Question;BE 126;Archer Industries sells three different sets of;sportswear. Sleek sells for $30 and has variable costs of $18, Smooth sells for;$50 and has variable costs of $30, Potent sells for $70 and has variable costs;of $45. The sales mix of the three sets is: Sleek, 50%, Smooth, 30%, and;Potent, 20%.;Instructions;What is the weighted-average unit contribution;margin?;BE 127;Lazaro Inc. sells two product lines.;The sales mix of the product lines is: Standard, 60%, and Deluxe, 40%. The;contribution margin ratio of each line is: Standard, 40%, and Deluxe, 45%. Lazaro?s;fixed costs are $1,995,000.;Instructions;What is the dollar amount of Deluxe sales at the;break-even point?;BE 128;Hunt, Inc. provided the following;information concerning two products;Product;12 Product 43;Contribution margin per unit $22 $18;Machine hours required for one unit 2 hours 1.5 hours;Instructions;Compute the contribution margin per;unit of limited resource for each product. Which product should Hunt tell its;sales personnel to ?push? to customers?;BE 129;Gallery Corporation makes two;products, footballs and baseballs. Additional information follows;Footballs Baseballs;Units 2,000 2,500;Sales $60,000 $25,000;Variable costs 24,000 13,750;Fixed costs 10,000 5,250;Net income $26,000 $ 6,000;Yards of leather per unit 1.25 0.25;Profit per unit $13.00 $2.40;Contribution margin per unit $18.00 $4.50;Assume that Gallery is able to order;an additional 2,500 yards of leather and wishes to maximize its income. Of the;additional units it produces, at least 400 of each product are necessary for;sales.;Instructions;How many units of each must be;produced?;BE 130;Marina Manufacturing is considering;buying new equipment for its factory. The new equipment will reduce variable;labor costs but increase depreciation expense. Contribution margin is expected;to increase from $250,000 to $300,000. Net income is expected to remain the;same at $100,000.;Instructions;Compute the degree of operating;leverage before and after the purchase of the new equipment and interpret your;results..;BE 131;The degree of operating leverage for Gurney;Inc.. and Dough Company are 2.4 and 5.6 respectively. Both have net incomes of;$60,000. Determine their respective contribution margins.;aBE 132;Swift Co. produces footballs. It;incurred the following costs this year;Direct materials $35,000;Direct labor 31,000;Fixed manufacturing overhead 22,000;Variable manufacturing overhead 38,000;Fixed selling and administrative;expenses 23,000;Variable selling and administrative;expenses 14,000;Instructions;What are the total product costs for;the company under variable costing?;aBE 133;Swift Co. produces footballs. It;incurred the following costs this year;Direct materials $35,000;Direct labor 31,000;Fixed manufacturing overhead 22,000;Variable manufacturing overhead 38,000;Fixed selling and administrative;expenses 23,000;Variable selling and administrative;expenses 14,000;Instructions;What are the total product costs for;the company under absorption costing?;aBE 134;During 2013, Basler Manufacturing;produced 60,000 units and sold 55,000 for $10 per unit. Variable manufacturing;costs were $4 per unit. Annual fixed manufacturing overhead was $120,000 ($2;per unit). Variable selling and administrative costs were $1 per unit sold, and;fixed selling and administrative costs were $30,000.;Instructions;Prepare a variable costing income;statement.;aBE 135;During 2013, Basler Manufacturing;produced 60,000 units and sold 55,000 for $10 per unit. Variable manufacturing;costs were $4 per unit. Annual fixed manufacturing overhead was $120,000 ($2;per unit). Variable selling and administrative costs were $1 per unit sold, and;fixed selling and administrative costs were $30,000.;Instructions;Prepare an absorption costing income;statement.;ExercisesEx. 136;Kindle, Inc. manufactures cosmetic products that;are sold through a network of sales agents. The agents are paid a commission of;12.5% of sales. The income statement for the year ending December 31, 2013, is;as follow.;KINDLE;INC.;Income Statement;Year Ending December 31, 2013;Sales $130,000;Cost of goods sold;Variable $58,500;Fixed 14,350 72,850;Gross margin 57,150;Selling and marketing expenses;Commissions $16,250;Fixed costs 17,100 33,350;Operating income $ 23,800;The company;is considering hiring its own sales staff to replace the network of agents. It;will pay its salespeople a commission of 10% and incur additional fixed costs;of $13 million.;Instructions;(a) Under the current policy of using a network;of sales agents, calculate Kindle, Inc.'s break-even point in sales dollars for;the year 2013.;(b) Calculate the company's break-even point in;sales dollars for the year 2013 if it hires its own sales force to replace the;network of agents.;(c) Calculate the degree of operating leverage at;sales of $130 million if (1) Kindle, Inc. uses sales agents, and (2) Kindle;Inc. employs its own sales staff.;Ex. 137;Qwik Service has over 200 auto-maintenance;service outlets nationwide. It provides primarily two lines of service: oil;changes and brake repair. Oil change-related services represent 75% of its;sales and provide a contribution margin ratio of 20%. Brake repair represents 25%;of its sales and provides a 60% contribution margin ratio. The company's fixed;costs are $12,000,000 (that is, $60,000 per service outlet).;Instructions;(a) Calculate the dollar amount of each type of;service that the company must provide in order to break even.;(b) The company has a desired net income of $45,000;per service outlet. What is the dollar amount of each type of service that must;be provided by each service outlet to meet its target net income per outlet?;Ex. 138;Seaver Corporation manufactures mountain bikes.;It has fixed costs of $4,140,000. Seaver?s sales mix and contribution margin;per unit is shown as follows;Sales;Mix Contribution;Margin;Green 25% $120;Brown 45% $ 60;Blue 30% $ 40;Instructions;Compute the number of each type of bike that the;company would need to sell in order to break even under this product mix.;Ex. 139;DeMont Tax Services provides primarily;two lines of service: accounting and tax. Accounting-related services represent;60% of its revenue and provide a contribution margin ratio of 30%. Tax services;represent 40% of its revenue and provide a 40% contribution margin ratio. The;company?s fixed costs are $4,250,000.;Instructions;(a) Calculate the revenue from each type of;service that the company must achieve to break even.;(b) The company has a desired net income of $1,700,000.;What amount of revenue would DeMont earn from tax services if it achieves this;goal with the current sales mix?;Ex. 140;Blue Chance Co. sells computers and video game;systems. The business is divided into two divisions along product lines.;Variable costing income statements for the current year are presented below;Computers VG Systems Total;Sales $700,000 $300,000 $1,000,000;Variable costs 420,000 210,000 630,000;Contribution margin $280,000 $ 90,000 370,000;Fixed costs 296,000;Net income $ 74,000;Ex 140 (cont.);Instructions;(a) Determine the sales mix and contribution margin;ratio for each division.;(b) Calculate the company?s weighted-average;contribution margin ratio.;(c) Calculate the company?s break-even point in;dollars.;(d) Determine the sales level, in dollars, for;each division at the break-even point.
Paper#41743 | Written in 18-Jul-2015Price : $21