Please do not give solution in image format thanku Exercise 11-15A (Static) Using contribution margin format income statement to measure the magnitudeof operating leverage LO 11-3, 11-4The following income statement was drawn from the records of Joel Company, a merchandising firm:JOEL COMPANYIncome StatementSales revenue (2,000 units x $125)Cost of goods sold (2,000 units × $65)Gross marginSales commissions (10% of sales)Administrative salaries expenseFor the Year Ended December 31, Year 1Advertising expenseDepreciation expenseShipping and handling expenses (2,000 units × $1.00)Net incomeRequiredReq Aa. Reconstruct the income statement using the contribution margin format.b. Calculate the magnitude of operating leverage. Round the answer to two decimal places.c. Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10 percent.Complete this question by entering your answers in the tabs below.Req B and CReconstruct the income statement using the contribution margin format.JOEL COMPANYIncome StatementFor the Year Ended December 31, Year 1$$< Req A$250,000(130,000)0120,000(25,000)(30,000)(20,000)(24,000)(2,000)$19,0000Req B and C >

The income statement refers to the statement which lists all the expenses incurred and revenue…

Exercise 11-15A (Static) Using contribution margin format income statement to measure the magnitude of operating leverage LO 11-3, 11-4 The following income statement was drawn from the records of Joel Company, a merchandising firm: JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (2,000 units X $125) Cost of goods sold (2,000 units x $65) Gross margin Sales commissions (10% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (2,000 units × $1.00) Net income Req A Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. Round the answer to two decimal places. c. Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10 percent. Req B and C Complete this question by entering your answers in the tabs below. Reconstruct the income statement using the contribution margin format. JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 $ $ < Req A $250,000 (130,000) 0 120,000 (25,000) (30,000) 0 (20,000) (24,000) (2,000) $19,000 Req B and C >

Exercise 11-15A (Static) Using contribution margin format income statement to measure the magnitude of operating leverage LO 11-3, 11-4 The following income statement was drawn from the records of Joel Company, a merchandising firm: JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (2,000 units X $125) Cost of goods sold (2,000 units x $65) Gross margin Sales commissions (10% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (2,000 units × $1.00) Net income Req A Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. Round the answer to two decimal places. c. Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10 percent. Req B and C Complete this question by entering your answers in the tabs below. Reconstruct the income statement using the contribution margin format. JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 $ $ < Req A $250,000 (130,000) 0 120,000 (25,000) (30,000) 0 (20,000) (24,000) (2,000) $19,000 Req B and C >

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6PB: Contribution margin, break-even sales, cost-volume-profit chart, margin of safety, and operating...

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Contribution margin, break-even sales, cost-volume-profit chart, margin of safety, and operating leverage Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: It is expected that 12,000 units will be sold at a price of 240 a unit. Maximum sales within the relevant range are 18,000 units. Instructions 1. Prepare an estimated income statement for 20Y7. 2. What is the expected contribution margin ratio? 3. Determine the break-even sales in units and dollars. 4. Construct a cost-volume-profit chart indicating the break-even sales. 5. What is the expected margin of safety in dollars and as a percentage of sales? (Round to one decimal place.) 6. Determine the operating leverage.
Problem 12-21 (Algo) Prepare a contribution margin format income statement; answer what-if questions LO 12-7, 12-8, 12-9 Shown here is an income statement in the traditional format for a firm with a sales volume of 7,500 units. Cost formulas also are shown: Revenues Cost of goods sold ($5,900 + $2.25/unit) Gross profit Operating expenses: Selling ($1,200 + $0.10/unit) Administrative ($3,500 + $0.20/unit) Operating income $34,400 22,775 $ 11,625 1,950 5,000 $ 4,675 Required: a. Prepare an income statement in the contribution margin format. b. Calculate the contribution margin per unit and the contribution margin ratio. c. Calculate the firm's operating income (or loss) if the volume changed from 7,500 units to 1. 11,250 units. 2. 3,750 units. d. Refer to your answer to part a for total revenues of $34,400. Calculate the firm's operating income (or loss) if unit selling price and variable expenses per unit do not change and total revenues 1. Increase by $14,500. 2. Decrease by $3,000.
Exercise 11-15A (Algo) Using contribution margin format income statement to measure the magnitude of operating leverage LO 11-3, 11-4 The following income statement was drawn from the records of Benson, a merchandising firm: BENSON COMPANY Income Statement For the Year Ended December 31 Sales revenue (4,500 units × $163) $ 733,500 Cost of goods sold (4,500 units × $82) (369,000 ) Gross margin 364,500 Sales commissions (5% of sales) (36,675 ) Administrative salaries expense (85,000 ) Advertising expense (34,000 ) Depreciation expense (48,000 ) Shipping and handling expenses (4,500 units × $3) (13,500 ) Net income $ 147,325 Required Reconstruct the income statement using the contribution margin format. Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Benson will earn if sales increase by 20 percent.
Problem 12-23 (Algo) Prepare a contribution margin format income statement; calculate break-even point LO 7, 8, 9, 11 Presented here is the income statement for Big Shot Inc. for the month of May: Sales $ 61,000 Cost of goods sold 53,200 Gross profit $ 7,800 Operating expenses 15,900 Operating loss $ (8,100 ) Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 17%.Required: Rearrange the preceding income statement to the contribution margin format. If sales increase by 10%, what will be the firm's operating income (or loss)? Calculate the amount of revenue required for Big Shot to break even.
Smithen Company, a wholesale distributor, has been operating for only a few months. The company sells three products-sinks, mirrors, and vanities. Budgeted sales by product and in total for the coming month are shown below based on planned unit sales as follows: Sinks Mirrors Vanities Total Units 1,000 500 500 2,000 Percentage of total sales Sales Variable expenses Contribution margin Contribution margin per unit Fixed expenses Operating income Break-even point in unit sales: Percentage sex 25% 25% 100% Break-even point in sales dollars: Total Fixed expenses. Weighted-average CM per unit Sinks 48% Product Mirrors 20% $264,000 100.00% $110,000 100.00% $176,000 100.00% $550,000 100.00% 80,000 30.30% 72,000 65.45% 82,000 46.59% 219,300 39.87% 53.41% 60.13% $184,000 $ 94,000 330,700 69.70% 38,000 34.55% S 76.00 $ 184.00 $ 188.00 Fixed expenses Overall CM ratio $293,300 $158.00 Vanities 32% $293,300 0.60 1,856.33 units Total 100% 293,300 $ 37,400 = $487,798.61 *($184.00 0.50) + ($76.00 x…
Franklin Modems, Inc. makes modem cards that are used In notebook computers. The company completed the following transactions during year 1. All purchases and sales were made with cash. 1. Acquired $820,000 of cash from the owners. 2. Purchased $305,900 of manufacturing equipment. The equipment has a $37,000 salvage value and a four-year useful life. 3. The company started and completed 5,700 modems. Direct materials purchased and used amounted to $47 per unit. 4. Direct labor costs amounted to $32 per unit. 5. The cost of manufacturing supplies used amounted to $11 per unit. 6. The company paid $57,800 to rent the manufacturing facility. 7. Franklin sold all 5,70e units at a cash price of $155 per unit. 8. The sales staff was paid a $9.50 per unit sales commission. 9. Paid $46,eee to purchase equipment for administrative offices. The equipment was expected to have a $3,700 salvage value and a three-year useful life. 10. Administrative expenses consisting of office rental and salaries…
Print Item Question Content Area Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y3 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: EstimatedFixed Cost Estimated Variable Cost(per unit sold) Production costs: Direct materials — $46 Direct labor — 40 Factory overhead $200,000 20 Selling expenses: Sales salaries and commissions 110,000 8 Advertising 40,000 — Travel 12,000 — Miscellaneous selling expense 7,600 1 Administrative expenses: Office and…
The February contribution format income statement of Tipton Corporation appears below: O 0.27 O 6.79 O 3.70 Sales O 0.15 Variable expenses The degree of operating leverage is closest to: Contribution margin Fixed expenses Net operating income. $ $ 211,200 96,000 115,200 84,100 31,100
Contribution Margin Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 81,800 units during the year. Cover-to-CoverCompany Biblio FilesCompany Contribution margin ratio (percent) % % Unit contribution margin $ $ Break-even sales (units) Break-even sales (dollars) $ $ Review the definitions of contribution margin ratio and unit contribution margin. Also review the formulas for break-even in terms of units sold and sales dollars. Income Statement - Cover-to-Cover Cover-to-Cover CompanyContribution Margin Income StatementFor the Year Ended December 31, 20Y8 Sales $409,000 Variable costs: Manufacturing expense $245,400 Selling expense 20,450 Administrative expense 61,350 (327,200) Contribution margin $81,800…
Contribution Margin Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 82,800 units during the year. Contribution margin ratio (percent) Unit contribution margin Break-even sales (units) Break-even sales (dollars) Cover-to-Cover Company $ % Biblio Files Company $ %
A company reports the following contribution margin income statement. Contribution Margin Income Statement For Year Ended December 31 Sales (19,200 units at $22.50 each) Variable costs (19,200 units at $18.00 each) Contribution margin. Fixed costs Income The manager believes the company can increase sales volume to 22,000 total units by increasing advertising costs by $16,200. Required A Required B Complete this question by entering your answers in the tabs below. Contribution Margin Income Statement For Year Ended December 31 $ 432,000 345,600 Prepare a contribution margin income statement assuming the company incurs the additional advertising costs and sales volume increases to 22,000 units. Sales Variable costs Contribution margin 86,400 64,800 $ 21,600 Fixed costs Income
Contribution Margin Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 83,800 units during the year. Cover-to-CoverCompany Biblio FilesCompany Contribution margin ratio (percent) Unit contribution margin Break-even sales (units) Break-even sales (dollars) Review the definitions of contribution margin ratio and unit contribution margin. Also review the formulas for break-even in terms of units sold and sales dollars. Income Statement - Cover-to-Cover Cover-to-Cover CompanyContribution Margin Income StatementFor the Year Ended December 31, 20Y8 Sales $419,000 Variable costs: Manufacturing expense $251,400 Selling expense 20,950 Administrative expense 62,850 (335,200) Contribution margin $83,800 Fixed costs: Manufacturing…