customers. Data from the most recent period concerning these products appear below: Annual sales volume Unit...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
customers. Data from the most recent period concerning these products appear below: Annual sales volume Unit selling price Variable expense per unit Contribution margin per unit Velcro 101,000 Metal 202,000 Nylon 404,000 $ 1.65 $ 1.50 $ 0.85 $ 1.25 $ 0.40 $ 0.70 $ 0.80 $ 0.25 $ 0.60 Total fixed expenses are $404,000 per period. Of the total fixed expenses. $20,000 could be avoided if the Velcro product is dropped, $80,000 if the Metal product is dropped, and $60,000 if the Nylon product is dropped. The remaining fixed expenses of $244,000 consist of common fixed expenses such as administrative salaries and rent on the factory building that could be avoided only by going out of business. The company's managers would like to compute the break-even point in dollar sales for the company as a whole, and the break-even point in unit sales for each product. They are considering two methods for computing each product's break-even point in unit sales: Method number 1. Include each product's traceable fixed costs and an allocated share of the common fixed costs in the numerator of each break-even calculation. The common fixed costs would be allocated to the three products using sales dollars as the allocation base. Method number 2: Only include each product's traceable fixed costs in the numerator of each break-even calculation. Required: 1. Using data from the most recent period, prepare a contribution format segmented income statement. 2. What is the company's overall break-even point in dollar sales? 3a. Calculate the break-even point in unit sales for each product using method 1. 3b. What will be the company's overall profit if it sells exactly the break-even quantity of each product? 4a. Calculate the break-even point in unit sales for each product using method 2. 4b. What will be the company's overall profit if it sells exactly the break-even quantity of each product? 5. Which method should the company use to calculate each product's break-even point in unit sales? customers. Data from the most recent period concerning these products appear below: Annual sales volume Unit selling price Variable expense per unit Contribution margin per unit Velcro 101,000 Metal 202,000 Nylon 404,000 $ 1.65 $ 1.50 $ 0.85 $ 1.25 $ 0.40 $ 0.70 $ 0.80 $ 0.25 $ 0.60 Total fixed expenses are $404,000 per period. Of the total fixed expenses. $20,000 could be avoided if the Velcro product is dropped, $80,000 if the Metal product is dropped, and $60,000 if the Nylon product is dropped. The remaining fixed expenses of $244,000 consist of common fixed expenses such as administrative salaries and rent on the factory building that could be avoided only by going out of business. The company's managers would like to compute the break-even point in dollar sales for the company as a whole, and the break-even point in unit sales for each product. They are considering two methods for computing each product's break-even point in unit sales: Method number 1. Include each product's traceable fixed costs and an allocated share of the common fixed costs in the numerator of each break-even calculation. The common fixed costs would be allocated to the three products using sales dollars as the allocation base. Method number 2: Only include each product's traceable fixed costs in the numerator of each break-even calculation. Required: 1. Using data from the most recent period, prepare a contribution format segmented income statement. 2. What is the company's overall break-even point in dollar sales? 3a. Calculate the break-even point in unit sales for each product using method 1. 3b. What will be the company's overall profit if it sells exactly the break-even quantity of each product? 4a. Calculate the break-even point in unit sales for each product using method 2. 4b. What will be the company's overall profit if it sells exactly the break-even quantity of each product? 5. Which method should the company use to calculate each product's break-even point in unit sales?
Expert Answer:
Related Book For
Managerial Accounting
ISBN: 9781260247787
17th Edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
Students also viewed these accounting questions
-
Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. All three products are sold in highly competitive markets, so the company is...
-
Because of excessive pollution on the Momiss River, the state of Momiss is going to build pollution control stations. Three sites (1, 2, and 3) are under consideration. Momiss is interested in...
-
As well as its investment in T (see question 8) S also held 75% of the shares of U. U sells goods to S. During the year ending 31 March 20X4, U sells goods to S for $100 000. The cost of the goods to...
-
For the month of November, AC3220 Ltd. recorded $500,000 in sales, 40% of which were on account (terms N30), and 60% of which were cash sales. The company is required to charge 15% HST on all sales....
-
An engineer performed an experiment to determine the effect of $\mathrm{CO}_{2}$ pressure, $\mathrm{CO}_{2}$ temperature, peanut moisture, $\mathrm{CO}_{2}$ flow rate, and peanut particle size on the...
-
1. Why has there been a corporate governance "revolution" throughout the world recently? 2. What are the main areas of deficiencies as pointed out by corporate governance reformers? 3. Representing...
-
Hickory Company manufactures two products-15,000 units of Product Y and 7,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering...
-
Write a description of the concepts, the significance of the concepts to practice in general, and what kinds of organizational issues/problems might be resolved through successful implementation of...
-
After listening to the lecture on online presentations, please comment with at least two complete sentences for each of the items listed below on how you plan to manage them in an online speech. The...
-
Share the titles of and the places you found the five sources you will use in your essay, for example, "Title of Article" from Title of Journal . Explain why they're credible, how do they relate to...
-
1. From the "Eight Facts About Immigrants and Immigration" article, identify a fact that surprised you. Why were you surprised? Has your thinking changed since reading the article? If so, how? If...
-
Describe the importance of the inclusion of children with special needs in a normal Classroom and how as future teachers you can accommodate and improve the performance of special need learners in...
-
you will need to perform the tasks below or as instructed by your trainer. Receiving process 7. Demonstrate to your trainer how you will process the delivery to ensure all items meet specifications...
-
Write a note on Arabic linguistic/ grammar?
-
If your school has a subscription to the FASB Codification, go to aaahq.org/ ascLogin.cfm to log in and prepare responses to the following. (a) What is the stock dividend? (b) What is a stock split?...
-
A balloon is launched at sea level, where the air pressure is \(100 \mathrm{kPa}\). The helium has a volume of \(1000 \mathrm{~m}^{3}\) at this altitude. What is the volume of the helium when the...
-
A balloon is at a height of \(5.0 \mathrm{~km}\) and is descending at a constant rate. The buoyancy force is directed ; the drag force is directed A. Up, up B. Up, down C. Down, up D. Down, down...
-
A balloon is launched at sea level, where the air pressure is \(100 \mathrm{kPa}\). The density in the hot-air chamber is \(1.0 \mathrm{~kg} / \mathrm{m}^{3}\). What is the density of the air when...
Study smarter with the SolutionInn App