Question 1
Suppose that Head-First Company now sells both bicycle helmetsand motorcycle helmets. The bicycle helmets are priced at $74 andhave variable costs of $48 each. The motorcycle helmets are pricedat $215 and have variable costs of $130 each. Total fixed cost forHead-First as a whole equals $60,000 (includes all fixed factoryoverhead and fixed selling and administrative expense). Next year,Head-First expects to sell 4,850 bicycle helmets and 1,940motorcycle helmets.
Refer to the list below for the exact wording of text itemswithin your income statement.
AmountDescriptions Operating income Operating loss Sales Total contribution margin Total fixed expense Total variable expense
1. Form a package of bicycle and motorcycle helmets based on thesales mix expected for the coming year.
Product Price Unit Variable Cost Unit Contribution Margin Sales Mix Package Contribution Margin Bicycle helmet Motorcycle helmet Package total
2. Calculate the break-even point in units for bicycle helmetsand for motorcycle helmets.
Break-Even Bicycle Helmets: Break-Even Motorcycle Helmets :
Check your answer by preparing a contribution margin incomestatement. Refer to the list of Amount Descriptions for the exactwording of text items within your income statement.
Head-First Company
Contribution Margin Income Statement
At Break-Even Point
1
2
3
4
5
Question 2
Head-First Company now sells both bicycle helmets and motorcyclehelmets. Next year, Head- First expects to produce total revenue of$575,000 and incur total variable cost of $400,000. Total fixedcost is expected to be $60,500.
Refer to the list below for the exact wording of text itemswithin your income statement.
AmountDescriptions Operating income Operating loss Sales Total contribution margin Total fixed expense Total variable expense
. Calculate the break-even point in sales dollars forHead-First. Round the contribution margin ratio to four decimalplaces and sales to the nearest dollar.
The break-even point in sales equals .
Check your answer by preparing a contribution margin incomestatement. Refer to the list of Amount Descriptions for the exactwording of text items within your income statement.
Head-First Company
Contribution Margin Income Statement
At Break-Even Sales Dollars
1
2
3
4
5
Question 1
Suppose that Head-First Company now sells both bicycle helmetsand motorcycle helmets. The bicycle helmets are priced at $74 andhave variable costs of $48 each. The motorcycle helmets are pricedat $215 and have variable costs of $130 each. Total fixed cost forHead-First as a whole equals $60,000 (includes all fixed factoryoverhead and fixed selling and administrative expense). Next year,Head-First expects to sell 4,850 bicycle helmets and 1,940motorcycle helmets.
Refer to the list below for the exact wording of text itemswithin your income statement.
| AmountDescriptions | |
| Operating income | |
| Operating loss | |
| Sales | |
| Total contribution margin | |
| Total fixed expense | |
| Total variable expense |
1. Form a package of bicycle and motorcycle helmets based on thesales mix expected for the coming year.
| Product | Price | Unit Variable Cost | Unit Contribution Margin | Sales Mix | Package Contribution Margin |
| Bicycle helmet | |||||
| Motorcycle helmet | |||||
| Package total |
2. Calculate the break-even point in units for bicycle helmetsand for motorcycle helmets.
| Break-Even Bicycle Helmets: | |
| Break-Even Motorcycle Helmets | : |
Check your answer by preparing a contribution margin incomestatement. Refer to the list of Amount Descriptions for the exactwording of text items within your income statement.
Head-First Company |
Contribution Margin Income Statement |
At Break-Even Point |
1 | ||
2 | ||
3 | ||
4 | ||
5 |
Question 2
Head-First Company now sells both bicycle helmets and motorcyclehelmets. Next year, Head- First expects to produce total revenue of$575,000 and incur total variable cost of $400,000. Total fixedcost is expected to be $60,500.
Refer to the list below for the exact wording of text itemswithin your income statement.
| AmountDescriptions | |
| Operating income | |
| Operating loss | |
| Sales | |
| Total contribution margin | |
| Total fixed expense | |
| Total variable expense |
. Calculate the break-even point in sales dollars forHead-First. Round the contribution margin ratio to four decimalplaces and sales to the nearest dollar.
The break-even point in sales equals .
Check your answer by preparing a contribution margin incomestatement. Refer to the list of Amount Descriptions for the exactwording of text items within your income statement.
Head-First Company |
Contribution Margin Income Statement |
At Break-Even Sales Dollars |
1 | ||
2 | ||
3 | ||
4 | ||
5 |
Related questions
| Cane Company manufactures two products called Alpha and Beta that sell for $215 and $160, respectively. Each product uses only one type of raw material that costs $7 per pound. The company has the capacity to annually produce 125,000 units of each product. Its unit costs for each product at this level of activity are given below: |
| Alpha | Beta | |||||||
| Direct materials | $ | 42 | $ | 21 | ||||
| Direct labor | 35 | 28 | ||||||
| Variable manufacturing overhead | 23 | 21 | ||||||
| Traceable fixed manufacturing overhead | 31 | 34 | ||||||
| Variable selling expenses | 28 | 24 | ||||||
| Common fixed expenses | 31 | 26 | ||||||
| Total cost per unit | $ | 190 | $ | 154 | ||||
| The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars. |
PLEASE ANSWER THE FOLLOWING:
1. Assume that Cane expects to produce and sell 106,000 Betas during the current year. One of Caneâs sales representatives has found a new customer that is willing to buy 4,000 additional Betas for a price of $74 per unit. If Cane accepts the customerâs offer, how much will its profits increase or decrease?
2. Assume that Cane expects to produce and sell 111,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 26,000 additional Alphas for a price of $144 per unit. If Cane accepts the customerâs offer, it will decrease Alpha sales to regular customers by 12,000 units. Calculate the incremental net operating income if the order is accepted? (Loss amount should be indicated with a minus sign.)
3. Assume that Cane normally produces and sells 76,000 Betas and 96,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 16,000 units. If Cane discontinues the Beta product line, how much would profits increase or decrease?
4. Assume that Cane expects to produce and sell 71,000 Alphas during the current year. A supplier has offered to manufacture and deliver 71,000 Alphas to Cane for a price of $144 per unit. If Cane buys 71,000 units from the supplier instead of making those units, how much will profits increase or decrease?
5. Assume that Caneâs customers would buy a maximum of 96,000 units of Alpha and 76,000 units of Beta. Also assume that the companyâs raw material available for production is limited to 246,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?
6. Assume that Caneâs customers would buy a maximum of 96,000 units of Alpha and 76,000 units of Beta. Also assume that the companyâs raw material available for production is limited to 246,000 pounds. How many units of each product should Cane produce to maximize its profits?
| 7. How many pounds of raw material are needed to make one unit of Alpha and one unit of Beta? |
i only need help with questions : 12, 14, 16,17c, 17d
1. (5 points) Make a list of materials needed tomanufacture one finished good. Include the following criteria:material (including block size), color, number required, cost perblock, and total cost per type of block. Determine the totalmaterial cost to manufacture one finished good. Include packagingfor the finished product.
2. (4 points) Determine how many direct labor employeesare necessary to meet demand. You do not intend to pay overtime.Laborers work eight hours a day Monday through Friday, which doesnot include time for lunch since it is not paid. They receive twoweeks of paid vacation, but six paid holidays. If your calculationresults in a partial person, remember that you will have to roundup to a whole number. You do not intend to hire any part-timelabor.
3. (3 points) Determine the annual cost fordirect labor (including benefits). Do notround.
4. (2 points) What is the direct labor costper finished product? Do not round.
5. Cost identification.
The following accounts are to be used in 5a-5e:
Account Name | Annual Amount |
Office Supplies | $500 |
Factory Utilities | $2400 |
Sales Commissions | $40000 |
Factory Equipment Depreciation | $500 |
Factory Rent | $5000 |
Advertising | $12000 |
Factory Managerâs Salary | $35000* |
Indirect Labor | $35000 |
Office Utilities | $600 |
Factory Insurance | $3600 |
Office Maintenance (Annual Contract) | $200 |
Sales Salaries | $60000* |
Office Equipment Depreciation | $1200 |
Indirect Materials | $5000 |
Freight-Out | $200000 |
Factory Equipment Repairs (based on expected quarterlyservice calls) | $800 |
*Includes medical benefits.
- (4 points) From the above list, select four variablemanufacturing overhead accounts.
- (4 points) From the above list, select four variableselling expense or administrative expense accounts.
- (4 points) From the above list, select four fixed sellingexpense or administrative expense accounts.
- (4 points) From the above list, select four fixedmanufacturing overhead accounts.
- (4 points) Fill out the attached spreadsheet with theinformation given in 5a-5d. That means you will have to keepreading these discussion areas.
Make sure your answers for the following questions reflectall of the costs on the 5e spreadsheet.
6. (3 points) What is the total manufacturingoverhead?
7. (5 points) Create a Cost of Goods ManufacturedSchedule. Do not round.
8. (4 points) What is the predetermined overhead ratebased on direct labor cost? Round to two decimal places and makesure your answer is in the correct format.
9. (4 points) What is the total manufacturing cost perunit? Do not round.
10. (5 points) Calculate the projected net income/(loss)for the first year. This should be in the form of an simple incomestatement including captions for revenue, cost of goods sold (donot round.), gross profit, operating expenses, and netincome/(loss). All operating expenses must be listed individually.Do not round.
11. Cost Identification
a. (2 points) What is the total variable cost?
b. (1 point) What is the total fixed cost?
- (5 points) How many finished units will you have to sellannually to break even? Do not round variable costs or contributionmargin. You will have to round the number of units to break even,since you cannot sell a partial unit. Remember to always round upfor break even, no matter what the decimal.
- ( 7 points) Using the break even or contribution marginequations, compute how many units need to be sold to earn a netincome of $60000. Create a C-V-P income statement to prove yourcalculations. Show all of your work to get the C-V-P incomestatement. Do not round variable costs or contribution margin. Youwill have to round the number of units to break even, since youcannot sell a partial unit. Remember to always round up for breakeven, no matter what the decimal.
- (4 points) Create a flexible manufacturing overheadbudget at a level of 110,000 finished units.
- (5 points) Prepare a flexible budget report given thatactual production was 110,000 finished units.
Actual overhead for the year included:
Factory Repairs $950
Factory Utilities $2430
Indirect Labor $36750
Indirect Materials $5700
Freight-Out $215000
Office Supplies $510
Commissions $43000
Office Utilities $750
Advertising $12000
Office Maintenance $300
Sales Salaries $60000
Office Depreciation $1200
Factory Depreciation $500
Factory Rent $5100
Manager's Salary $ 35000
Factory Insurance $3800
- (3 points) Sales per quarter are expected to be 10,000units, 30,000 units, 40,000 units, and 20,000 units, respectively.Prepare a correctly formatted sales budget.
- There is a shortage of large rectangular blocks! (None atall.)
a. (3 points) What is the new total product cost per unitif two small rectangular blocks are substituted for every largerectangular block? Do not round.
b. (5 points) Prepare an income statement to show the newnet income/(loss) with sales totaling 100,000 units. Use the newtotal product cost in Q17a. Do not round.
c. (5 points) How many finished units need to be soldannually to break even? Do not round variable costs or contributionmargin. You will have to round the number of units to break even,since you cannot sell a partial unit. Remember to always round upfor break even, no matter what the decimal. Use the new totalproduct cost in Q17a.
d. (5 points) Create a C-V-P income statement to proveyour break-even. Do not round variable costs or contributionmargin. You will have to round the number of units to break even,since you cannot sell a partial unit. Remember to always round upfor break even, no matter what the decimal. Use the new totalproduct cost in Q17a.
