HW 5 - Week 5 homework PDF

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Question 1 (10 points) oSs_14270633

Bravo Company sells Widgets at $6 a unit. In FY 2016, fixed costs are expected to be $200,000 and variable costs are estimated to increase from $3 per unit to $4 a unit. Bravo wants to have a FY 2016 operating income of $40,000. Use this information to determine the number of units of Widgets that Bravo must sell in FY 2016 to meet this goal. (Round any total dollar value to the nearest whole dollar & enter as whole dollars only. Round any unit dollar value to the nearest penny & enter with both dollar(s) & cents. Round any unit non-dollar decimal numbers to the next higher whole number and enter as a whole number.) 120,000 SP X units= UVC X units +FC+ Profit

$6.00 x units= $4.00 x units + 200,000+ 40,000; 120,000 Question 2 (16 points) oSs_14270634

During FY 2016, Bravo Company plans to sell Widgets for $5.00 a unit. Current variable costs are $3.00 a unit and fixed costs are expected to increase to a total of $100,000. Use this information to determine for FY 2016: 1. the number of units of Widgets for Bravo to breakeven 2. the total dollar value of sales that Bravo must achieve to breakeven (Round any total dollar value to the nearest whole dollar & enter as whole dollars only. Round any unit dollar value to the nearest penny & enter with both dollar(s) & cents. Round any unit non-dollar decimal numbers to the next higher whole number and enter as a whole number.) 50,000 250,000 $5 x units= $3 x units+ 100,000 $5 x 50,000= 250,0000

Question 3 (16 points) oSs_14270635

For FY 2016 Bravo Company's CVP format Income Statement is as follows:

Bravo Company

Income Statement (CVP format) For the Year Ended 12/31/16 Sales (100 units)

$10,000

Variable Costs:

Direct Labor

$1,500

Direct Materials

1,400

Factory Overhead (variable)

1,000

Selling Expenses (variable)

600

Administrative Expenses (variable)

500

Total Variable Expenses

5,000

Contribution Margin

$5,000

Fixed Costs:

Factory Overhead (fixed)

$500

Selling Expenses (fixed)

1,000

Administrative Expenses (fixed)

1,000

Total Fixed Expenses

Net Income (aka Operating Income)

2,500

$2,500

Bravo utilizes a JIT production system and there are no Raw Materials, Work-in-Process or Finished Goods inventories. Bravo Company expects that all costs will remain the same for FY 2017 with the exception of fixed factory overhead which is budgeted to increase by $1,700. Use this information to determine: 1. FY 2016 Cost of Goods Sold 2. FY 2016 breakeven point in units

(Round any total dollar value to the nearest whole dollar & enter as whole dollars only. Round any unit dollar value to the nearest penny & enter with both dollar(s) & cents. Round any unit non-dollar decimal numbers to the next higher whole number and enter as a whole number.)

4,400 50 FY16 COGS:$1500 + $1400+ 1000+ 500=4,400 FY16 BEU: $2,500/($100-$50) = 50 units Question 4 (21 points) oSs_14270636

Alpha Company has two service departments (Cafeteria Services & Maintenance Services). Alpha has two production departments (Printing Department & Binding Department.)

Cafeteria Services has costs of $140,000 and are allocated to production departments based on their number of employees. Employees are: Cafeteria Services 2 Maintenance Services 2 Printing Department 4 Binding Department 8 Alpha uses the direct method for service cost allocation. Use this information to determine for Alpha Company the dollar amount of its Cafeteria costs that are to be absorbed by: . (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units) 1. the Maintenance Service Department 2. the Printing Department 3. the Binding Department $0 $46,667 $93,333

1. Nothing is allocated to the second service dept. with the direct approach. 2. Printing dept.:$140,000 x 4/12= $46,667 3. Binding dept:$140,000 x8/12= $93,333 Question 5 (16 points) 5 oSs_14270637

Alpha Company has two service departments (Cafeteria Services & Maintenance Services). Alpha has two production departments (Printing Department & Binding Department.) Cafeteria Services has costs of $140,000 and are allocated to production departments based on their number of employees. Employees are: Cafeteria Services 2 Maintenance Services 2 Printing Department 4 Binding Department 8 Alpha uses the step method for service cost allocation. Use this information to determine for Alpha Company the dollar amount of its Cafeteria costs that are to be absorbed by: (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units) 1. the Printing Department 2. the Binding Department

46,667 93,333 Step 1 allocation 1a. Café Svc: $140,000x 2/14=$20,000 1b. Printing Dept. $140,000 x 4/14= $40,000 1c. Binding Dept. $140,000 x 8/ 14=$80,000 Step 2 allocation Step 3 allocation

Question 6 (21 points) During FY 2016, Bravo Company sold 16,000 units for $84,000. Bravo had $2.75 variable costs per unit sold. Bravo also reported $28,000 of fixed costs. Use this information to determine FY 2016: 1. Contribution Margin per unit 2. Breakeven in Units 3. Breakeven in Total Sales (Round any total dollar value to the nearest whole dollar & enter as whole dollars only. Round any unit dollar value to the nearest penny & enter with both dollar(s) & cents. Round any unit non-dollar decimal numbers to the next higher whole number and enter as a whole number.) $2.50 11,200 units

1. FY2016: ($84,000/16,000 units) -$2.75=$2.50

2. FY2016: BEU= $28,000/ $2.50

11,200 units

3. FY2016= BES $5.25 x 11,200 units= $58,800...