FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable cost to produce this component is $1.56 per unit; full cost is $1.98. The component sells on the open market for $4.96. Assuming Division East has excess capacity, what is the lowest price Division East will accept for the component? What is the highest price that Division West will pay for it? (Enter your answers in 2 decimal places.)arrow_forwardPresidio, Incorporated, produces one model of mountain bike. Partial information for the company follows: Required: 1. Complete Presidio's cost data table. 2. Calculate Presidio's contribution margin ratio and its total contribution margin at each sales level indicated in the cost data table assuming the company sells each bike for $630. 3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $630. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Complete Presidio's cost data table. Note: Round your Cost per Unit' answers to 2 decimal places. Bikes Produced and Sold Total costs Variable costs Fixed costs per year Total costs Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit 720 Units 890 Units 1,902 Units $ 187,200 187,200 $ 0 $ 0 $ 0.00 Required 1 543.00 $ 0.00 Required 2 >arrow_forwardMost businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit and the breakeven point depend on the proportions in which the products are sold. Sales mix is the relative contribution of sales among various products sold by a firm. Assume that the sales of Jordan Incorporated for a typical year are as follows: Product Units Sold Sales Mix A 18,320 80% B 4,580 20 Total 22,900 100% Assume the following unit selling prices and unit variable costs: Product Selling Price Variable Cost Contribution Margin A $ 90 $ 75 $ 15 B 150 110 40 Fixed costs are $420,000 per year. Assume that the sales mix, expressed in terms of relative physical units sold, is constant as sales volume changes. --Assume the original facts except that now fixed costs are expected to be $42,000 higher than originally planned. How does this expected increase in fixed costs affect the breakeven point in units? How does…arrow_forward
- Atlantic Company sells a product with a break-even point of 6,148 sales units. The variable cost is $71 per unit, and fixed costs are $178,292. Determine the following:arrow_forwardProvide graph in answerarrow_forwardWren Co. manufactures and sells two products with selling prices and variable costs as follows: A) selling price $18.00, variable costs $12.00, and B) selling price $22.00, variable costs $14.00. Wren's total annual fixed costs are $38,400. Wren sells four units of A for every unit of B. If operating income was $28,800 what was the number of units Wren sold?arrow_forward
- Best Windows is a small company that installs windows. Its cost structure is as follows: Selling price from each window installation Variable cost of each window installation Annual fixed costs $ $ $ 160,000 Use (a) the equation method and (b) the contribution method to calculate operating income if Best installs 4,000 windows. Use (a) the Equation method to calculate operating income if Best installs 4,000 windows. Begin by determining the formula to calculate the operating income using the equation method. Then, calculate the operating income. (Abbreviation used: FC = Fixed costs, SP = Selling price, VCU = Variable cost per unit, Q = Quantity of units sold.) X X )-( )-( X X 700 600 X = Operating income = Next, use (b) the contribution method to calculate operating income if Best installs 4,000 windows. Begin by determining the formula to calculate the operating income using the contribution method. Then, calculate the operating income. = Operating incomearrow_forwardHanshabenarrow_forwardResponse containing written narrative, figures, and charts. Milano Co. manufactures and sells three products: product 1, product 2, and product 3. Their unit selling prices are product 1, $40; product 2, $30; and product 3, $20. The per unit variable costs to manufacture and sell these products are product 1, $30; product 2, $15; and product 3, $8. Their sales mix is reflected in a ratio of 6:4:2. Annual fixed costs shared by all three products are $270,000. One type of raw material has been used to manufacture products 1 and 2. The company has developed a new material of equal quality for less cost. The new material would reduce variable costs per unit as follows: product 1 by $10 and product 2 by $5. However, the new material requires new equipment, which will increase annual fixed costs by $50,000. If the company continues to use the old material, determine its break-even point in both sales units and sales dollars of each individual product. If the company uses the new…arrow_forward
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