Ganja Motors is a small car dealership. On average, it sells a car for $54,000, which it purchases from the manufacturer for $46,000. Each month, Ganja Motors pays $96,400 in rent and utilities and $136,000 for salespeople’s salaries. In addition to their salaries, salespeople are paid a commission of $1200 for each car they sell. Ganja Motors also spends $26,000 each month for local advertisements. Its tax rate is 40%. How many cars must Ganja Motors sell each month to break even? Ganja Motors has a target monthly net income of $102,000. What is its target monthly operating income? How many cars must be sold each month to reach the target monthly net income of $102,000?

Ganja Motors is a small car dealership. On average, it sells a car for $54,000, which it purchases from the manufacturer for $46,000. Each month, Ganja Motors pays $96,400 in rent and utilities and $136,000 for salespeople’s salaries. In addition to their salaries, salespeople are paid a commission of $1200 for each car they sell. Ganja Motors also spends $26,000 each month for local advertisements. Its tax rate is 40%. How many cars must Ganja Motors sell each month to break even? Ganja Motors has a target monthly net income of $102,000. What is its target monthly operating income? How many cars must be sold each month to reach the target monthly net income of $102,000?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 6E: Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of...

See similar textbooks

Similar questions

Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of 25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is 1,100 per year. In addition to the salaries, Elliott spends 27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Classify the resources associated with purchasing as (1) flexible or (2) committed. 2. Compute the total activity availability, and break this into activity usage and unused activity. 3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. 4. (a) Suppose that a large special order will cause an additional 500 purchase orders. What purchasing costs are relevant? By how much will purchasing costs increase if the order is accepted? (b) Suppose that the special order causes 700 additional purchase orders. How will your answer to (a) change?
Westover Motors is a small car dealership. On average, it sells a car for $32,000, which it purchases from the manufacturer for $28,000. Each month, Westover Motors pays $53,700 in rent and utilities and $69,000 for salespeople’s salaries. In addition to their salaries, salespeople are paid a commission of $400 for each car they sell. Westover Motors also spends $10,500 each month for local advertisements. Its tax rate is 40%. Q1. How many cars must Westover Motors sell each month to break even? Q2. Westover Motors has a target monthly net income of $69,120. What is its target monthly operating income? How many cars must be sold each month to reach the target monthly net income of $69,120?
Schoenen Motors is a small car dealership. On average, it sells a car for $27,000, which it purchases from the manufacturer for $23,000. Each month, Schoenen Motors pays $48,200 in rent and utilities and $68,000 for salespeople's salaries. In addition to their salaries, salespeople are paid a commission of $600 for each car they sell. Schoenen Motors also spends $13,000 each month for local advertisements. Its tax rate is 40%. Read the requirements. Requirement 1. How many cars must Schoenen Motors sell each month to break even? Schoenen Motors must sell cars each month to break even Requirement 2. Schoenen Motors has a target monthly net income of $51,000. What is its targeted monthly operating income? How many cars must be sold each month to reach the target monthly net income of $51,000? The target monthly operating income is They would need to sell cars to reach the target monthly income of $51,000.
Schoenen Motors is a small car dealership. On average it sells a car for $33,000, which it purchases from the manufacturer for $29,000. Each month, Schoenen Motors pays $66,000 in rent and utilities and $73,000 for salespeople's salaries. In addition to their salaries, salespeople are paid a commission of $700 for each car they sell. Schoenen Motors also spends $12,000 each month for local advertisements. Its tax rate is 40%. Required 1. How many cars must Schoenen Motors sell each month to break even? 2. Schoenen Motors has a target monthly net income of $64,500. What is its target operating income? How many cars must be sold each month to reach the target monthly net income of $64,500? Requirement 1. How many cars must Schoenen Motors sell each month to break even? Schoenen Motors must sell cars each month to break even. (Round the number of cars up to the nearest whole number.) Requirement 2. Schoenen Motors has a target monthly net income of $64,500, What is its target operating…
Klee Motors is a small car dealership. On average, it sells a car for $24 000, which it purchases from the manufacturer for $20 000. Each month, Klee Motors pays $60 000in rent and utilities and $60 000 in salespeople’s salaries. In addition to their salaries, sales people are paid a commission of $500 for each car they sell. Klee Motors also spends $15 000 each month on local advertisements. a. How many cars must Klee Motors sell each month to break even? b. Will Klee Motors earns a profit if it can sell 6 cars? c. How much sales revenue shall the company earn to achieve a $100,000 profit?
Classical Glasses operates a kiosk at the local mall, selling s unglasses for $30 each. Classical Glasses currently pays $1,000 a month to rent the space and pays two full-time employees to each work 160 hours a month at $10 per hour. The store shares a manager with a neighboring kiosk and pays 50% of the manager’s annual salary of $60,000 and benefits of $12,000. The wholesale cost of the sunglasses to the company is $10 a pair. Q1. How many sunglasses does Classical Glasses need to sell each month to break even?
Classical Glasses operates a kiosk at the local mall, selling s unglasses for $30 each. Classical Glasses currently pays $1,000 a month to rent the space and pays two full-time employees to each work 160 hours a month at $10 per hour. The store shares a manager with a neighboring kiosk and pays 50% of the manager’s annual salary of $60,000 and benefits of $12,000. The wholesale cost of the sunglasses to the company is $10 a pair. Q.Assume Classical Glasses pays its employees hourly under the original pay structure, but is able to pay the mall 10% of its monthly revenue instead of monthly rent. At what sales levels would Classical Glasses prefer to pay a fixed amount of monthly rent, and at what sales levels would it prefer to pay 10% of its monthly revenue as rent?
Classical Glasses operates a kiosk at the local mall, selling s unglasses for $30 each. Classical Glasses currently pays $1,000 a month to rent the space and pays two full-time employees to each work 160 hours a month at $10 per hour. The store shares a manager with a neighboring kiosk and pays 50% of the manager’s annual salary of $60,000 and benefits of $12,000. The wholesale cost of the sunglasses to the company is $10 a pair. Q.If the store’s hourly employees agreed to a 15% sales-commission-only pay structure, instead of their hourly pay, how many sunglasses would Classical Glasses need to sell to earn an operating income of $5,300?
Classical Glasses operates a kiosk at the local mall, selling s unglasses for $30 each. Classical Glasses currently pays $1,000 a month to rent the space and pays two full-time employees to each work 160 hours a month at $10 per hour. The store shares a manager with a neighboring kiosk and pays 50% of the manager’s annual salary of $60,000 and benefits of $12,000. The wholesale cost of the sunglasses to the company is $10 a pair. Q.If Classical Glasses wants to earn an operating income of $5,300 per month, how many sunglasses does the store need to sell?
Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of $25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is $1,100 per year. In addition to the salaries, Elliott spends $27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Which of the resources associated with purchasing can be classified as flexible resources? Forms, Postage and Supplies Which of the resources associated with purchasing can be classified as committed resources? PC system and clerks 2. Compute the total activity availability, and break this into activity usage and unused activity. Activity availability: fill in the blank 3 purchase orders Activity usage: fill in the blank…
ABC Kitchen sells dishwashers and garbage disposals to customers. The company buys the dishwashers and garbage disposals from a wholesaler and it costs the company $7,000 for each dishwasher and $4,000 for each garbage disposal. The company sells its dishwashers for $10,000 and garbage disposals for $6,080 each. ABC Kitchen will install the dishwashers and garbage disposals for $1,000 each. On Dec 26, 2021, during Boxing day sales, ABC Kitchen offered a deal to its customers where they could buy a dishwasher, garbage disposal, including full installation package for a total price of $14,000. The Company sold 100 packages. The dishwashers and garbage disposals were shipped and delivered on Jan 18, company completed half the installations on Jan 22, 2022 and the 2022 remaining installations were done on Jan 29, 2022. *Question: Prepare all the required journal entry
Sheridan Diesel owns the Fredonia Barber Shop. He employs 4 barbers and pays each a base rate of $ 1,570 per month. One of the barbers serves as the manager and receives an extra $ 500 per month. In addition to the base rate, each barber also receives a commission of $ 9.05 per haircut. Other costs are as follows. Advertising $ 270 per month Rent $ 1,060 per month Barber supplies $0.45 per haircut Utilities $ 195 per month plus $ 0.10 per haircut Magazines $ 15 per month Sheridan currently charges $ 16 per haircut. Determine the variable costs per haircut and the total monthly fixed costs. (Round variable costs to 2 decimal places, e.g. 2.25.) Total variable cost per haircut 2$ 9.6 Total fixed 24 8320 eTextbook and Media Compute the break-even point in units and dollars. Break-even point haircuts Break even sales 2$ eTextbook and Media Determine net income, assuming 1,590 haircuts are given in a month. Net income / (Loss) $