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.
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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
Related Book For
Introduction to Managerial Accounting
ISBN: 978-0078025792
7th edition
Authors: Peter Brewer, Ray Garrison, Eric Noreen
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