Question: From Exercise 5.30, we know that Ajay Singhs gift-wrapping service charges $3 for each package wrapped. Ajay estimates that his variable costs will total $1

From Exercise 5.30, we know that Ajay Singh’s gift-wrapping service charges $3 for each package wrapped. Ajay estimates that his variable costs will total $1 per package wrapped and that his fixed costs will total $600 for the month.

Required:

a. Suppose Ajay’s variable costs were to increase by 50% per package. What is Ajay’s breakeven sales volume?

b. Suppose Ajay estimates that he will be able to wrap 3,000 packages in a month. Assume also that he wishes to earn $2,400 in profit for the month. What is the minimum price that Ajay must charge to reach his profit goal?

c. How much profit would Ajay earn if December revenue were $4,500 for the month?

Step by Step Solution

★★★★★

3.35 Rating (173 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a A 50 increase changes Ajays variable costs from 100 per package to 100 1 50 or 150 per package Con... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

229-B-M-A-B-P-C (650).docx

120 KBs Word File

Students Have Also Explored These Related Managerial Accounting Questions!

How much data would you lose if your computer's hard drive crashed right now? Could you reduce the amount of data that would be lost? How?

If the level of government spending were to increase by 50 units in the IS-LM schedule model, how would this affect the position of the IS schedule? In which direction would the schedule shift and by...

How much energy would be released if Earth were annihilated by collision with ananti-Earth? Particle Charge Whimsy Seriousness Cuteness 1 -2 3 2 -3 -1 --1 1. -4 -2 -1 6. 0. 6. -4 9-

Ajay Singh's gift-wrapping service charges $3 for each package wrapped. Ajay estimates that his variable costs will total $1 per package wrapped and that his fixed costs will total $600 for the...

Ajay Singh offers gift-wrapping services at the local mall. Ajay wraps each package, regardless of size, in the customers choice of wrapping paper and bow for a price of $3. Ajays variable costs...

Problem 3 : Ajay Singh plans to offer gift - wrapping services at the local mall during the month of December. Ajay will wrap each package, regardless of size, in the customer's choice of wrapping...

5.30 CVP relation and profit planning, unit contribution margin approach Ajay Singh plans to offer gift-wrapping services at the local mall during the month of December. Ajay will wrap each package,...

Problem 1: Zap, Inc., manufactures and sells a broadleaf herbicide that kills unwanted grasses and weeds. Via their television infomercials, Zap encourages homeowners to "take control of their yards"...

Briefly discuss the cost-volume-profit analysis model and how it is used. Use the attached PDF. APA Citation. 300 words. REVISED PAGES 3 Chapter Three 1 Fundamentals of Cost-Volume-Prot Analysis...

Calculating the sales volume and flexible budget variances, budget reconciliation report (LO1, LO2, LO3). During the holiday season, Ajay Singh offers gift-wrapping services at the local mall. Ajay...

Journalize the following transactions in the accounts of Lamp Light Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables: Mar. 19. Sold...

Your client, Cars Unlimited, Inc., is currently the largest client for the local office of the audit firm. Cars Unlimited, Inc. is a large car dealership that sells over 15,000 cars a year. You have...

60. LO.7 Aqua, Inc., a calendar year corporation formed in 2001, reports the following gross receipts and taxable income for 20012012. Year Gross Receipts Taxable Income 2001 $4,000,000 $1,450,000...

Valid contracts (i) are made by free consent. (iii) have lawful consideration and lawful object. (ii) are made by competent parties. (iv) all of the above.

Hirams Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern...

Smoky Mountain Corporation makes two types of hiking bootsXtreme and the Pathfinder. Data concerning these two product lines appear below: The company has a traditional costing system in which...

2.5 points QUESTION 53 Which of the following is true of worthless securities? If the securities become worthless at any time during the tax year, the loss is deemed to have occurred on the last day...

a product that has a variable cost of $2.10 per unit and total fixed cost of $135,000 wants to determine the level of output necessary to avoid losses. a. What level of sales is necessary to...

Please explain and write readable When sorting through the payroll documents that Mr. Castle gave you, you find the following unentered timesheets for Dan Miller and Gregg Schneider. Timesheet Dec 16...