1. Cisco Co. sells two products, the deluxe model and the standard. The deluxe sells for $40/unit. The standard sells for $20/unit. Sales are projected to be 1,000 units for the deluxe and 3,000 units for the standard. The deluxe model uses 6 oz. of direct material, the standard model uses 4 oz. of direct material. The material costs $.50/oz. The deluxe model takes 1/2 hour of labor to produce, the standard model takes 1/6 hour of labor to produce. The wage rate is $12.00/hour. Total overhead is $32,000, of which $24,000 is fixed. Total selling and administration costs are $30,000, of which $14,000 is fixed. Prepare a Traditional Income Statement and a Contribution Margin Income Statement. Traditional Income Statement Contribution Margin Income Statement 2.a. How many units of the Deluxe must be sold to break even? 2.b. How many units of the Standard must be sold to break even? 2.c. What is the Contribution Margin Ratio for the Deluxe model? - 2.d. What is the Contribution Margin Ratio for the Standard model? 2.e. What sales revenue is required for the Deluxe to achieve $2,000 profit for that model? 2.f. What sales revenue is required for the Standard to achieve $2,000 profit for that model? -

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
1. Cisco Co. sells two products, the deluxe model and the standard. The deluxe sells for $40/unit.
The standard sells for $20/unit. Sales are projected to be 1,000 units for the deluxe and 3,000
units for the standard. The deluxe model uses 6 oz. of direct material, the standard model uses
4 oz. of direct material. The material costs $.50/oz. The deluxe model takes 1/2 hour of labor
to produce, the standard model takes 1/6 hour of labor to produce. The wage rate is
$12.00/hour. Total overhead is $32,000, of which $24,000 is fixed. Total selling and
administration costs are $30,000, of which $14,000 is fixed. Prepare a Traditional Income
Statement and a Contribution Margin Income Statement.
Traditional Income Statement
Contribution Margin Income Statement
2.a. How many units of the Deluxe must be sold to break even?
2.b. How many units of the Standard must be sold to break even?
-
2.c. What is the Contribution Margin Ratio for the Deluxe model?
-
2.d. What is the Contribution Margin Ratio for the Standard model?
2.e. What sales revenue is required for the Deluxe to achieve $2,000 profit for that model?
2.f. What sales revenue is required for the Standard to achieve $2,000 profit for that model?
-
Transcribed Image Text:1. Cisco Co. sells two products, the deluxe model and the standard. The deluxe sells for $40/unit. The standard sells for $20/unit. Sales are projected to be 1,000 units for the deluxe and 3,000 units for the standard. The deluxe model uses 6 oz. of direct material, the standard model uses 4 oz. of direct material. The material costs $.50/oz. The deluxe model takes 1/2 hour of labor to produce, the standard model takes 1/6 hour of labor to produce. The wage rate is $12.00/hour. Total overhead is $32,000, of which $24,000 is fixed. Total selling and administration costs are $30,000, of which $14,000 is fixed. Prepare a Traditional Income Statement and a Contribution Margin Income Statement. Traditional Income Statement Contribution Margin Income Statement 2.a. How many units of the Deluxe must be sold to break even? 2.b. How many units of the Standard must be sold to break even? - 2.c. What is the Contribution Margin Ratio for the Deluxe model? - 2.d. What is the Contribution Margin Ratio for the Standard model? 2.e. What sales revenue is required for the Deluxe to achieve $2,000 profit for that model? 2.f. What sales revenue is required for the Standard to achieve $2,000 profit for that model? -
Expert Solution
steps

Step by step

Solved in 5 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education