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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
......................................................................... 0.58 Variable overhead
................................................................. 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
......................................................................... 0.58 Variable overhead
................................................................. 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
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