1.1 If the cost of manufacturing (direct material anddirect labor) is 60% of sales and profit is 10% of sales,what would be the improvement in profit if, throughbetter planning and control, the cost of manufacturingwas reduced from 60% of sales to 55% of sales? 1.2 Inproblem 1.1, how much would sales have to increase toprovide the same increase in profits (keeping themanufacturing cost the same at 60%)?

“Since you have posted multiple questions, we will provide the solution only to the first question…

Answered: 1.1 If the cost of manufacturing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question 11.11.Which of the following equations can be used to compute a firm’s magnitude of operating leverage? Net income/sales Fixed costs/contribution margin Net income/gross margin Contribution margin/net income Question 12.12.Booker Company operates a factory with two departments, X and Y. The rent paid on the manufacturing facility would most likely be allocated to departments X and Y on the basis of: direct labor hours. machine hours. square footage occupied. units sold. Question 13.13.The KnitWitt Corporation manufactures knitted shawls and scarves. The company expects to incur $1,500,000 in overhead costs during 2010. The following budget information is for 2010: ShawlsScarvesTotalNumber of units expected to be produced50,000100,000150,000Direct labor hours250,000800,0001,050,000Machine hours100,00080,000180,000If the company uses direct labor hours as the cost driver, what will be the allocation rate for 2010? $1.43 per direct labor hour $10 per direct labor hour $8.33…
Which of the following would produce no change in the contribution margin per unit? Select one: a. A 14% increase in variable cost. b.A 7% increase in selling price. CA 15% decrease in selling price. d. None of the given of answers. A 23% increase in the number of units sold.
If sales are $796,000, variable costs are 76% of sales, and income from operations is $230,000, what is the contribution margin ratio? Oa. 76% Оb. 72% Ос. 28% Od. 24%
You are given the following• Total sales 40• Total fixed cost 2• Net profit 28 What is the TOTAL contribution margin?
Please explain this statement thoroughly. "To estimate what the profit will be at various levels of activity, multiply the number of units to be sold above or below the break-even point by the unit contribution margin."
Change in operating income = change in sales dollars x contribution margin What is the equation for the "change in sales dollars"?
H
1. Assume a company sells three different products. The contribution margin ratio of the first product is 20 percent. The contribution margin ratio of the second product is 50 percent. The contribution margin ratio of the third product is 80 percent. What is the range of the company's overall contribution margin ratio?
If an organization wants to make a profit, it must generate more sales revenue than the total costs it incurs. This relation can be expressed using which of the following profit equations? O a. Operating income = [(Sales price per unit - Variable cost per unit) x #units sold] - Fixed cost O b. Operating income = [Sales price per unit - Fixed cost per unit) x # units produced] -Variable cost Oc Operating income Sales revenue - Total variable costs - Discretionary costs O d. Operating income - Sales revenue - Committed costs - Fixed costs
Holding other factors constant, a company's contribution margin per unit will increase with: a. All answers given are NOT correct. O b. any increase in quantity sold. С. any increase in variable cost per unit O d. any decrease in the selling price per unit e. increase in its total fixed costs
#27
Find the profit maximizing output given the following revenue and cost functions:R(q) = 1000q – 2q2C(q) = q3 – 59q2 + 1315q + 2000

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1.1 If the cost of manufacturing (direct material and direct labor) is 60% of sales and profit is 10% of sales, what would be the improvement in profit if, through better planning and control, the cost of manufacturing was reduced from 60% of sales to 55% of sales? 1.2 In