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ACCTG 211 Chapter Notes -Variable Cost, Contribution Margin

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skyalpaca88
13 Feb 2014
School
PSU
Department
Accounting
Course
ACCTG 211
Professor
Bernand Fagnani

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Document Summary

19-2b break-even sales under present and proposed conditions: determine for 2012 the total fixed costs and the total variable costs. Variable costs: ,000: determine for 2010 (a) the unit variable cost and (b) the unit contribution margin. Unit contribution margin: : compute the break-even sales (units) for 2012. 13,000 units: compute the break-even sales (units) under the proposed program. 25,500 units: determine the amount of sales (units) that would be necessary under the proposed program to realize the ,000 of income from operations that was earned in 2012. 42,500 units: determine the maximum income from operations possible with the expanded plant.

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Related Questions

Break-Even Sales Under Present and Proposed Conditions

Battonkill Company, operating at full capacity, sold 172,900units at a price of $126 per unit during 2014. Its income statementfor 2014 is as follows:

Sales $21,785,400
Cost of goods sold 7,728,000
Gross profit $14,057,400
Expenses:
Selling expenses $3,864,000
Administrative expenses 2,310,000
Total expenses 6,174,000
Income from operations $7,883,400

The division of costs between fixed and variable is asfollows:

Fixed Variable
Cost of goods sold 40% 60%
Selling expenses 50% 50%
Administrative expenses 70% 30%

Management is considering a plant expansion program that willpermit an increase of $2,142,000 in yearly sales. The expansionwill increase fixed costs by $285,600, but will not affect therelationship between sales and variable costs.

Required: PLEASE JUST ANSWER QUESTIONS 5,67

1. Determine for 2014 the total fixed costs andthe total variable costs.

Total fixed costs $
Total variable costs $

2. Determine for 2014 (a) the unit variablecost and (b) the unit contribution margin.

Unit variable cost $
Unit contribution margin $

3. Compute the break-even sales (units) for2014.
units

4. Compute the break-even sales (units) underthe proposed program.
units

5. Determine the amount of sales (units) thatwould be necessary under the proposed program to realize the$7,883,400 of income from operations that was earned in 2014.
units

6. Determine the maximum income from operationspossible with the expanded plant.
$

7. If the proposal is accepted and sales remainat the 2014 level, what will the income or loss from operations befor 2015?
$

Break-Even Sales Under Present and Proposed Conditions

Battonkill Company, operating at full capacity, sold 172,900units at a price of $126 per unit during 2014. Its income statementfor 2014 is as follows:

Sales $21,785,400
Cost of goods sold 7,728,000
Gross profit $14,057,400
Expenses:
Selling expenses $3,864,000
Administrative expenses 2,310,000
Total expenses 6,174,000
Income from operations $7,883,400

The division of costs between fixed and variable is asfollows:

Fixed Variable
Cost of goods sold 40% 60%
Selling expenses 50% 50%
Administrative expenses 70% 30%

Management is considering a plant expansion program that willpermit an increase of $2,142,000 in yearly sales. The expansionwill increase fixed costs by $285,600, but will not affect therelationship between sales and variable costs.

Required:

1. Determine for 2014 the total fixed costs andthe total variable costs.

Total fixed costs $
Total variable costs $

2. Determine for 2014 (a) the unit variablecost and (b) the unit contribution margin.

Unit variable cost $
Unit contribution margin $

3. Compute the break-even sales (units) for2014.
units

4. Compute the break-even sales (units) underthe proposed program.
units

5. Determine the amount of sales (units) thatwould be necessary under the proposed program to realize the$7,883,400 of income from operations that was earned in 2014.
units

6. Determine the maximum income from operationspossible with the expanded plant.
$

7. If the proposal is accepted and sales remainat the 2014 level, what will the income or loss from operations befor 2015?
$ SelectIncomeLoss

In the month of March, Style Salon services 610 clients at anaverage price of $180. During the month, fixed costs were $25,758and variable costs were 70% of sales.

(a) Determine the contribution margin in dollars, per unit, andas a ratio.

Contribution margin $____________?
Contribution margin per unit $____________?
Contribution margin ration ____________%?

(b) Using the contribution margin technique, compute thebreak-even point in dollars and in units.

Break-even sales $______________?
Break-even sales _____________ units?