SMG AC 222 Study Guide - Midterm Guide: Sunk Costs, Fixed Cost, Earnings Before Interest And Taxes

163 views7 pages

jadecamel783

16 Dec 2017

School

Department

Course

Professor

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

The midterm exam will be 25 multiple choice questions, both conceptual and problem based. You will have 50 minutes to complete the exam and will be allowed one 8 x 11 cheat sheet. Ac 222 mid term exam #1 study guide. How will the cost respond to a change in activity. Which costs fall under variable and fixed expenses. How do changes in volume effect variable and fixed expenses within range. The difference between direct and indirect costs. Which costs should be added to manufacturing overhead. What is the formula used in the high-low method. How do you calculate the slope in the high low method. Be able to calculate fixed cost, total cost, and variable cost element given certain variables. Textbook/connect problems: the foundational 15, exercise 2-5, exercise 2-8, exercise 2-10, Basic definition and understanding of job order costing. Situations in which job order costing would be used. The differences between actual overhead vs. estimated overhead vs. overhead applied.

Related Questions

1)The manager of Able Car Inspection reviewed his monthlyoperating costs for the past year. His costs range from $4,100 for1,100 inspections to $3,700 for 700 inspections.

1. Calculate variable cost per inspection. use the high-lowmethod. round to the nearest cent

2. calculate the total fixed costs

3. write the equation and calculate the operating costs for 900inspections

4. Draw a graph illustrating your total cost under this plan.show your costs at 700, 900, and 1,100 inspections

--------------------------------------------------

2) For its top managers, Airborn Travel formats its incomestatements as follows:

Airborn Travel

contribution margin income statement

three months ended March 31, 2012

Sales revenue $318500

Variable costs $111475

contribution margin 207025

fixed costs 176000

operating income $31025

Airborn's relevant range is between sales of $253000 and$366000

1) calculate the contribution margin ratio

2) Prepare two contribution margin income statements: one at the$253000 level and one at the $366,000 level. (Hint: the proportionof each sales dollar that goes toward variable costs is constantwithin the relevant range.) enter losses with a minus sign orparentheses

3) compute breakeven sales in dollars.

---------------------------------------------------------------

3) Hang Ten, Co., produces sports socks. The company has fixedcosts of $91,080 and variable costs of $0.81 per package. Eachpackage sells for $1.80.

1. Compute the contribution margin per package and thecontribution margin ratio. (round answers to 2 decimal places)

2. Find the breakeven point in units and in dollars, using thecontribution margin approach.

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

lemonbeaver448

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%

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?
$

apricotherring974

SMG AC 222 Study Guide - Midterm Guide: Sunk Costs, Fixed Cost, Earnings Before Interest And Taxes

Document Summary

Get access

Related Documents

SMG AC 222 Midterm: AC222 exam2 cheat sheet

SMG AC 222 Lecture Notes - Lecture 1: Income Statement, Cost Driver, Fixed Cost

SMG AC 222 Lecture Notes - Lecture 6: Earnings Before Interest And Taxes, Akai, Total Absorption Costing

Related Questions