on CVP Analysis and Contribution Format Income Statement Practices 1- BELLI PITT INC. Belli-Pitt, Inc, produces...

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on CVP Analysis and Contribution Format Income Statement Practices 1- BELLI PITT INC. Belli-Pitt, Inc, produces a single product. The results of the company's operations for a typical month are summarized in contribution format as follows: Sales $540,000 360,000 Contribution margin 180,000 Variable expenses Fixed expenses Net operating income 120,000 $60,000 The company produced and sold 120,000 kilograms of product during the month. There were no beginning or endin inventories. Required: a) Given the present situation, compute i. The break-even sales in kilograms. Loff *ii. The break-even sales in dollars. iii. iv. The sales in kilograms that would be required to produce net operating income of $90,000. The margin of safety in dollars. b) An important part of processing is performed by a machine that is currently being leased for $20,000 per month. Belli-Pitt has been offered an arrangement whereby it would pay $0.10 royalty per kilogram processed by the machine rather than the monthly lease. i. Should the company choose the lease or the royalty plan? ii. Under the royalty plan compute break-even point in kilograms. iii. iv. Under the royalty plan compute break-even point in dollars. Under the royalty plan determine the sales in kilograms that would be required to produce net operating income of $90,000. on CVP Analysis and Contribution Format Income Statement Practices 1- BELLI PITT INC. Belli-Pitt, Inc, produces a single product. The results of the company's operations for a typical month are summarized in contribution format as follows: Sales $540,000 360,000 Contribution margin 180,000 Variable expenses Fixed expenses Net operating income 120,000 $60,000 The company produced and sold 120,000 kilograms of product during the month. There were no beginning or endin inventories. Required: a) Given the present situation, compute i. The break-even sales in kilograms. Loff *ii. The break-even sales in dollars. iii. iv. The sales in kilograms that would be required to produce net operating income of $90,000. The margin of safety in dollars. b) An important part of processing is performed by a machine that is currently being leased for $20,000 per month. Belli-Pitt has been offered an arrangement whereby it would pay $0.10 royalty per kilogram processed by the machine rather than the monthly lease. i. Should the company choose the lease or the royalty plan? ii. Under the royalty plan compute break-even point in kilograms. iii. iv. Under the royalty plan compute break-even point in dollars. Under the royalty plan determine the sales in kilograms that would be required to produce net operating income of $90,000.

Answer rating: 100% (QA)

a Given the present situation compute i The breakeven sales in kilograms The breakeven sales in kilograms can be calculated using the contribution margin per unit In this case the contribution margin ... View the full answer