Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
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Question
Chapter 6, Problem 6.15BE
To determine
Contribution Margin:
The process or theory which is used to judge the benefit given by each unit of the goods produced is called as contribution margin.
To Determine: The contribution margin for each company.
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Students have asked these similar questions
The following CVP income statements are available for Cullumber Corp. and Ivanhoe, Inc.
Cullumber
Ivanhoe, Inc.
Corp.
Sales revenue
$742,000
$742,000
Variable costs
371,000
225,250
Contribution margin
371,000
516,750
Fixed costs
238,500
384,250
Net income
$132,500
$132,500
(a)
Compute the degree of operating leverage for each company. (Round answers to 1 decimal place, e.g. 15.5.)
Degree of
Operating Leverage
Cullumber
Ivanhoe
The following CVP income statements are available for Cullumber Corp. and Ivanhoe, Inc.
Cullumber
Ivanhoe, Inc.
Corp.
Sales revenue
$742,000
$742,000
Variable costs
371,000
225,250
Contribution margin
371,000
516,750
Fixed costs
238,500
384,250
Net income
$132,500
$132,500
(a)
Your answer is correct.
Compute the degree of operating leverage for each company. (Round answers to 1 decimal place, e.g.
15.5.)
Degree of
Operating Leverage
Cullumber
2.8
Ivanhoe
3.9
eTextbook and Media
Assistance Used
Attempts: 2 of 5 used
(b)
Assume that sales revenue decreases by 20%. Prepare a CVP income statement for each company. (Do not
round intermediate calculations.)
Cullumber Corp.
Ivanhoe , Inc.
2$
$
2$
$
(>
The single-column CVP income statements shown below are available for Wildhorse Company and Blossom Company,
Sales
Variable costs
Contribution margin
Fixed costs
Net income
Wildhorse
Wildhorse Co.
Blossom
$495,000
239,000
256,000
1000
156,000
$100,000
Blossom Co.
Degree of Operating Leverage
$495,000
(a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e.g. 1.15.)
$
51,000
444,000
344,000
$100,000
(b) Assuming that sales revenue increases by 10% (due to a 10% increase in the number of units sold), prepare a single-plumn CVP income statement for each company.
Wildhorse Company
$
tA
$
Blossom Company
Chapter 6 Solutions
Managerial Accounting: Tools for Business Decision Making
Ch. 6 - What is meant by CVP analysis?Ch. 6 - Provide three examples of management decisions...Ch. 6 - Prob. 3QCh. 6 - Describe the features of a CVP income statement...Ch. 6 - The traditional income statement for Wheat Company...Ch. 6 - Prob. 6QCh. 6 - What is meant by the term sales mix? How does...Ch. 6 - Prob. 8QCh. 6 - Prob. 9QCh. 6 - Prob. 10Q
Ch. 6 - What is the theory of constraints? Provide some...Ch. 6 - What is meant by "cost structure? Explain how a...Ch. 6 - What is operating leverage? How does a company...Ch. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - Distinguish between absorption costing and...Ch. 6 - Prob. 18QCh. 6 - Prob. 19QCh. 6 - Prob. 20QCh. 6 - Prob. 21QCh. 6 - Prob. 22QCh. 6 - Determine missing amounts for contribution margin....Ch. 6 - Hamby Inc. has sales of 2,000,000 for the first...Ch. 6 - Prob. 6.3BECh. 6 - Prob. 6.4BECh. 6 - Prob. 6.5BECh. 6 - Prob. 6.6BECh. 6 - NoFly Corporation sells three different models of...Ch. 6 - Information for NoFly Corporation is given in...Ch. 6 - Prob. 6.9BECh. 6 - Prob. 6.10BECh. 6 - In Marshall Company, data concerning two products...Ch. 6 - Prob. 6.12BECh. 6 - Prob. 6.13BECh. 6 - Prob. 6.14BECh. 6 - Prob. 6.15BECh. 6 - Compute product costs under variable costing. (LO...Ch. 6 - Compute product costs under absorption costing....Ch. 6 - Prob. 6.18BECh. 6 - Prob. 6.19BECh. 6 - Victoria Company reports the following operating...Ch. 6 - Prob. 6.2DICh. 6 - Zoom Corporation manufactures and sells three...Ch. 6 - Prob. 6.4DICh. 6 - Prob. 6.1ECh. 6 - In the month of June, Jose Heberts Beauty Salon...Ch. 6 - Compute net income under different alternatives....Ch. 6 - Prob. 6.4ECh. 6 - Prob. 6.5ECh. 6 - Yard Tools manufactures lawnmowers, weed-trimmers,...Ch. 6 - PDQ Repaint has 200 auto-maintenance service...Ch. 6 - Express Delivery is a rapidly growing delivery...Ch. 6 - Prob. 6.9ECh. 6 - Determine break-even point in dollars for two...Ch. 6 - Mars Company manufactures and sells three...Ch. 6 - Compute contribution margin and determine the...Ch. 6 - Helena Company manufactures and sells two...Ch. 6 - The CVP income statements shown below are...Ch. 6 - Casas Modernas of Juarez, Mexico, is contemplating...Ch. 6 - Prob. 6.16ECh. 6 - Compute product cost and prepare an income...Ch. 6 - Prob. 6.18ECh. 6 - Crate Express Co. produces wooden crates used for...Ch. 6 - Midlands Inc. had a bad year in 2016. For the...Ch. 6 - Lorge Corporation has collected the following...Ch. 6 - Determine break-even sales under alternative sales...Ch. 6 - Prob. 6.4APCh. 6 - The following CVP income statements are available...Ch. 6 - Bonita Beauty Corporation manufactures cosmetic...Ch. 6 - Prepare income statements under absorption costing...Ch. 6 - Dilithium Batteries is a division of Enterprise...Ch. 6 - CURRENT DESIGNS Current Designs manufactures two...Ch. 6 - Prob. 6.1BYPCh. 6 - Managerial Analysis For nearly 20 years,...Ch. 6 - Real-World Focus In a recent report, the Del Monte...Ch. 6 - The June 8, 2009, edition of the Wall Street...Ch. 6 - Prob. 6.6BYPCh. 6 - Ethics Case Brett Stem was hired during January...Ch. 6 - Prob. 6.9BYP
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- Frontier Corporation has a contribution margin of $512,000 and net operating income of $128,000. What is its degree of operating leverage? Multiple Choice 0.25 4.75 9.50 4.00 Darrow_forwardThe CVP income statements shown below are available for Armstrong Company and Contador Company. Armstrong Co. Contador Co. Sales $494,000 $494,000 Variable costs 233,000 45,000 Contribution margin 261,000 449,000 Fixed costs 161,000 349,000 Net income $100,000 $100,000 (a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, eg. 1.15.) Degree of Operating Leverage Armstrong Contador (b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for each company. Armstrong Company Contador Company > > > > >arrow_forwardFrontier Corp. has a contribution margin of $1,682,000 and profit of $336,400. What is its degree of operating leverage? Multiple Choice 0.20 5.80 14.50 5.00arrow_forward
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