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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Textbook Question
Chapter 6, Problem 6.1DI
Victoria Company reports the following operating results for the month of April.
VICTORIA COMPANY
CVP Income Statement
For the Month Ended April 30, 2017
| Total | Per Unit | |
| Sales (9,000 units) | $450,000 | $50 |
| Variable costs | 270,000 | 30 |
| Contribution margin | 180,000 | $20 |
| Fixed expenses | 150,000 | |
| Net income | $ 30,000 |
Management is considering the following course of action to increase net income: Reduce the selling price by 4%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 20%.
Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars:
(a) Assuming no changes to selling price or costs, and
(b) Assuming changes to sales price and volume as described above.
Comment on your findings.
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Victoria Company reports the following operating results for the month of April.
VICTORIA COMPANY
CVP Income Statement
For the Month Ended April 30, 2020
Sales (10,000 units)
Variable costs
Contribution margin
Fixed expenses
Net income
$500,000
300,000
Break-even point
Break-even point $
Total
Show Transcribed Text
Margin of safety $
Break-even point
200,000
Management is considering the following course of action to increase net income: Reduce the selling price by 5%, with no changes to
unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 10%.
Break-even point
140,000
Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars: (Round
intermediate calculations to 4 decimal places eg. 0.2522 and final answer to 0 decimal places, e.g. 2,510)
(a) Assuming no changes to selling price or costs.
$60,000
$
Using the contribution margin technique, compute the break-even point in…
Victoria Company reports the following operating results for the month of April.
VICTORIA COMPANY
CVP Income Statement
For the Month Ended April 30, 2020
Total
Sales (10,000 units)
Variable costs
Contribution margin
Fixed expenses
Net income
$500,000
250,000
250,000
189,900
$60,100
Per Unit
$50
25.00
$25.00
Management is considering the following course of action to increase net income: Reduce the selling price by 5%, with no changes to
unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 20%.
Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars: (Round
Victoria Company reports the following operating results for the month of April.
VICTORIA COMPANYCVP Income StatementFor the Month Ended April 30, 2020
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Sales (9,000 units)
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Variable costs
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270,000
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30.00
Contribution margin
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180,000
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$20.00
Fixed expenses
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150,000
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Net income
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$30,000
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Management is considering the following course of action to increase net income: Reduce the selling price by 4%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 20%.Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars: (Round intermediate calculations to 4 decimal places e.g. 0.2522 and final answer to 0 decimal places, e.g. 2,510.)(a) Assuming no changes to selling price or costs.
Break-even point
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Break-even point
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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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