BUS 202 Lecture 13: February 27th
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Department
BUS - Business Administration
Course
BUS 202
Professor
Nick Ross
Semester
Spring

Description
February 27th Monday, February 27, 2017 9:14 AM Audio 1 • Fashion shoes: ○ Per pair: § Price $30 § Invoice cost (wholesales) $13.50 § Sales commission $4.50 ○ Fixed expenses: § Advertising $30,000 § Rent $20,000 § Salaries $100,000 ○ Calculate the breakeven point in dollars and units: § Fixed cost/(P-v) § ($30,000 + $20,000 + $100,000)/($30 -$13.50-$4.50)= 12,500 units § 12,500*$30=$375,000.00 § F/CMR □ ((150)/((30 -13.50-4.50)/30))=375 k ○ Draw a CVP plot when and between 0 &17k § Total cost § Total rev § 375 12,500 • Can compute the breakeven without a number sold • Prepare an income statement (Q = 12,000) ---less that breakeven • Thinking about adding a new sales commission of $.75 per shoe how does this change the breakeven level of revenue and units? ○ ($30,000 + $20,000 + $100,000)/($30 -$13.50-$5.25)=13,333 units 13,333*$30 = $399,990.00 ○ February 27th Monday, February 27, 2017 9:14 AM Audio 1 • Fashion shoes: ○ Per pair: § Price $30 § Invoice cost (wholesales) $13.50 § Sales commission $4.50 ○ Fixed expenses: § Advertising $30,000 § Rent $20,000 § Salaries $100,000 ○ Calculate the breakeven point in dollars and units: § Fixed cost/(P-v) § ($30,000 + $20,000 + $100,000)/($30 -$13.50-$4.50)= 12,500 units § 12,500*$30=$375,000.00 § F/CMR □ ((150)/((30 -13.50-4.50)/30))=375 k ○ Draw a CVP plot when and between 0 &17k § Total cost § Total rev § 375 12,500 • Can compute the breakeven without a number sold • Prepare an income statement (Q = 12,000) ---less that breakeven • Thinking about adding a new sales commission of $.75 per shoe how does this change the breakeven level of revenue and units? ○ ($30,000 + $20,000 + $100,000)/($30 -$13.50-$5.25)=13,333 units 13,333*$30 = $399,990.00 ○ • Thinking about adding a new sales commission of $.75 per shoe how does this change the breakeven level of revenue and units? ○ ($30,000 + $20,000 + $100,000)/($30 -$13.50-$5.25)=13,333 units ○ 13,333*$30 = $399,990.00 • Instead they think about giving the manager a $.50 commission on all sales above the breakeven point. If they sell 15,000 pairs what is our net income? ○ Sales: § 15,000*30=450,000 ○ Var exp § 12,500*(13.50+4.50)=225,000 (225,000+(2,500*13.50+5)=258,755 ○ CM § 450,000-258,755=191,245 ○ F § $150,000 ○ N.I. § 191,245 -$150,000=$41,245.00 • Company decides to ○ Eliminate the 4.50 sales commission ○ Increase wages by 31,500 ○ What is the new break even level? § ($30,000 + $20,000 + $131,500)/($30 -$13.50)=11,000 units § 11,000*$30=$330,000.00 • Job costing and process costing ○ Absorption costing -> put FMOH into one product cost ○ Variable costing: CVP/contribution format § Income statement § Product only includes the variable manufacturing cost • Weber Aircraft company: ○ Selling price per aircraft $100,000 ○ DM $19,000 DL $5,000 ○ ○ VMOH $1,000 ○ FMOH $70,000/month ○ VSG&A $10,000 ○ FSG&A $20,000/month Inventory Jan Feb March Beg 0 0 1 ○ Produce 1 2 4 Sell 1 1 5 End 0 1 0 • Thinking about adding a new sales commission of $.75 per shoe how does this change the breakeven level of revenue and units? ○ ($30,000 + $20,000 + $100,000)/($30 -$13.50-$5.25)=13,333 units ○ 13,333*$30 = $399,990.00 • Instead they think about giving the manager a $.50 commission on all sales above the breakeven point. If they sell 15,000 pairs what is our net income? ○ Sales: § 15,000*30=450,000 ○ Var exp § 12,500*(13.50+4.50)=225,000 (225,000+(2,500*13.50+5)=258,755 ○ CM § 450,000-258,755=191,245 ○ F § $150,000 ○ N.I. § 191,245 -$150,000=$41,245.00 • Company decides to ○ Eliminate the 4.50 sales commission ○ Increase wages by 31,500 ○ What is the new break even level? § ($30,000 + $20,000 + $131,500)/($30 -$13.50)=11,000 units § 11,000*$30=$330,000.00 • Job costing and process costing ○ Absorption costing -> put FMOH into one product cost ○ Variable costing: CVP/contribution format § Income statement § Product only includes the variable manufacturing cost • Weber Aircraft company: ○ Selling price per aircraft $100,000 ○ DM $19,000 DL $5
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