Thomas Edison State College
Principles of Managerial Accounting (ACC-102)
Final Project
1. Cost-volume-profit relationships (15 points)
The following data are available for a product manufactured and sold by Logan Company:
Compute the following:
(a) Contribution margin per unit: $_______________
Solution: Computation of the Contribution margin per unit
Contribution margin per unit = Selling price per unit – Variable Cost per unit
Where as
Selling price per unit = 212
Variable Cost per unit =128
Contribution margin per unit = 212 – 128
Contribution margin per unit = $84
(b) Number of units that must be sold to break-even: _______________ units
Solution: Computation of the Number of units that must be sold to break-even
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It is therefore a sunk cost.
The $320,000, on the other hand, is a fixed cost associated with the proposed addition.
This cost has not yet been incurred. Because it is necessary to the proposed addition it is an out-of-pocket cost
(b) Calculate by how much the proposed addition will either increase or reduce operating income. Show all work.
Solution: Computation of the following
Operating income = ($750,000 Sales - $450,000 variable costs - $320,000 fixed costs).
Operating income = ($750,000 - $450,000 - $320,000).
Operating income = -$20,000
The proposed addition will decrease operating income by $20,000;
3. Responsibility income statement-preparation (20 points)
Gameland Village is segmented into two sales departments: software and video games. During April, these two departments reported the following operating results:
Complete the following segmented income statement for Gameland Village. Follow the contribution margin approach, and show percentages as well as dollar amounts. Conclude your income statement with the company’s income from operations
GAMELAND VILLAGE
Income Statement by Product Lines
For the Month Ended April 30, 20__
Segments
Gameland Village
Software
Video Games
Dollars
%
Dollars
%
Dollars
%
Sales
$
$400,000
100
$200,000
100
Variable Costs
65
56
$
$
The company maintains a minimum cash balance of at least $50,000 at the end of each month. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.
| Textbook pages 11-12. Assets = $12,000 + $50,000 = $62,000. Cash and inventory are examples.
3. Market research estimates that monthly equipment production could be increased to 3,500 units which is well within production capacity limitations, if the price were cut from $1,580 to $1,400 per unit. Assuming the cost behavior patterns implied by the data in Exhibit 1 are correct, would you recommend that this action be taken? What would be the impact on monthly sales, costs, and income?
Because each product has a different contribution margin percentage, the volume required for each break-even point would be different and will not add up to the company’s overall break-even volume of 1,100,000 units; the overall break-even volume assumes that there is only one contribution margin percentage which is :
For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.
Access the "Litigation" section of the SEC's website at www.sec.gov/litigation.shtml. Click on "Accounting and Auditing Enforcement Releases." Click on "AAER-3234" filed January 20, 2011. Read the release and the related SEC Complaint. Summarize the release and complaint in 2-3 pages (12-point, double spaced).
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National governments in coffee growing countries have a major investment in Starbucks. Some of these countries include Costa Rica, Guatemala, Kenya, Nicaragua, and Tanzania. Starbucks strive to be responsible for its
The analysis of the financial projection in this report is based on the assumptions and the information which you (client) provided. These assumptions and information can be change with the passage of time. The
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These extend from the TC and travel horizontally along walls, ceilings, or floors to the LAN work area.
The marketing manager would like to cut the selling price by $6 and increase the advertising budget by $2,700 per month. The marketing manager predicts that these two changes would increase monthly sales by 100 units. What should be the overall effect on the company 's monthly net operating income of this change? Show your work!
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According to the company 's accounting system, the product 's net operating loss is 10,000