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Final

# ACC 406 Lecture 4: HW Chapter E4-13,E4-16,E4-19,E4-21,E4-27Exam

Department
Accounting
Course Code
ACC 406
Professor
Richard Deklerk
Study Guide
Final

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Exercise 413 1. Unit variable cost = \$19.00 × 0.60 = \$11.40
Unit contribution margin = \$19.00 \$11.40 = \$7.60
2. Break-even units =
\$7.60 \$874,000 = 115,000
3. Break-even sales revenue = \$19.00 × 115,000 = \$2,185,000 OR Break-even sales revenue = 0.40
\$874,000 = \$2,185,000
4. Sales ........................................................................................... \$2,185,000 Less: Variable costs (0.6 x
\$2,185,000) .................................... 1,311,000 Contribution margin
.................................................................. 874,000 Less: Fixed costs
....................................................................... 874,000 Operating income
...................................................................... \$ 0
5. Break-even operations always result in a profit of zero.
Exercise 416
1. Unit variable cost includes all variable costs on a unit basis: Direct materials
..................................................................... \$0.27 Direct labour
................................................................. 0.63 Variable selling
..................................................................... 0.17 Unit variable cost
.................................................................. \$1.65
Unit variable manufacturing cost includes the variable costs of production on a unit basis: Direct
materials ..................................................................... \$0.27 Direct labour
................................................................. 0.63 Unit variable manufacturing cost
........................................ \$1.48
Unit variable cost is used in CVP because it includes all variable costs, not just manufacturing costs.
2. Break-even units =
(\$131,650 + \$18,350) (\$2.45 \$1.65) -
= \$0.80 \$150,000 = 187,500
3. Units to earn \$12,600 =
(\$131,650 + \$18,350 + \$12,600) (\$2.45 \$1.65) - = 203,250