Etie Corporation is the maker of high-quality golf bags. The company currently has three different lines of bags, which it sells to sporting goods stores and golfshops throughout the world, Birdie sells a constant mix of 4 small bags for each medium-sized bag and 5 medium bags for each large-sized bag. Total fixed costsfor the year are expected to be $2,027,534.Small Medium LargeSelling price per bag$ 500 $750 $750$ 300 $ 475 $480Variable cost per bagThe breakeven point in units (for the year) would be: (Round up "Break-even units to the nearest whole unit and do not round other intermediate calculations.)Multiple Choice7384 small; 1796 medium; 360 large.10,881 small; 2,719 medium; 545 large.9.396 smalt; 2,344 medium; 470 largeNone of the answer choices are correct

The break-even point indicates that total units are to be sold by the business entity to recover the…

Answered: de Corporation is the maker of…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8E

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EZ Carry Corp. is the maker of high quality golf bags. The company currently has three different lines of bags, which it sells to sporting goods stores and golf shops throughout the world. EZ Carry sells a constant mix of 4 small bags for each medium-sized bag and 5 medium bags for each large-sized bag. Total fixed costs for the year are expected to be $2,027,575. Small Medium Large Selling price per bag $ 120 $ 160 $ 280 Variable cost per bag $ 40 $ 105 $ 190 The breakeven point in units (for the year) would be: (Round per-unit amounts to 3 decimal places; do not round other intermediate calculations.) Multiple Choice 18,229 small; 4,557 medium; 912 large. 20,637 small; 5,159 medium; 1,032 large. 22,839 small; 5,707 medium; 1,142 large. 24,334 small; 6,082 medium; 1,217 large.
Gotcha Covered manufactures and sells leather cases for cell phones. Each case sells for $80. Variable manufacturing costs are $30 per case. We pay a sales commission of 10% of the selling price to our salespeople. Fixed manufacturing costs are $200,000 and fixed operating costs are $35,000. Calculate the following amounts: a. b. C. ii. iii. iv. V. Target quantity if we want to generate Operating Income = $100,000 Neatly draw a CVP Chart. Be sure to label everything relevant. We currently produce and sell 10,000 cases. i. What is our expected Operating Income? How much is our Margin of Safety in units and dollars? Prepare an Income Statement (through Oper Inc) using the GM format. Prepare an Income Statement (through Oper Inc) using the CM format. Our plant manager suggested we purchase a new machine which will lower our labor costs. This change will increase Fixed Costs by $30,000 and reduce Variable Cost per Unit by $5. Calculate the new Breakeven Quantity and new expected Operating…
Woodland Wearables produces two models of a smart watch, the Basic and the Flash. The watches have the following characteristics: Basic Flash Selling price per watch $ 450 $ 550 Variable cost per watch $ 370 $ 310 Expected sales (watches) per year 75,000 25,000 The total fixed costs per year for the company are $1,632,000. Required: What is the anticipated level of profits for the expected sales volumes? Assuming that the product mix is the same at the break-even point, compute the break-even point in units. If the product sales mix were to change to nine Basic watches for each Flash watch, what would be the new break-even volume for Woodland Wearables?
On-the-Go, Inc., produces two models of traveling cases for laptop computers—the Programmer and the Executive. The bags have the following characteristics. Programmer Executive Selling price per bag $ 70 $ 100 Variable cost per bag $ 30 $ 40 Expected sales (bags) per year 8,000 12,000 The total fixed costs per year for the company are $819,000. Required: a. What is the anticipated level of profits for the expected sales volumes? b. Assuming that the product mix is the same at the break-even point, compute the break-even point. c. If the product sales mix were to change to nine Programmer-style bags for each Executive-style bag, what would be the new break-even volume for On-the-Go?
Perfect Fit Jeans Co. sells blue jeans wholesale to major retailers across the country. Each pair of jeans has a selling price of 50 with 40 in variable costs of goods sold. The company has fixed manufacturing costs of 1500000 and fixed marketing costs of 300000. Sales commissions are paid to the wholesale sales reps at 5% of revenues. The company has an income tax rate of 20%. (include formulas) How many jeans must Perfect Fit sell in order to break even? How many jeans must the company sell in order to reach A target operating income of$520,000? A net income of$520,000? How many jeans would Perfect Fit have to sell to earn the net income in requirement above if (Consider each requirement independently.) The contribution margin per unit increases by 20% The selling price is increased to $52.00. The company outsources manufacturing to an overseas company, increasing variable costs per unit by $3.00 and saving 70% of fixed manufacturing costs.
Woodland Wearables produces two models of a smart watch, the Basic and the Flash. The watches have the following characteristics: Selling price per watch Variable cost per watch Expected sales (watches) per year Basic $ 260 Flash $ 455 $ 180 18,000 $ 215 6,000 The total fixed costs per year for the company are $1,449,600. Required: a. What is the anticipated level of profits for the expected sales volumes? b. Assuming that the product mix is the same at the break-even point, compute the break-even point in units. c. If the product sales mix were to change to nine Basic watches for each Flash watch, what would be the new break-even volume for Woodland Wearables? Complete this question by entering your answers in the tabs below. Required A Required B Required C What is the anticipated level of profits for the expected sales volumes? Anticipated profit
What a Racquet, Inc. sells unique, customized tennis rackets. The results from the past year are shown below. sales in units -300000 variable costs- 3500000 fixed costs- 600000 What price should it charge its customers given a desired 40% mark up on the cost of its rackets (round to the nearest cent)?
Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling 44,000 shelves for $32 each. Cutrate Furniture approached Jansen about buying 1,200 shelves for bookcases it is building and is willing to pay $26 for each shelf. No packaging will be required for the bulk order. Jansen usually packages shelves for Home Depot at a price of $1.50 per shell. The $1.50 per-shelf cost is included in the unit variable cost of $27, with annual fixed costs of $320.000. However, the $130 packaging cost will not apply in this case. The fixed costs will be unaffected by the special order and the company has the capacity to accept the order. Based on this information, what would be the profit if Jansen accepts the special order? A. Profits will decrease by $1,200. B. Profits will increase by $31,200. C. Profits will increase by $600. D. Profits will increase by $7,200.
Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals 146,000. Each door handle sells for 12 and has variable cost of 9; each trim kit sells for 8 and has variable cost of 5. Required: 1. What are the contribution margin per unit and the contribution margin ratio for door handles and for trim kits? 2. If Polaris sells 20,000 door handles and 40,000 trim kits, what is the operating income? 3. How many door handles and how many trim kits must be sold for Polaris to break even? 4. CONCEPTUAL CONNECTION Assume that Polaris has the opportunity to rearrange its plant to produce only trim kits. If this is done, fixed costs will decrease by 35,000, and 70,000 trim kits can be produced and sold. Is this a good idea? Explain.
Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)
Tiktok Company distributes a lightweight lawn chair that sell for P150 per unit. Variable costs are P60 per unit, and fixed costs total P1,800,000 annually. The company estimates that sales will increase by P450,000 during the coming year due to increased demand. Required: By how much should net income increase?

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