Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 5, Problem 12E
EXERCISE 5-12 Multiproduct Break-Even Analysis LO5-9
Olongapo Sports Corporation distributes two premium golf balls—Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow:
Fixed expenses total $183,750 per month.
Required:
- Prepare a contribution format income statement for the company as a whole. Carry computations to one decimal place.
- What is the company's break-even point in dollar sales based on the current sales mix?
- If sales increase by $100,000 a month, by how much would you expect the monthly net operating income to increase? What are your assumptions?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Question 2
Style photo sells only one product. The statement of comprehensive income for 2021 is provided below:
Sales
60,000
Less variable expenses
-30,000
Contribution margini
30,000
Less fixed expenses
-22,500
Net income
7,500
Required:
Calculate with workings:
a. The contribution margin ratio in percentage.
b. Three breakeven point in total sales ringgits.
Question 2
Style photo sells only one product. The statement of comprehensive income for 2021 is provided below:
Sales
60,000
Less variable expenses
-30,000
Contribution margin
30,000
Less fixed expenses
-22,500
Net income
7,500
Required:
Calculate with workings:
The contribution margin ratio in percentage.
Three breakeven point in total sales ringgits.
The sales in RM if the company wants to achieve RM40,000 in net income.
Q3
Menlo Company distributes a single product. The company's sales and expenses for last month follow:
Total
$486,000
Per Unit
$30
12
194,400
Sales
Variable expenses
Contribution margin
Fixed expenses
Operating income
Required:
1. What is the monthly break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.)
Break-even point in unit sales
Break-even point in sales dollars
Total contribution margin
2. Without resorting to computations, what is the total contribution margin at the break-even point?
Units sold
3-a. How many units would have to be sold each month to earn a target profit of $97,200? Use the formula method.
291,600 $18
233,280
$ 58,320
units
Menlo Company
Contribution Income Statement.
Total
3-b. Verify your answer by preparing a contribution format income statement at the target sales level.
Unit sales required
units
units
Per unit
4. Refer to part 3 and now assume that the tax rate is 30%. How many units would need to be sold each month…
Chapter 5 Solutions
Managerial Accounting
Ch. 5.A - EXERCISE 5A-1 High-Low Method LO5-10 The Cheyenne...Ch. 5.A - EXERCISE 5A-2 Least-Squares Regression LO5-11...Ch. 5.A - EXERCISE 5A-3 Cost Behavior; High-Low Method...Ch. 5.A - Prob. 4ECh. 5.A - EXERCISE 5A-5 Least-Squares Regression LO5-11...Ch. 5.A - Prob. 6PCh. 5.A - Problem 5A-7 Cost Behavior; High-Low Method;...Ch. 5.A - Problem 5A-8 High-Low Method; Predicting Cost...Ch. 5.A - Prob. 9PCh. 5.A - Prob. 10P
Ch. 5.A - Case 5A-11 Mixed Cost Analysis and the Relevant...Ch. 5.A - CASE 5A-12 Analysis of Mixed Costs in a Pricing...Ch. 5 - Prob. 1QCh. 5 - Often the most direct route to a business decision...Ch. 5 - Prob. 3QCh. 5 - What is the meaning of operating leverage?Ch. 5 - What is the meaning of break-even point?Ch. 5 - 5-6 In response to a request from your immediate...Ch. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 1AECh. 5 - Prob. 2AECh. 5 - Prob. 3AECh. 5 - Prob. 4AECh. 5 - Prob. 5AECh. 5 - Prob. 1F15Ch. 5 - Prob. 2F15Ch. 5 - Prob. 3F15Ch. 5 - Prob. 4F15Ch. 5 - Prob. 5F15Ch. 5 - Prob. 6F15Ch. 5 - Prob. 7F15Ch. 5 - Prob. 8F15Ch. 5 - Prob. 9F15Ch. 5 - Prob. 10F15Ch. 5 - Prob. 11F15Ch. 5 - Prob. 12F15Ch. 5 - Prob. 13F15Ch. 5 - Prob. 14F15Ch. 5 - Prob. 15F15Ch. 5 - Prob. 1ECh. 5 - Prob. 2ECh. 5 - Prob. 3ECh. 5 - Prob. 4ECh. 5 - Prob. 5ECh. 5 - Prob. 6ECh. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - EXERCISE 5-10 Multiproduct Break-Even Analysis...Ch. 5 - Prob. 11ECh. 5 - EXERCISE 5-12 Multiproduct Break-Even Analysis...Ch. 5 - EXERCISE 5-13 Changes in Selling Price, Sales...Ch. 5 - Prob. 14ECh. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Prob. 18ECh. 5 - Prob. 19PCh. 5 - PROBLEM 5-20 CVP Applications: Break-Even...Ch. 5 - PROBLEM 5-21 Sales Mix; Multiproduct Break-Even...Ch. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 -
PROBLEM 5-26 CVP Applications; Break-Even...Ch. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 -
PROBLEM 5-31 Interpretive Questions on the CVP...Ch. 5 - Prob. 32C
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
- PROBLEM 7 Tito Company sells several products. Information of average revenue and costs are as follows: Selling price per unitPhp20.00 Variable costs per unit: Direct materialsPhp4.00 Direct manufacturing labor Php1.60 Manufacturing overhead Php0.40 Selling costsPhp2.00 Annual fixed costs Php96,000 26. Calculate the contribution margin per unit. 27. Calculate the number of units Tito's must sell each year to break even. 28. Determine the breakeven point in peso. 29. Calculate the number of units Tito's must sell to yield a profit of Php144,000. PROBLEMarrow_forwardWest Island distributes a single product. The companys sales and expenses for the month of June are shown. Using the information presented, answer these questions: A. What is the break-even point in units sold and dollar sales? B. What is the total contribution margin at the break-even point? C. If West Island wants to earn a profit of $21,000, how many units would they have to sell? D. Prepare a contribution margin income statement that reflects sales necessary to achieve the target profit.arrow_forwardQuestion 4 Auto Tires, Inc. sells tires to service stations for an average of $145 each. The variable costs of each tire is $85 and monthly fixed manufacturing costs total $45,000. Other monthly fixed costs of the company total $15,000. Note: No need to enter comma between number Required: 1. What is the break-even level in tires? 2. What is the margin of safety, assuming sales total $190,000? 3. What is the break-even level in tires, assuming variable costs increase by 20 percent and selling price increase by 17 per unit ? 4. What is the break-even level in tires, assuming the selling price goes up by 20 percent, fixed manufacturing costs decline by 10 percent and other fixed costs decline by $1500and variable cost decrease by 1 per unit ?arrow_forward
- Net Income Planning Midvale Corporation sells a single product for $100 per unit, of which $40 is contribution margin. Fixed costs total $180, 000 and net income before income tax is $48, 000. Determine the following a. The present sales volume in dollars. $Answer 570, 000 b. The break - even point in units. Answer 4, 500 units c. The sales volume in units necessary to attain a net income before income tax of $60, 000 Answer 6, 000 units d. The sales volume in units necessary to attain a net income before income tax equal to 10% of sales revenue. Answer 5, 925 units e. The sales volume in units necessary to attain an after - tax net income of $54, 000 if the tax rate is 40% Answer 6,750 units.arrow_forward01:09:21 ook nt nces Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below: Sales Variable expenses Contribution margin Fixed expenses Net operating income Required 1 Required 2 Claimjumper $ 63,900 42,600 $ 21,300 Sales Variable expenses Contribution margin Required: 1. What is the overall contribution margin (CM) ratio for the company? 2. What is the company's overall break-even point in dollar sales? 3. Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products. Fixed expenses Net operating income (loss) Complete this question by entering your answers in the tabs below. Required 3 Makeover $21,300,000 106,500 42,600 $ Prepare a contribution format income statement at the company's break-even point that sh for the two products. (Do not round intermediate calculations. Round your answers to the r…arrow_forwardMultiproduct breakeven analysis and target profit, taxes Pursuit Company produces two products: Bric and Brac. The following table summarizes the products' details and planned unit sales for the upcoming period: Bric BrAc Sellingpriceperunt...........$S25$30 Variablecostperunit ... $14$17 Planned unit sales volume . . . . . . 800, 000 400,000 Pursuit Company has total fixed costs of $10 million and faces a tax rate of 30%. Required (a)What is Pursuit Company's expected profit at the planned level of sales? (b)Assuming a constant sales mix, what are the unit sales of Bric and Brac required for Pursuit Company to break even? (c) Assuming a constant sales mix, what are the unit sales of Bric and Brac required for Pursuit Company to earn an after-tax income of $910, 000 ?arrow_forward
- Exercise 5-12 (Algo) Multiproduct Break-Even Analysis [LO5-9] Olongapo Sports Corporation distributes two premium golf balls-Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Product Total Sales CM ratio Flight Dynamic $ 730,000 Sure Shot $ 270,000 $ 1,000,000 63% 77% ? Fixed expenses total $584,500 per month. Required: 1. Prepare a contribution format income statement for the company as a whole. 2. What is the company's break-even point in dollar sales based on the current sales mix? 3. If sales increase by $55,000 a month, by how much would you expect the monthly net operating income to increase? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a contribution format income statement for the company as a whole. (Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34).) Flight Dynamic Sure Shot Total Company Amount % Amount % Amount %arrow_forwardMultiproduct Break-Even Analysis Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below: Required: 1. What is the overall contribution margin (CM) ratio for the company? 2. What is the company’s overall break-even point in dollar sales? 3. Verify the overall break-even point for the company by constructing a contribution format income statement showing the appropriate levels of sales for the two products.arrow_forwardQuestion No. 3 CVP – Applied: Revising Sales Incentives Data concerning Wislocki Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 180 100 % Variable expenses 45 25 % Contribution margin $ 135 75 % Fixed expenses are $1,048,000 per month. The company is currently selling 9400 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $12 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $106,000 per month. The marketing manager predicts that introducing this sales incentive would increase monthly sales by 440 units. Required: What should be the overall effect on the company's monthly net operating income of this change?arrow_forward
- 1 02:57:48 Menlo Company distributes a single product. The company's sales and expenses for last month follow: Sales Variable expenses Contribution margin Fixed expenses Net operating income Req 1 Total $ 632,000 442,400 Req 2 189,600 154,800 $ 34,800 Required: 1. What is the monthly break-even point in unit sales and in dollar sales? 2. Without resorting to computations, what is the total contribution margin at the break-even point? 3-a. How many units would have to be sold each month to attain a target profit of $52,800? 3-b. Verify your answer by preparing a contribution format income statement at the target sales level. 4. Refer to the original data. Compute the company's margin of safety in dollar and percentage terms. 5. What is the company's CM ratio? If the company can sell more units, thereby increasing sales by $55,000 per month, and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase? Complete this question by entering…arrow_forwardExercise 6-12 (Algo) Multiproduct Break-Even Analysis [LO6-9] Olongapo Sports Corporation distributes two premium golf balls-Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Product Flight Dynamic Sales CM ratio $ 660,000 Sure Shot $340,000 68% 76% Total $1,000,000 ? Fixed expenses total $567,000 per month. Required: 1. Prepare a contribution format income statement for the company as a whole. 2. What is the company's break-even point in dollar sales based on the current sales mix? 3. If sales increase by $57,000 a month, by how much would you expect the monthly net operating income to increase?arrow_forwardExercise 6-12 (Algo) Multiproduct Break-Even Analysis [LO6-9] Olongapo Sports Corporation distributes two premium golf balls-Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Product Flight Dynamic Sales CM ratio $ 740,000 Sure Shot $260,000 Total $1,000,000 63% 77% ? Fixed expenses total $587,000 per month. Required: 1. Prepare a contribution format income statement for the company as a whole. 2. What is the company's break-even point in dollar sales based on the current sales mix? 3. If sales increase by $59,000 a month, by how much would you expect the monthly net operating income to increase? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a contribution format income statement for the company as a whole. (Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34).) Flight Dynamic mount Sure Shot % Amount % Total Company Amount %arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
What is Risk Management? | Risk Management process; Author: Educationleaves;https://www.youtube.com/watch?v=IP-E75FGFkU;License: Standard youtube license