Liman Corporation has a single product whose selling price is$137 and whose variable expense is $58 per unit. The companyâsmonthly fixed expense is $39,600.
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Section BreakExercise 5-6 Compute the Level ofSales Required to Attain a Target Profit [LO5]
7.
value:
0.76 points
Required information
Exercise 5-6 Part 1
Required: 1. Using the equation method,determine the unit sales that are required to earn a target profitof $6,852.
Unit sales
rev: 01_06_2014_QC_43159
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8.
value:
0.76 points
Required information
Exercise 5-6 Part 2
2. Using the formula method,determine the dollar sales that are required to earn a targetprofit of $7,484.
Dollar sales $
rev: 02_08_2013_QC_26463
Liman Corporation has a single product whose selling price is$137 and whose variable expense is $58 per unit. The companyâsmonthly fixed expense is $39,600. |
References
eBook & Resources
Section BreakExercise 5-6 Compute the Level ofSales Required to Attain a Target Profit [LO5]
7.
value:
0.76 points
Required information
Exercise 5-6 Part 1
| Required: | |
| 1. | Using the equation method,determine the unit sales that are required to earn a target profitof $6,852. |
| Unit sales |
rev: 01_06_2014_QC_43159
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eBook & Resources
Hint #1
Check my work
8.
value:
0.76 points
Required information
Exercise 5-6 Part 2
| 2. | Using the formula method,determine the dollar sales that are required to earn a targetprofit of $7,484. |
| Dollar sales | $ | |
rev: 02_08_2013_QC_26463
Related questions
Ch 5: E 5,6,7 | instructions |help |
Questions 1 - 2 (of 5)Question 3 (of 5)Questions 4 - 5 (of5) Save & ExitSubmit
Exercise 5-7 Compute the Level of Sales Required to Attain aTarget Profit [LO5-6]
[The following information applies to the questionsdisplayed below.] |
Lin Corporation has a single product whose selling price is $135and whose variable expense is $54 per unit. The companyâs monthlyfixed expense is $40,280. |
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Section BreakExercise 5-7 Compute the Level ofSales Required to Attain a Target Profit [LO5-6]
4.
value:
2.00 points
Required information
Exercise 5-7 Part 1
| Required: | |
| 1. | Using the equation method, determine for the unit sales that arerequired to earn a target profit of $6,700. |
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Hint #1
5.
value:
2.00 points
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Exercise 5-7 Part 2
| 2. | Using the formula method, determine for the unit sales that arerequired to earn a target profit of $9,100.(Round youranswer to the nearest whole number.) |
[The following information applies to the questionsdisplayed below.] |
| Data for Herron Corporation areshown below: |
| Per Unit | Percent of Sales | |||
| Selling price | $ | 70 | 100% | |
| Variableexpenses | 56 | 80% | ||
| Contributionmargin | $ | 14 | 20% | |
| Fixed expenses are $74,300 permonth and the company is selling 4,600 units per month.(Input the amount as a positive value. Do not roundintermediate calculations. Round your answer to 2 decimalplaces.) |
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Section BreakExercise 5-5 Changes in VariableCosts, Fixed Costs, Selling Price, and Volume [LO4]
5.
value:
0.76 points
Required information
Exercise 5-5 Part 1
| Required: | |
1a. | The marketing manager believes that an $8,700 increase in themonthly advertising budget would increase monthly sales by $13,400.Calculate the increase or decrease in net operating income. |
| Net operatingincome | (Click toselect)decreasesincreases by | $ |
| 1b. | Should the advertising budget beincreased ? | ||||
|
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value:
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Exercise 5-5 Part 2
2a. | Management is considering using higher-quality components thatwould increase the variable cost by $5 per unit. The marketingmanager believes that the higher-quality product would increasesales by 14% per month. Calculate the change in total contributionmargin. |
| Total contributionmargin (Click to select)decreasesincreases by | $ |
| 2b. | Should the higher-qualitycomponents be used? | ||||
|
Jetson Co. sold 20,800 units of its only product and incurred a$56,672 loss (ignoring taxes) for the current year as shown here.During a planning session for year 2012âs activities, theproduction manager notes that variable costs can be reduced 50% byinstalling a machine that automates several operations. To obtainthese savings, the company must increase its annual fixed costs by$158,000. The maximum output capacity of the company is 40,000units per year. |
| JETSON COMPANY Contribution Margin Income Statement For Year Ended December 31, 2011 | |||||
| Sales | $ | 796,640 | |||
| Variable costs | 637,312 | ||||
| Contributionmargin | 159,328 | ||||
| Fixed costs | 216,000 | ||||
| Net loss | $ | (56,672 | ) | ||
rev: 02_07_2012
References
Section BreakLearning Objective: 22-A1 Computethe contribution margin and describe what it reveals about acompanyâs cost structure.Learning Objective: 22-P2 Compute thebreak-even point for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
2.
value:
3.12 points
Required information
| Required: | |
| 1. | Compute the break-even point in dollar sales for year 2011.(Round your intermediate calculations to 2 decimal places.Omit the "$" sign in your response.) |
| Break-even point indollar sales for year 2011 | $ |
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WorksheetLearning Objective: 22-A1 Compute thecontribution margin and describe what it reveals about a companyâscost structure.Learning Objective: 22-P2 Compute the break-evenpoint for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
Check my work
3.
value:
3.12 points
Required information
| 2. | Compute the predicted break-even point in dollar sales for year2012 assuming the machine is installed and there is no change inthe unit sales price. (Round your intermediate calculationsto 2 decimal places and final answer to nearest dollar amount. Omitthe "$" sign in your response.) |
| Break-even point indollar sales for year 2012 | $ |
rev: 02_07_2012
References
eBook & Resources
WorksheetLearning Objective: 22-A1 Compute thecontribution margin and describe what it reveals about a companyâscost structure.Learning Objective: 22-P2 Compute the break-evenpoint for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
Check my work
4.
value:
3.12 points
Required information
| 3. | Prepare a forecasted contribution margin income statement for2012 that shows the expected results with the machine installed.Assume that the unit sales price and the number of units sold(20,800 units) will not change, and no income taxes will be due.(Input all amounts as positive values. Omit the "$" sign inyour response.) |
| JETSON COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2012 | |
| (Click toselect)Sales commissionsSalesRent on factoryIncome taxesIncomebefore taxes | $ |
| (Click toselect)Income before taxesVariable costsTaxes on factoryFactorymaintenanceIncome taxes | |
| (Click toselect)Gross profitContribution margin | |
| (Click toselect)Fixed costsFactory maintenanceRent on factorySalescomissionsTaxes on factory | |
| Net income | $ |
References
eBook & Resources
WorksheetLearning Objective: 22-A1 Compute thecontribution margin and describe what it reveals about a companyâscost structure.Learning Objective: 22-P2 Compute the break-evenpoint for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
Check my work
5.
value:
3.12 points
Required information
| 4. | Compute the sales level required in both dollars and units toearn $168,000 of after-tax income in 2012 with the machineinstalled and no change in the unit sales price. Assume that theincome tax rate is 40%. (Round your intermediatecalculations to 2 decimal places and final answers to the nearestwhole number. Omit the "$" sign in your response.) |
| Sales level requiredin dollars | $ | |
| Sales level requiredin units | units | |
References
eBook & Resources
WorksheetLearning Objective: 22-A1 Compute thecontribution margin and describe what it reveals about a companyâscost structure.Learning Objective: 22-P2 Compute the break-evenpoint for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
Check my work
6.
value:
3.12 points
Required information
| 5. | Prepare a forecasted contribution margin income statement thatshows the results at the sales level computed in part 4. Assume anincome tax rate of 40%. (Input all amounts as positivevalues. Round your "Sales level required in units" to nearest wholenumber. Round your intermediate calculations to 2 decimal placesand final answers to the nearest whole number. Omit the "$" sign inyour response.) |
| JETSON COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2012 | |
| (Click toselect)Sales commissionsRent on factoryFactorymaintenanceSalesIncome taxes | $ |
| (Click toselect)Variable costsIncome taxesFactory maintenanceSalescommissionsIncome before taxes | |
| (Click toselect)Gross profitContribution margin | |
| (Click toselect)Factory maintenanceOffice equipment leaseFixed costsSalescommissionsSales | |
| (Click toselect)Factory maintenanceSales commissionsIncome before incometaxesTaxes on factoryOffice equipment lease | |
| (Click toselect)Rent on factoryOffice equipment leaseTaxes on factoryIncometaxesSales comissions | |
| (Click to select)NetincomeNet loss | $ |
