ACCTG 211 Chapter Notes -Variable Cost
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1. Sales Mix and Break-Even Sales
Dragon Sports Inc. manufactures and sells two products, baseballbats and baseball gloves. The fixed costs are $836,000, and thesales mix is 30% bats and 70% gloves. The unit selling price andthe unit variable cost for each product are as follows:
Products | Unit Selling Price | Unit Variable Cost | ||
Bats | $70 | $50 | ||
Gloves | 180 | 110 |
a. Compute the break-even sales (units) forboth products combined.
units
b. How many units of each product, baseballbats and baseball gloves, would be sold at break-even point?
Baseball bats | units |
Baseball gloves | units |
2.
Break-Even Sales
Currently, the unit selling price of a product is $240, the unitvariable cost is $200, and the total fixed costs are $476,000. Aproposal is being evaluated to increase the unit selling price to$270.
a. Compute the current break-even sales(units).
units
b. Compute the anticipated break-even sales(units), assuming that the unit selling price is increased to theproposed $270, and all costs remain constant.
units
1.
Contribution Margin and Contribution Margin Ratio
For a recent year, Wicker Company-owned restaurants had thefollowing sales and expenses (in millions):
Sales | $32,100 |
Food and packaging | $8,317 |
Payroll | 8,100 |
Occupancy (rent, depreciation, etc.) | 10,023 |
General, selling, and administrative expenses | 4,700 |
$31,140 | |
Income from operations | $960 |
Assume that the variable costs consist of food and packaging,payroll, and 40% of the general, selling, and administrativeexpenses.
a. What is Wicker Company's contributionmargin? Round to the nearest million. (Give answer in millions ofdollars.)
$ million
b. What is Wicker Company's contribution marginratio? Round to one decimal place.
%
c. How much would income from operationsincrease if same-store sales increased by $1,900 million for thecoming year, with no change in the contribution margin ratio orfixed costs? Round your answer to the closest million.
$ million
2.
Break-Even Sales and Sales to Realize Income from Operations
For the current year ending October 31, Yentling Company expectsfixed costs of $533,200, a unit variable cost of $64, and a unitselling price of $95.
a. Compute the anticipated break-even sales(units).
units
b. Compute the sales (units) required torealize income from operations of $124,000.
units
3.
Break-Even Sales
Currently, the unit selling price of a product is $240, the unitvariable cost is $200, and the total fixed costs are $476,000. Aproposal is being evaluated to increase the unit selling price to$270.
a. Compute the current break-even sales(units).
units
b. Compute the anticipated break-even sales(units), assuming that the unit selling price is increased to theproposed $270, and all costs remain constant.
units
4.
Sales Mix and Break-Even Sales
Dragon Sports Inc. manufactures and sells two products, baseballbats and baseball gloves. The fixed costs are $836,000, and thesales mix is 30% bats and 70% gloves. The unit selling price andthe unit variable cost for each product are as follows:
Products | Unit Selling Price | Unit Variable Cost | ||
Bats | $70 | $50 | ||
Gloves | 180 | 110 |
a. Compute the break-even sales (units) forboth products combined.
units
b. How many units of each product, baseballbats and baseball gloves, would be sold at break-even point?
Baseball bats | units |
Baseball gloves | units |