Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 7.35AE
To determine
To compute: The company’s fixed expenses.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Required information
Learning Objective 05-P2: Compute the break-even point for a single-product company.
A company's break-even point for a period is the sales volume at which total revenues equal total costs. To compute a
break-even point in terms of sales units, we divide total fixed costs by the contribution margin per unit. To compute a
break-even point in terms of sales dollars, divide total fixed costs by the contribution margin ratio.
Cost-Volume-Profit Chart
Dollars
Maximum productive capacity = 1,800 units Sales = $180,000
$1800,000
$160,000
$140,000
$120,000
$100,000
Largest Income = $30,000
$80,000
Maximum productive capacity = 1,800 units
Break-Even Point (sales
of 800 units or $80,000)
Total Sales
Total Costs
Learning Tasks
A. Discussion Questions:
1. Explain why a contribution margin per unit becomes profit per unit above the breakeven
point.
2. Suppose a firm with a contribution margin percentage of 30% increased its advertising
expenses by P10,000 and found that sales increased by P 30,000. Was it a good
decision to increase advertising expenses? Suppose that the contribution margin ratio is
now 40%. Would it be a good decision to increase advertising expense?
B. Fill in the blanks for each of the following independent cases.
Case
Revenues
Variable Cost
Fixed Cost
Total Costs
Operating
Contribution
Income
Margin
Percentage
A
P500
P-
P800
P1,200
2,000
1,000
В
300
200
C
700
1,000
---- ----
1,500
300
40%
Assessment Task
Learning Objective 05-P2: Compute the break-even point for a single-product company.
Skip to question
A company’s break-even point for a period is the sales volume at which total revenues equal total costs. To compute a break-even point in terms of sales units, we divide total fixed costs by the contribution margin per unit. To compute a break-even point in terms of sales dollars, divide total fixed costs by the contribution margin ratio.
Cost-Volume-Profit Chart
Current Time 0:00
/
Duration 1:56
1x
Knowledge Check 01
Based on a CVP graph, select the correct drop-down answer for each question.
Chapter 7 Solutions
Managerial Accounting (5th Edition)
Ch. 7 - (Learning Objective 1) The contribution margin is...Ch. 7 - (Learning Objective 1) The contribution margin...Ch. 7 - (Learning Objective 2) The formula to find the...Ch. 7 - Prob. 4QCCh. 7 - Prob. 5QCCh. 7 - Prob. 6QCCh. 7 - (Learning Objective 4) Which of the following is...Ch. 7 - Prob. 8QCCh. 7 - Prob. 9QCCh. 7 - Prob. 10QC
Ch. 7 - Compute unit contribution margin and contribution...Ch. 7 - Prob. 7.2SECh. 7 - Prob. 7.3SECh. 7 - Find target profit volume (Learning Objective 2)...Ch. 7 - Prob. 7.5SECh. 7 - Prob. 7.6SECh. 7 - Prob. 7.7SECh. 7 - Prob. 7.8SECh. 7 - Compute margin of safety (Learning Objective 5)...Ch. 7 - Compute and use operating leverage factor...Ch. 7 - Calculate breakeven and target profit sales...Ch. 7 - Prob. 7.12SECh. 7 - Prob. 7.13SECh. 7 - Prob. 7.14SECh. 7 - Compute margin of safety (Learning Objective 5)...Ch. 7 - Compute and use operating leverage factor...Ch. 7 - Prob. 7.17SECh. 7 - Prob. 7.18SECh. 7 - Prepare contribution margin income statements...Ch. 7 - Work backward to find missing information...Ch. 7 - Find breakeven and target profit volume (Learning...Ch. 7 - Prob. 7.22AECh. 7 - Prob. 7.23AECh. 7 - Prob. 7.24AECh. 7 - Prob. 7.25AECh. 7 - Prob. 7.26AECh. 7 - Sustainability and CVP concepts (Learning...Ch. 7 - Prob. 7.28AECh. 7 - Calculate contribution margin and breakeven...Ch. 7 - Prob. 7.30AECh. 7 - Extension of E7-30A: Multiproduct firm (Learning...Ch. 7 - Prob. 7.32AECh. 7 - Breakeven and an advertising decision at a...Ch. 7 - Prob. 7.34AECh. 7 - Prob. 7.35AECh. 7 - Prob. 7.36AECh. 7 - Comprehensive CVP analysis (Learning Objectives 1,...Ch. 7 - Comprehensive CVP analysis (Learning Objectives 1,...Ch. 7 - Prob. 7.39AECh. 7 - Prob. 7.40BECh. 7 - Work backward to find missing information...Ch. 7 - Find breakeven and target profit volume (Learning...Ch. 7 - Prob. 7.43BECh. 7 - Prob. 7.44BECh. 7 - Prob. 7.45BECh. 7 - Prob. 7.46BECh. 7 - Continuation of E7-46B: Changing business...Ch. 7 - Sustainability and CVP (Learning Objective 3)...Ch. 7 - Prob. 7.49BECh. 7 - Prob. 7.50BECh. 7 - Prob. 7.51BECh. 7 - Prob. 7.52BECh. 7 - Find breakeven for a multiproduct firm (Learning...Ch. 7 - Breakeven and an advertising decision at a...Ch. 7 - Compute margin of safety and operating leverage...Ch. 7 - Use operating leverage factor to find fixed costs...Ch. 7 - Prob. 7.57BECh. 7 - Comprehensive CVP analysis (Learning Objectives 1,...Ch. 7 - Prob. 7.59BECh. 7 - Comprehensive CVP analysis (Learning Objectives 1,...Ch. 7 - Find missing data in CVP relationships (Learning...Ch. 7 - Prob. 7.62APCh. 7 - Prob. 7.63APCh. 7 - Prob. 7.64APCh. 7 - Prob. 7.65APCh. 7 - Prob. 7.66APCh. 7 - Find missing data in CVP relationships (Learning...Ch. 7 - Prob. 7.68BPCh. 7 - Comprehensive CVP problem (Learning Objectives 1,...Ch. 7 - Prob. 7.70BPCh. 7 - Prob. 7.71BPCh. 7 - CVP analysis at a multiproduct firm (Learning...Ch. 7 - Prob. 7.73SCCh. 7 - Discussion Questions 1. Define breakeven point....Ch. 7 - Prob. 7.75ACTCh. 7 - Prob. 7.76ACTCh. 7 - Prob. 7.77ACT
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
- Consider a process with a unit cost of $40 for the first unit; that is, c(1) = 40, anda learning rate of LR = 0.9. What will be the unit costs for the 16th unit?arrow_forwardFNG Paint (Pty) Ltd produces finger paint and sells them to pre‐schools. The following information relates to a set of finger paint. A set of finger paint is considered to be one unit. Direct labour needed for the first set of paint 4 hoursDirect labour costs per unit R30 per hourDirect material costs per unit R25Total Fixed costs R2 000Learning curve 80% Using the learning curve theory and information provided above, calculate the expected average cost for one set of paint should four and sixteen sets be produced, respectively. Round off to two decimal places.arrow_forwardFunTime Cruiseline offers nightly dinner cruises departing from several cities on the east- ern coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for $50 per passenger. FunTime Cruiseline's variable cost of providing the dinner is $30 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $210,000 per month. The company's rel- evant range extends to 20,000 monthly passengers.arrow_forward
- BE2.12 - Using Excel to Calculate Gross Margin and Revenue PROBLEM Bugsy provided the following operating information during the current year. Operating income Selling, general, and administrative costs Cost of goods sold $ 185,000 42,000 77,500 Student Work Area Required: Provide input into cells shaded in yellow in this template. Input the required mathematical formulas or functions with cell references to the Problem area or work area as indicated. What was Bugsy's gross margin this year? Gross margin What was its total revenue this year? Total revenuearrow_forwardIf an 80% learning curve is applicable, NUBD’s total cost on this order would be estimated at A. P26,400 B. P37,950 C. P31,790 D. P38,500 E. P27,600arrow_forwardPharoah sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The company's income statement from last month is as follows: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (a) Total $756,000 Variable cost ratio 264,600 491,400 282,750 $208,650 Contribution margin ratio Per Unit $54 18.90 What is Pharoah's contribution margin ratio? Its variable cost ratio? (Round ratios to 2 percentage places, eg. 0.38-38%) $35.10 % %6arrow_forward
- Specifically, Mr. Schaefer wants you to do the following: PART 1. Prepare a cost-volume-profit (CVP) analysis of the proposal's financial implications. 1. Specifically, prepare an analysis that includes the projected revenue, variable costs, and fixed costs for enrollment levels of 20, 25, 30 and 37 students using the monthly projections in Attachment A of the case. 2. Then, compute the weighted average contribution margin (CM) per student (computed as the total CM divided by the number of students enrolled) and 3. The number of students that need to enroll at each of the four levels of enrollment for the center to break even. For this analysis, I have provided an Excel template in which I have already sorted variable and fixed costs: I have included the raw data. Note: Your enrollment information has already been weighted so you will not need to calculate weights for your weighted average CM.arrow_forwardThe answers are percentages of the whole. Professors is used for one and number of students for advising. What is the total cost for the company and then what is it on a per “unit” bases. Then multiple the number in each department by the per unit cost. This separates it into how much to charge each department. Instructional Accounting Instructional Business Revenues $ 500,000 $ 1,000,000 Operating Expenses $ 250,000 $ 550,000 Income before Service Charges Investment $ 300,000 $ 500,000 ROI before service charges Number of professors 5 10 Number of students in program 200 500 Payroll Advising (Driver is # of professors) (Driver is # of students) Service department expenses $ 100,000 $ 200,000 Service department charge rate Instructional Accounting Instructional Business Revenues $…arrow_forwardStudent ID #: 11. George Corporation has the following information for the current year: Selling price per Variable costs per unit Fixed costs unit 2$ 10.00 2$ 6.00 $1,000.00 Required: Prepare a cost-volume-profit graph identifying the following items: Total fixed costs line Total variable costs line Total costs line Total revenues line Breakeven point in sales dollars Breakeven point in units Profit area A. B. С. D. Е. F. G. Н. Loss area 6,000 5,000 4,000 3,000 2,000 1,000 Retm 100 200 300 400 500 Earnin Qty (# Units) 3 Dollars ($)arrow_forward
- If an 80% learning curve is applicable, NUBD’s total cost on this order would be estimated atarrow_forwardAction Trainers provides a personalized training program that is popular with many companies. The munber of programs offered over the last five months, and the costs of offering these programn are as follos Jan Feb Mar April May Promams Offered 55 45 60 Costs Incuned $15,400 14,050 18,000 14,700 19,000 50 75 Usang the high low method, compute the 1ranable cost per program and the 2 total fixed cost per month Uing the least squares regressicen method compune the 3 vanable cout pe program and the 4total fied cost per moetharrow_forwardManaging Quality Improvement Teams Perform a cost-benefit analysis using the following data: Direct cost: 10 laptops 2,000.00 each Server 2,000.00 Network Installation 15,000.00 Software 20,000.00 Indirect costs: Training 15,000.00 Annualized Benefits Increased Capacity 100,000.00 Please show the full solution and analysis for this case. Thanksarrow_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
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Economic Value Added EVA - ACCA APM Revision Lecture; Author: OpenTuition;https://www.youtube.com/watch?v=_3hpcMFHPIU;License: Standard Youtube License