Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)

16th Edition

ISBN: 9780134475585

Author: Srikant M. Datar, Madhav V. Rajan

Publisher: PEARSON

See similar textbooks

Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It…

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future…

Videos

Textbook Question

Chapter 3, Problem 3.24E

CVP exercises. The Deli-Sub Shop owns and operates six stores in and around Minneapolis. You are given the following corporate budget data for next year:

Revenues	$11,000,000
Fixed costs	$ 3,000,000
Variable costs	$ 7,500,000

Variable costs change based on the number of subs sold.

Compute the budgeted operating income for each of the following deviations from the original budget data. (Consider each case independently.)

1. A 10% increase in contribution margin, holding revenues constant

Required

2. A 10% decrease in contribution margin, holding revenues constant
3. A 5% increase in fixed costs
4. A 5% decrease in fixed costs
5. A 5% increase in units sold
6. A 5% decrease in units sold
7. A 10% increase in fixed costs and a 10% increase in units sold
8. A 5% increase in fixed costs and a 5% decrease in variable costs
9. Which of these alternatives yields the highest budgeted operating income? Explain why this is the case.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 3, Problem 3.23E

Chapter 3, Problem 3.25E

Students have asked these similar questions

The Deli-Sub Shop owns and operates six stores in and around Minneapolis. You are given the following corporate budget data for next year:Revenues $11,000,000 Fixed costs $ 3,000,000 Variable costs $ 7,500,000 Variable costs change based on the number of subs sold. Compute the budgeted operating income for each of the following deviations from the original budget data. (Consider each case independently.) Q1. A 10% increase in contribution margin, holding revenues constant Q2. A 10% decrease in contribution margin, holding revenues constant Q3. A 5% increase in fixed costs Q4. A 5% decrease in fixed costs Q5. A 5% increase in units sold Q6. A 5% decrease in units sold Q7. A 10% increase in fixed costs and a 10% increase in units sold Q8. A 5% increase in fixed costs and a 5% decrease in variable costs Q9. Which of these alternatives yields the highest budgeted operating income? Explain why this is the case.

A small business owner wants to create a budget for the upcoming year. The business has projected sales of $500,000 and wants to achieve a profit margin of 10%. The owner expects to have fixed costs of $200,000 and variable costs of $100,000. Calculate the budgeted net income for the upcoming year.

Mohan Agribusiness Corporation is a distributor of an Agricultural product. Data concerning next month’s budget appear below: Selling price $25 per unit Variable Expenses $15 per unit Fixed Expenses $8,500 per month Unit Sales 1,000 units per month Required: 1. Compute the company’s margin of safety. Show your solution. (10 points) 2. Compute the company’s margin of safety as a percentage of its sales. Show your solution. (10 points)

Chapter 3 Solutions

Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)

Ch. 3 - Define costvolumeprofit analysis.Ch. 3 - Describe the assumptions underlying CVP analysis.Ch. 3 - Distinguish between operating income and net...Ch. 3 - Prob. 3.4Q Ch. 3 - Prob. 3.5Q Ch. 3 - Why is it more accurate to describe the subject...Ch. 3 - CVP analysis is both simple and simplistic. If you...Ch. 3 - Prob. 3.8Q Ch. 3 - Prob. 3.9Q Ch. 3 - Give an example of how a manager can decrease...

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.