5 Calculate operating income and...Ch. 9 - Prob. 9.20PCh. 9 - Problem 9.21
LO 3
Use gross profit ratio to...Ch. 9 - Prob. 9.22PCh. 9 - Prob. 9.23PCh. 9 - Problem 9.24
LO 10
Prepare a statement of cash...Ch. 9 - Problem 9.25
LO 10
Cash flows from operating,...Ch. 9 - Prob. 9.26PCh. 9 - Prob. 9.27PCh. 9 - Problem 9.28 LO 10. 11 Complete balance sheet and...Ch. 9 - Prob. 9.29PCh. 9 - Prob. 9.30PCh. 9 - Prob. 9.31CCh. 9 - Prob. 9.32CCh. 9 - Prob. 9.33C
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
- Break-even analysis Somerset Inc. has finished a new video game, Snowboard Challenge. Management is now considering its marketing strategies. The following information is available: Anticipated sales price per unit 80 Variable cost per unit 35 Anticipated volume 1,000,000 units Production costs 20,000,000 Anticipated advertising 15,000,000 The cost of the video game, packaging, and copying costs. Two managers, James Hamilton and Thomas Seymour, had the following discussion of ways to increase the profitability of this new offering: James: I think we need to think of some way to increase our profitability Do you have any ideas? Thomas: Well, I think the best strategy would be to become aggressive on price. James: How aggressive? Thomas: If we drop the price to 60 per unit and maintain our advertising budget at 15,000,000, I think we will generate total sales of 2.000,000 units. James: I think thats the wrong way to go. Youre giving too much up on price. Instead, I think we need to follow an aggressive advertising strategy Thomas: How aggressive? James: If we increase our advertising to a total of 25,000,000, we should be able to increase sales volume to 1,400.000 units without any change in price. Thomas: I dont think thats reasonable. Well never cover the increased advertising costs. Which strategy is best: Do nothing? Follow the advice of Thomas Seymour? Or follow James Hamiltons strategy?arrow_forwardBreak-even analysis Somerset Inc. has finished a new video game, Snowboard Challenge. Management is now considering its marketing strategies. The following information is available: Anticipated vales price per unit................ 80 Variable cost per unit......................... 35 Anticipated volume........................... 1,000,000 units Production costs.............................. 20,000,000 Anticipated advertising........................ 15,000,000 Two managers, James Hamilton and Thomas Seymour, had the following discussion of ways to increase the profitability of this new offering: James: I think we need to think of some way to increase our profitability. Do you have any ideas? Thomas: Well. I think the best strategy would be to become aggressive on price. James: How aggressive? James: lf we drop the price to 60 per unit and maintain our advertising budget at 15,000,000. I think we will generate total sales of 2,000,000 units. James: I think that's the wrong way to go. You're giving up too much on price. Instead, I think we need to follow an aggressive advertising strategy. Thomas: How aggressive? James: If we increase our advertising to a total of 25,000,000, we should be able to increase sales volume to 1,400,000 units without any change in price. Thomas: l dont think that's reasonable. We'll never cover the increased advertising costs. Which strategy is best: Do nothing, follow the advice of Thomas Seymour, orb follow James Hamilton's strategy?arrow_forwardBreak-even analysis Somerset Inc. has finished a new video game, Snowboard Challenge. Management is now considering its marketing strategies. The following information is available: Anticipated vales price per unit................ 80 Variable cost per unit......................... 35 Anticipated volume........................... 1,000,000 units Production costs.............................. 20,000,000 Anticipated advertising........................ 15,000,000 Two managers, James Hamilton and Thomas Seymour, had the following discussion of ways to increase the profitability of this new offering: James: I think we need to think of some way to increase our profitability. Do you have any ideas? Thomas: Well. I think the best strategy would be to become aggressive on price. James: How aggressive? James: lf we drop the price to 60 per unit and maintain our advertising budget at 15,000,000. I think we will generate total sales of 2,000,000 units. James: I think that's the wrong way to go. You're giving up too much on price. Instead, I think we need to follow an aggressive advertising strategy. Thomas: How aggressive? James: If we increase our advertising to a total of 25,000,000, we should be able to increase sales volume to 1,400,000 units without any change in price. Thomas: l dont think that's reasonable. We'll never cover the increased advertising costs. Which strategy is best: Do nothing, follow the advice of Thomas Seymour, orb follow James Hamilton's strategy?arrow_forward
- Product costing and decision analysis for a service company Blue Star Airline provides passenger airline service, using small jets. The airline connects four major cities: Charlotte, Pittsburgh, Detroit, and San Francisco. The company expects to fly 170,000 miles during a month. The following costs are budgeted for a month: Fuel 2,120,000 Ground personnel 788,500 Crew salaries 850,000 Depreciation 430,000 Total costs 4,188,500 Blue Star management wishes to assign these costs to individual flights in order to gauge the profitability of its service offerings. The following activity bases were identified with the budgeted costs: Airline Cost Activity Base Fuel, crew, and depreciation costs Number of miles flown Ground personnel Number of arrivals and departures at an airport The size of the companys ground operation in each city is determined by the size of the workforce. The following data are available from corporate records for each terminal operation: Terminal City Ground Personnel Cost Number of Arrivals/Departures Charlotte 256,000 320 Pittsburgh 97,500 130 Detroit 129,000 150 San Francisco 306,000 340 Total 788,500 940 Three recent representative flights have been selected for the profitability study. Their characteristics are as follows: Description Miles Flown Number of Passengers Ticket Price per Passenger Flight 101 Charlotte to San Francisco 2,000 80 695,00 Flight 102 Detroit to Charlotte 800 50 441,50 Flight 103 Charlotte to Pittsburgh 400 20 382,00 Instructions 1. Determine the fuel, crew, and depreciation cost per mile flown. 2. Determine the cost per arrival or departure by terminal city. 3. Use the information in (1) and (2) to construct a profitability report for the three flights. Each flight has a single arrival and departure to its origin and destination city pairs.arrow_forwardQuestion 6 of 10 Moving to another question will save this response. Question 6 Javed Corporation produces and sells a single product, has provided its contribution format income statement for March. Sales (17,000 units) Rs. 2,210,000 Variable Expenses 1,530,000 Contribution Margin 680,000 Fixed Cost 250,000 Net Profit 430,000 Number of units to be sold so that target profit of Javed Corporation increased by Rs. 48,000?arrow_forwardCh. 8 Homework Question 7 (a) Please solve and explain the following problem. Shadee Corp. expects to sell 600 sun visors in May and 800 in June. Each visor sells for $18. Shadee’s beginning and ending finished goods inventories for May are 75 and 50 units, respectively. Ending finished goods inventory for June will be 60 units. Each visor requires a total of $4.00 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $1.50 each. Shadee wants to have 30 closures on hand on May 1, 20 closures on May 31, and 25 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,000 per month, and variable manufacturing overhead is $1.25 per unit produced. Each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $9 per hour. Additional information: Selling costs are expected to be 6 percent of sales.Fixed administrative expenses per month total $1,200. Determine Shadee's budgeted selling and…arrow_forward
- Exercise 5-1 (Algo) The Effect of Changes in Sales Volume on Net Operating Income [LO5-1] Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (7,300 units) $ 240,900 $ 33.00 Variable expenses 131,400 18.00 Contribution margin 109,500 $ 15.00 Fixed expenses 54,800 Net operating income $ 54,700 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 40 units? 2. What would be the revised net operating income per month if the sales volume decreases by 40 units? 3. What would be the revised net operating income per month if the sales volume is 6,300 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating incomearrow_forwardEXERCISE 5–12 Multiproduct Break-Even Analysis [LO5–9]Olongapo Sports Corporation distributes two premium golf balls—the Flight Dynamic and the Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: {picture11} Fixed expenses total $183,750 per month. Required:1. Prepare a contribution format income statement for the company as a whole. Carry computations to one decimal place.2. Compute the break-even point for the company based on the current sales mix.3. If sales increase by $100,000 a month, by how much would you expect net operating incometo increase? What are your assumptions?arrow_forwardEXERCISE 6–8 Compute the Margin of Safety [ LO7 ] Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month’s budget appear below: Selling price . . . . . . . $30 per unit Variable expenses . . $20 per unit Fixed expenses . . . . $7,500 per month Unit sales . . . . . . . . . 1,000 units per month Required: 1. Compute the company’s margin of safety. 2. Compute the company’s margin of safety as a percentage of its sales.arrow_forward
- Exercise 14-3 (Algo) Internal Rate of Return [LO14-3] Wendell’s Donut Shoppe is investigating the purchase of a new $34,600 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $6,500 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,500 dozen more donuts each year. The company realizes a contribution margin of $1.60 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? 2. What discount factor should be used to compute the new machine’s internal rate of return? (Round your answers to 3 decimal places.) 3. What is the new machine’s internal rate of return? (Round your final answer…arrow_forwardExercise 14-3 (Algo) Internal Rate of Return [LO14-3] Wendell’s Donut Shoppe is investigating the purchase of a new $42,800 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,700 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 2,500 dozen more donuts each year. The company realizes a contribution margin of $1.50 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? 2. What discount factor should be used to compute the new machine’s internal rate of return? (Round your answers to 3 decimal places.) 3. What is the new machine’s internal rate of return? (Round your final answer…arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Financial & Managerial AccountingAccountingISBN:9781285866307Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting (Text Only)AccountingISBN:9781285743615Author: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
Financial & Managerial Accounting
Accounting
ISBN:9781337119207
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting (Text Only)
Accounting
ISBN:9781285743615
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
What is Risk Management? | Risk Management process; Author: Educationleaves;https://www.youtube.com/watch?v=IP-E75FGFkU;License: Standard youtube license