Product U23N has been considered a drag on profits at Jinkerson Corporation for some time and management is considering discontinuing the product altogether. Data from thecompany's budget for the upcoming year appear below:SalesVariable expensesFixed manufacturing expensesFixed selling and administrative expenses$ 730,000$ 350,000$ 234,000$ 161,000In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $144,000 of the fixed manufacturingexpenses and $93,000 of the fixed selling and administrative expenses are avoidable if product U23N is discontinued. The financial advantage (disadvantage) for the company ofeliminating this product for the upcoming year would be:Multiple Choiceо$15,000О($15,000)($143,000)О$143,000< Prev4 of 16Next >

The correct answer is (3) $300,000.Explanation:The correct answer is (3) $300,000.To calculate the…

Answered: Product U23N has been considered a drag…

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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Solve the following problem: The service department at Major Motors sold $48,000 in service last month. They had direct labor costs of $16,500 to pay their technicians. They were not given credit for any parts sales or expenses because that was the responsibility of their separate parts department. They were, however, allocated $29,250 in fixed expenses. What was Major Motors net profit?
[The following information applies to the questions displayed below.] Astro Company sold 22,500 units of its only product and reported income of $60,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 45% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $155,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($55 per unit) Variable costs ($50 per unit) Contribution margin Fixed costs Income 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal places.) Contribution margin Contribution Margin Ratio Numerator: Contribution margin per unit $ 1 Fixed costs per unit $ 1,237,500 1,125,000 112,500 52,500 $ 60,000 $ Denominator: Selling price…
Esme Company’s management is trying to decide whether to eliminate Department Z, which has produced low profits or losses for several years. The company’s departmental income statements show the following.
Supermart Food Stores (SFS) has experienced net operating losses in its frozen food products line in the last few periods. Management believes that the store can improve its profitability if SFS discontinues frozen foods. The operating results from the most recent period are: Sales Cost of goods sold Frozen Foods Baked Goods Fresh Produce 238000 381,000 416000 221,000 308,000 321,000 SFS estimates that store support expenses, in total, are approximately 13% of revenues. The controller says that not every sales dollar requires or uses the same amount of store support activities. A preliminary analysis reveals store support activities for these three product lines are: ences Activity (cost driver) Order processing (number of purchase orders) Receiving (number of deliveries) Shelf - stocking (number of hours per delivery) Customer support ( total units sold) Frozen Baked Foods Goods 11 62 1375 5 0.2 27,000 38,000 Fresh Produce 107 254 7 76,000 The controller estimates activity - cost…
Preppy Co. makes and sells a single product. The current selling price is $30 per unit. Variable costs are $21 per unit, and fixed expenses total $90,000 per month. Sales volume for July totaled 12,000 units. (a) Calculate the operating income for July. (b) Calculate the break-even point in units sold and total revenues. (c) Management is considering the use of automated production equipment. If this were done, variable costs would drop to $15.00 per unit, but fixed expenses would increase to $100,000 per month. (1.) Calculate operating income at a volume of 12,000 units per month with the new cost structure. (2.) Calculate the break-even point in units with the new cost structure.
The Colin Division of Sunland Company sells its product for $32 per unit. Variable costs per unit include: manufacturing, $14; and selling and administrative, $3. Fixed costs are: $200000 manufacturing overhead, and $60000 selling and administrative. There was no beginning inventory. Expected sales for next year are 40000 units. Edward Lewis, the manager of the Colin Division, is under pressure to improve the performance of the Division. As part of the planning process, he has to decide whether to produce 40000 units or 60000 units next year. What would the net income be under variable costing for each alternative? 40000 units 60000 units $380000 $340000 $340000 $392000 $340000 $340000 $340000 $500000
Members of the board of directors of Safety Place have received the following operating income data for the year ended May 31, 2018: (Click the icon to view the operating income data.) Members of the board are surprised that the industrial systems product line is not profitable. They commission a study to determine whether the company should drop the line. Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $80,000 and decrease fixed selling and administrative expenses by $10,000. Read the requirements. Requirement 1. Prepare a differential analysis to show whether Safety Place should drop the industrial systems product line. (Use parentheses or a minus sign to enter decreases to profits.) in operating income
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Astro Company sold 23,000 units of its only product and reported income of $264, 600 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 44% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $156,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($56 per unit) $ 1, 288,000 Variable costs ($35 per unit ) 805, 000 Contribution margin 483,000 Fixed costs 218,400 Income $ 264,600 Problem 18 - 3A (Algo) Part 1 1. Compute the break - even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal places.)
Scholes Systems supplies a particular type of office chair to large retailers such as Target, Costco, and Office Max. Scholes is concerned about the possible effects of inflation on its operations. Presently, the company sells 81,000 units for $65 per unit. The variable production costs are $35, and fixed costs amount to $1,410,000. Production engineers have advised management that they expect unit labor costs to rise by 15 percent and unit materials costs to rise by 10 percent in the coming year. Of the $35 variable costs, 40 percent are from labor and 20 percent are from materials. Variable overhead costs are expected to increase by 20 percent. Sales prices cannot increase more than 10 percent. It is also expected that fixed costs will rise by 5 percent as a result of increased taxes and other miscellaneous fixed charges. The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 7 percent…
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