Disk City, Inc., is a retailer for digital video disks. The projected net income for the current year is $2,340,000 based on a sales volumeof 290,000 video disks. Disk City has been selling the disks for $17 each. The variable costs consist of the $5 unit purchase price ofthe disks and a handling cost of $2 per disk. Disk City's annual fixed costs are $560,000.Management is planning for the coming year, when it expects that the unit purchase price of the video disks will increase 30 percent.(Ignore income taxes.)Required:1. Calculate Disk City's break-even point for the current year in number of video disks. (Round your final answer up to nearest wholenumber.)2. What will be the company's net income for the current year if there is a 20 percent increase in projected unit sales volume?3. What volume of sales (in dollars) must Disk City achieve in the coming year to maintain the same net income as projected for thecurrent year if the unit selling price remains at $17? (Do not round intermediate calculations. Round your final answer to the nearestwhole number.)4. In order to cover a 30 percent increase in the disk's purchase price for the coming year and still maintain the current contribution-margin ratio, what selling price per disk must Disk City establish for the coming year? (Do not round intermediate calculations. Roundyour final answer to 2 decimal places.)1.2.3.4Break-even pointNet incomeVolume of salesSelling price per disk+unitsChe

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Disk City, Inc., is a retailer for digital video disks. The projected net of 290,000 video disks. Disk City has been selling the disks for $17 the disks and a handling cost of $2 per disk. Disk City's annual fixe- Management is planning for the coming year, when it expects that (Ignore income taxes.) Required: 1. Calculate Disk City's break-even point for the current year in nun number.) the 2. What will be the company's net income for the current year if 3. What volume of sales (in dollars) must Disk City achieve in the ce

Disk City, Inc., is a retailer for digital video disks. The projected net of 290,000 video disks. Disk City has been selling the disks for $17 the disks and a handling cost of $2 per disk. Disk City's annual fixe- Management is planning for the coming year, when it expects that (Ignore income taxes.) Required: 1. Calculate Disk City's break-even point for the current year in nun number.) the 2. What will be the company's net income for the current year if 3. What volume of sales (in dollars) must Disk City achieve in the ce

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10EB: Keleher Industries manufactures pet doors and sells them directly to the consumer via their web...

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Keleher Industries manufactures pet doors and sells them directly to the consumer via their web site. The marketing manager believes that if the company invests in new software, they will increase their sales by 10%. The new software will increase fixed costs by $400 per month. Prepare a forecasted contribution margin income statement for Keleher Industries reflecting the new software cost and associated increase in sales. The previous annual statement is as follows:
Disk City, Inc. is a retailer for digital video disks. The projected net income for the current year is $1,760,000 based on a sales volume of 260,000 video disks. Disk City has been selling the disks for $19 each. The variable costs consist of the $8 unit purchase price of the disks and a handling cost of $2 per disk. Disk City’s annual fixed costs are $580,000. Management is planning for the coming year, when it expects that the unit purchase price of the video disks will increase 30 percent. (Ignore income taxes.) Q. What volume of sales (in dollars) must Disk City achieve in the coming year to maintain the same net income as projected for the current year if the unit selling price remains at $19? (Do not round intermediate calculations. Round your final answer to the nearest whole number.)
Disk City, Inc., is a retailer for digital video disks. The projected net income for the current year is $200,000 based on a sales volume of 200,000 video disks. Disk City has been selling the disks for $16 each. The variable costs consist of the $10 unit purchase price of the disks and a handling cost of $2 per disk. Disk City's annual fixed costs are S600,000. Management is planning for the coming year, when it expects that the unit purchase price of the video disks will increase 30 percent. (Ignore income taxes.) Required: 1. Calculate Disk City's break-even point for the current year in number of video disks.
Disk City, Inc., is a retailer for digital video disks. The projected net income for the current year is $2,260,000 based on a sales volume of 270,000 video disks. Disk City has been selling the disks for $17 each. The variable costs consist of the $5 unit purchase price of the disks and a handling cost of $2 per disk. Disk City’s annual fixed costs are $440,000. Management is planning for the coming year, when it expects that the unit purchase price of the video disks will increase 20 percent. (Ignore income taxes.) Required:1. Calculate Disk City’s break-even point for the current year in number of video disks. (Round your final answer up to nearest whole number.)2. What will be the company’s net income for the current year if there is a 15 percent increase in projected unit sales volume?3. What volume of sales (in dollars) must Disk City achieve in the coming year to maintain the same net income as projected for the current year if the unit selling price remains at $17? (Do not…
"Disk City, Inc., is a retailer for digital video disks. The projected net income for the current year is $200,000 based on a sales volume of 200,000 video disks. Disk City has been selling the disks for $16 each. The variable costs consist of the $10 unit purchase price of the disks and a handling cost of $2 per disk. Disk City’s annual fixed costs are $600,000. Management is planning for the coming year, when it expects that the unit purchase price of the video disks will increase 30 percent. (Ignore income taxes.). "Required: 1.Calculate Disk City’s break-even point for the current year in number of video disks. 2.What will be the company’s net income for the current year if there is a 10 percent increase in projected unit sales volume? 3.What volume of sales (in dollars) must Disk City achieve in the coming year to maintain the same net income as projected for the current year if the unit selling price remains at $16? 4.In order to cover a 30 percent increase in…
Shue Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $23,800, and the company expects to sell 1,550 per year. The company currently sells 1,900 units of its existing model per year. If the new model is introduced, sales of the existing model will fall to 1,570 units per year. The old board retails for $22,200. Variable costs are 56 percent of sales, depreciation on the equipment to produce the new board will be $1,575,000 per year, and fixed costs are $3,025,000 per year. If the tax rate is 25 percent, what is the annual OCF for the project? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. OCF
The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. Annual additional tooling costs $250,000 annually. b. Average inventory would decline by 80% from the current level of $1,000,000. c. Insurance, space, materials-handling, and setup costs, which currently total $400,000 annually, would decline by 20%. d. The emphasis on quality inherent in JIT production would reduce rework costs by 25%. The Knot currently incurs $160,000 in annual rework costs. e. Improved product quality under JIT production would enable The Knot to raise the price of its product by $2 per unit. The Knot sells 100,000 units each year. The Knot’s required rate of return on inventory investment is 15% per year. Q. Calculate the net benefit or cost to The Knot if it adopts JIT production at the Spartanburg plant.
The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. Annual additional tooling costs $250,000 annually. b. Average inventory would decline by 80% from the current level of $1,000,000. c. Insurance, space, materials-handling, and setup costs, which currently total $400,000 annually, would decline by 20%. d. The emphasis on quality inherent in JIT production would reduce rework costs by 25%. The Knot currently incurs $160,000 in annual rework costs. e. Improved product quality under JIT production would enable The Knot to raise the price of its product by $2 per unit. The Knot sells 100,000 units each year. The Knot’s required rate of return on inventory investment is 15% per year. Q. What nonfinancial and qualitative factors should The Knot consider when making the decision to adopt JIT production?
The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. Annual additional tooling costs $250,000 annually. b. Average inventory would decline by 80% from the current level of $1,000,000. c. Insurance, space, materials-handling, and setup costs, which currently total $400,000 annually, would decline by 20%. d. The emphasis on quality inherent in JIT production would reduce rework costs by 25%. The Knot currently incurs $160,000 in annual rework costs. e. Improved product quality under JIT production would enable The Knot to raise the price of its product by $2 per unit. The Knot sells 100,000 units each year. The Knot’s required rate of return on inventory investment is 15% per year. Q. Suppose The Knot implements JIT production at its Spartanburg plant. Give examples of performance measures The Knot could use to evaluate and control JIT…
Sonora, Inc. is launching a new product that it estimates will sell for $95 per unit. Annual demand is estimated to be 98,000 units. Sonora estimates that using its current manufacturing technology, it can manufacture the units for $37 per unit, but if it purchases a new machine, the units can be manufactured for $36 per unit. Sonora has a target profit of 20% return on sales. Under target costing, what is the target cost for the new product?
The Bremer Co. manufactures cordless telephones Bremer is planning to implement a JIT production system, which requires annual tooling costs of $150,000. Bremer estimates that the following annual benefits would arise from JIT production. a. Average inventory will decline by $700,000 from $900,000 to $200,00 b. Insurance, space, materials handling, and setup costs, which currently total $200,00 would decline by 30% c. The emphasis on quality inherent in JIT system would reduce rework costs by 20% Bremer currently incurs $350,000 on rework. d. Better quality would eneble Bremer to raise the prices of its products by $3 per unit. Bremer sells $30,000 unit each year. Bremer required rate of return on inventory investment is 12% per year Required: Calculate the net benefit or cost to the Bremer Corporation From implementing a JIT production system.
Sunland, Inc., sells two types of water pitchers, plastic and glass. Plastic pitchers cost the company $25 and are sold for $35. Glass pitchers cost $24 and are sold for $45. All other costs are fixed at $572,000 per year. Current sales plans call for 14,000 plastic pitchers and 28,000 glass pitchers to be sold in the coming year.