Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 3, Problem 3.43P
CVP analysis, shoe stores. The HighStep Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men’s shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. HighStep is considering opening another store that is expected to have the revenue and cost relationships shown here.
Consider each question independently.
- 1. What is the annual breakeven point in (a) units sold and (b) revenues?
Required
- 2. If 8,000 units are sold, what will be the store’s operating income (loss)?
- 3. If sales commissions are discontinued and fixed salaries are raised by a total of $15,500, what would be the annual breakeven point in (a) units sold and (b) revenues?
- 4. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $2.00 per unit sold, what would be the annual breakeven point in (a) units sold and (b) revenues?
- 5. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $2.00 per unit in excess of the breakeven point, what would be the store’s operating income if 12,000 units were sold?
Expert Solution & Answer
Trending nowThis is a popular solution!
Learn your wayIncludes step-by-step video
schedule09:01
Students have asked these similar questions
Columbus Inc. sells a high end hair dryer in a super competitive marketplace. As a result,
market research and competitive pressures influence the determination of their selling price.
Their marketing department has done a comprehensive analysis and It looks like a price of $61
would be appropriate given the present business environment.
The company has a goal of earning $30 on each unit.
What is the target unit cost of each hair dryer? Enter your answers without dollar signs or
commas.
ASUS
13
f4
E3
X
19
OLF
11
(12
3.
&
4.
5
7.
8.
E
T.
Y.
F
G
H
K
t6
立
Required information
[The following information applies to the questions displayed below.]
The Fashion Shoe Company operates a chain of women's shoe shops that carry many styles of shoes that are all sold at
the same price. Sales personnel in the shops are paid a sales commission on each pair of shoes sold plus a small base
salary.
The following data pertains to Shop 48 and is typical of the company's many outlets:
Per Pair of
Shoes
$ 20.00
Selling price
Variable expenses:
Invoice cost
Sales commission
Total variable expenses
Fixed expenses:
Advertising
Rent
Salaries.
Total fixed expenses
$ 6.50
5.50
$12.00
Annual
New break-even point in unit sales
New break-even point in dollar sales
$ 42,000
32,000
160,000
$ 234,000
4. The company is considering paying the Shop 48 store manager an incentive commission of 80 cents per pair of shoes (in addition to
the salesperson's commission). If this change is made, what will be the new break-even point in unit sales and dollar sales? (Do not
round…
Required information
[The following information applies to the questions displayed below.]
The Fashion Shoe Company operates a chain of women's shoe shops that carry many styles of shoes that are all sold at
the same price. Sales personnel in the shops are paid a sales commission on each pair of shoes sold plus a small base
salary.
The following data pertains to Shop 48 and is typical of the company's many outlets:
Per Pair of
Shoes
$ 20.00
Selling price
Variable expenses:
Invoice cost
Sales commission
Total variable expenses
Fixed expenses:
Advertising
Rent
Salaries
Total fixed expenses
$ 6.50
5.50
$ 12.00
Annual
$ 42,000
32,000
160,000
$ 234,000
5. Refer to the original data. As an alternative to (4) above, the company is considering paying the Shop 48 store manager 55 cents
commission on each pair of shoes sold in excess of the break-even point. If this change is made, what will be Shop 48's net operating
income (loss) if 31,350 pairs of shoes are sold? (Do not round intermediate…
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. 3.4QCh. 3 - Prob. 3.5QCh. 3 - Why is it more accurate to describe the subject...Ch. 3 - CVP analysis is both simple and simplistic. If you...Ch. 3 - Prob. 3.8QCh. 3 - Prob. 3.9QCh. 3 - Give an example of how a manager can decrease...
Ch. 3 - Give an example of how a manager can increase...Ch. 3 - What is operating leverage? How is knowing the...Ch. 3 - There is no such thing as a fixed cost. All costs...Ch. 3 - Prob. 3.14QCh. 3 - In CVP analysis, gross margin is a less-useful...Ch. 3 - Jacks Jax has total fixed costs of 25,000. If the...Ch. 3 - During the current year, XYZ Company increased its...Ch. 3 - Under the contribution income statement, a...Ch. 3 - A company needs to sell 10,000 units of its only...Ch. 3 - Once a company exceeds its breakeven level,...Ch. 3 - Prob. 3.21ECh. 3 - CVP computations. Garrett Manufacturing sold...Ch. 3 - CVP analysis, changing revenues and costs. Sunset...Ch. 3 - CVP exercises. The Deli-Sub Shop owns and operates...Ch. 3 - CVP exercises. The Doral Company manufactures and...Ch. 3 - CVP analysis, income taxes. Westover Motors is a...Ch. 3 - CVP analysis, income taxes. The Home Style Eats...Ch. 3 - CVP analysis, sensitivity analysis. Perfect Fit...Ch. 3 - CVP analysis, margin of safety. Suppose Morrison...Ch. 3 - Operating leverage. Cover Rugs is holding a 2-week...Ch. 3 - CVP analysis, international cost structure...Ch. 3 - Sales mix, new and upgrade customers. Chartz 1-2-3...Ch. 3 - Prob. 3.33ECh. 3 - Prob. 3.34ECh. 3 - Contribution margin, decision making. Welch Mens...Ch. 3 - Contribution margin, gross margin, and margin of...Ch. 3 - Uncertainty and expected costs. Kindmart is an...Ch. 3 - CVP analysis, service firm. Lifetime Escapes...Ch. 3 - CVP, target operating income, service firm....Ch. 3 - CVP analysis, margin of safety. Marketing Docs...Ch. 3 - CVP analysis, income taxes. (CMA, adapted) J.T....Ch. 3 - CVP, sensitivity analysis. The Derby Shoe Company...Ch. 3 - CVP analysis, shoe stores. The HighStep Shoe...Ch. 3 - CVP analysis, shoe stores (continuation of 3-43)....Ch. 3 - Prob. 3.45PCh. 3 - Prob. 3.46PCh. 3 - CVP analysis, income taxes, sensitivity. (CMA,...Ch. 3 - Choosing between compensation plans, operating...Ch. 3 - Prob. 3.49PCh. 3 - Multiproduct CVP and decision making. Crystal...Ch. 3 - Sales mix, two products. The Stackpole Company...Ch. 3 - Prob. 3.52PCh. 3 - Ethics, CVP analysis. Megaphone Corporation...Ch. 3 - Deciding where to produce. (CMA, adapted) Portal...
Additional Business Textbook Solutions
Find more solutions based on key concepts
5. Which inventory costing method results in the lowest net income during a period of rising inventory costs?
W...
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Discussion Analysis A13-41 Discussion Questions 1. How do managers use the statement of cash flows? 2. Describ...
Managerial Accounting (4th Edition)
Determining Acquisition Cost. Haply, Inc. incurred the following expenditures when acquiring a new assembly mac...
Intermediate Accounting (2nd Edition)
Prepare a production cost report and journal entries (Learning Objectives 4 5) Vintage Accessories manufacture...
Managerial Accounting (5th Edition)
5. Which inventory costing method results in the lowest net income during a period of rising inventory costs?
W...
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
E5-20 Journalizing purchase transactions
Learning Objective 2 July 24 Kerch. Inv. $64 CR
(
Howie Jewelers had ...
Horngren's Accounting (12th Edition)
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.Similar questions
- Jims Camera shop sells two high-end cameras, the Sky Eagle and Horizon. The demand for these two cameras are as follows: Ds = demand for the Sky Eagle, Ps is the selling price of the Sky Eagle, DH is the demand for the Horizon, and PH is the selling price of the Horizon. DS=2220.60Ps+0.35PHDH270+0.10Ps0.64PH The store wishes to determine the selling price that maximizes revenue for these two products. Develop the revenue function for these two models, and find the prices that maximize revenue.arrow_forwardIdentify fixed and variable costs Intuit Inc. (INTU) develops and sells software products for the personal finance market, including popular titles such as Quickbooks and TurboTax. Classify each of the following costs and expenses for this company as either variable or fixed to the number of units produced and sold: Packaging costs Sales commissions Property taxes on general offices Shipping expenses Straight-line depreciation of computer equipment President's salary Salaries of software developers Salaries of human resources personnel Wages of telephone order assistants Costs of providing online support Users guidesarrow_forwardColumbus Inc. sells a high end hair dryer in a super competitive marketplace. As a result, market research and competitive pressures influence the determination of their selling price. Their marketing department has done a comprehensive analysis and It looks like a price of $57 would be appropriate given the present business environment. The company has a goal of earning $28 on each unit. What is the target unit cost of each hair dryer? Enter your answers without dollar signs or commas.arrow_forward
- Recalculate the customer-level operating income using the number of written orders but at their actual $8 cost per order instead of $15 (except for DC, whose actual cost is $15 per order). How will KC Corporation evaluate customer-level operating cost performance this period?arrow_forwardStylish Sitting is a retailer of office chairs located in San Francisco, California. Due to increased market competition, the CFO of Stylish Sitting has grown worried about the firm's upcoming income stream. The CFO asked you to use the company financial information provided below. Sales price $ 73.00 Per-unit variable costs: Invoice cost 40.45 Sales commissions 17.45 Total per-unit variable costs $ 57.90 Total annual fixed costs: Advertising $ 54,500 Rent 77,000 Salaries 225,000 Total annual fixed costs $ 356,500 If 38,900 office chairs were sold, Stylish Sitting's operating income (πB) would be: (Do not round intermediate calculations.) Multiple Choice $230,890. $270,890. $200,890. $330,890.arrow_forwardRecalculate the customer-level operating income if salespeople had not broken up actual orders into multiple smaller orders. Don’t forget to also adjust sales commissions.arrow_forward
- Stylish Sitting is a retailer of office chairs located in San Francisco, California. Due to increased market competition, the CFO of Stylish Sitting has grown worried about the firm's upcoming income stream. The CFO asked you to use the company financial information provided below. Sales price $ 76.00 Per-unit variable costs: Invoice cost 40.25 Sales commissions 17.25 Total per-unit variable costs $ 57.50 Total annual fixed costs: Advertising $ 54,300 Rent 76,600 Salaries 224,600 Total annual fixed costs $ 355,500 If 38,500 office chairs were sold, Stylish Sitting's operating income (πB) would be: (Do not round intermediate calculations.)arrow_forwardApply mathematical skills around cost structures and appropriate equations to answer the following, inclusive of all associated workings to maximise marks: A convenience store buys 1-gallon jugs of milk for $2.99 and sells them for $4.29. What is the margin they earn on the milk? Please round your answer to the nearest tenth of a percent.arrow_forwardSlarlet Beauty manufactures and sells a face cream lo small specialy stores in the greater Los Angeles area. It presents the monthly operating income stalement shown here to George Diaz, a polenial investor in the business. Help Mr. Diaz understand Starlet Beauty's cost structure. E(Click the icon to view the operating income stalement.) Read the equirements. Data Table Requirement 1. Recast the income statement to emphasize contribution margin. Starlet Cosmetics Operating Income Statement, June 2017 Starlet Beauty Operating Income Statement, June 2017 10,000 Units sold Revenues 200,000 Cost of goods sold Variable manufacturing costs 80,000 32,900 Fixed manufacturing costs 112,900 Total Gross margin 87,100 Operating costs Variable marketing costs 48,000 17.500 Fixed marketing and administrative costs 65,500 Total operating costs 21,600 Operating income Print Done Choose from any list or enter any number in the input fields and then click Check Answer.arrow_forward
- A small company manufactures a certain item and sells it online. The company has a business model where the cost, C in dollars, to make x items is given by the equation C = 20/3 x + 50. The revenue R , in dollars , made by selling x items is given by the equation R = 10x. How many items must the company sell in order for the cost to equal their revenue?arrow_forwardHomework help. Chapter 21 number 7. Need help filling in the missing data. Thank You!arrow_forwardAnalyzing profitability Father Furniture Company manufactures and sells oak tables and chairs. Price and cost data for the furniture follow: Father Furniture has three sales representatives: Adam, Ben, and Caleb. Adam sold 100 tables With 6 chairs each. Ben sold 110 tables With 4 chairs each. Caleb sold 80 tables with 8 chairs each. Requirements Calculate the total contribution margin and the contribution margin ratio for each sales representative (round to two decimal places). Which sales representative has the highest contribution margin ratio? Explain Whyarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Essentials of Business Analytics (MindTap Course ...
Statistics
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Cengage Learning
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY