Week 4 Mylab Exercises - gdgdg PDF

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S20-1: Philadelphia Acoustics builds innovative speakers for music and home theater systems. Identify each cost as variable (V), fixed (F), or mixed (M), relative to number of speakers produced and sold. V

1.

V F M

2. 3. 4.

V F V M V F

5. 6. 7. 8. 9. 10.

Units of production depreciation on routers used to cut wood enclosures. Wood for speaker enclosures. Patents on crossover relays. Total compensation to salesperson who receives a salary plus a commission based on meeting sales goals. Crossover relays. Straight-line depreciation on manufacturing plant. Grill cloth. Cell phone costs of salesperson. Glue Quality inspector's salary

S20-3:Mark owns a machine shop. In reviewing the shop's utility bills for the past 12 months, he found that the highest bill of $2,700 occurred in August when the machines worked 1,300 machine hours. The lowest utility bill of $2,500 occurred in December when the machines worked 800 machine hours. Requirements 1. Calculate the variable rate per machine hour and the total fixed utility cost. 2. Show the equation for determining total utility cost for the machine shop. 3. If Mark anticipates using 1,200 machine hours in January, predict the shop's total utility bill using the equation from Requirement 2. Requirement 1. Calculate the variable rate per machine hour and the total fixed utility cost. First, calculate the variable rate per machine hour. Select the formula labels, then enter the amounts and compute the variable rate per machine hour. (Use thehigh-low method. Round your answer to the nearest cent.)

Change in total costs $200 (2,700-2,500)

Change in volume of activity / $500 (1,300-800) /

= =

Variable rate per machine hour $0.40

Calculate the total fixed cost. Select the formula labels, then enter the amounts and compute the total fixed cost. (Use the highest point.)

Total mixed cost $2,700

-. -

Total variable cost $520 (0.40*2,700)

Total fixed cost $2,180

= =

Requirement 2. Show the equation for determining total utility cost for the machine shop.

(

$ 0.40

x

Number of machine )+ hours

$ 2,180

=

Total utility cost

Requirement 3. If Mark anticipates using 1,200 machine hours in January, predict the shop's total utility bill using the equation from Requirement 2. Select the items needed and compute the shop's total utility bill predicted for January.

(

$ 0.40

x

1,200

)+

$ 2,180

=

$2,660

S20-5: Carver Company sells a product for $65 per unit. Variable costs are $50 per unit, and fixed costs are $1,500 per month. The company expects to sell 600 units in September. Prepare an income statement for September using the contribution margin format.

$39,000 (65*600) 30,000 (50*600)

Sales Revenue Variable Costs Contribution Margin Fixed Costs

9,000 (39,000-30,000) 1,500

Operating Income

$7,500 (9,000-1,500)

S20-7: Ocean Company sells a product with a contribution margin ratio of 40%. Fixed costs are $1,700 per month. What amount of sales (in dollars) must Ocean Company have to earn an operating income of $2,500? If each unit sells for $30, how many units must be sold to achieve the desired operating income? Begin by showing the formula and then entering the amounts to calculate the sales in dollars Ocean must have to earn an operating income of $2,500. (Abbreviation used: CM = contribution margin.)

( (

Fixed costs + Target profit ) / $1,700

+

$2,500

)/

CM ratio

=

40

=

%

Required sales in dollars $10,500

show the formula and enter the amounts to calculate the units Ocean must sell to earn an operating income of $2,500. (Abbreviation used: CM = contributionmargin.)

Required sales $10,500

/ /

Sales price per unit $30

= Required sales in units = 350

S20-8: Compute the missing amounts for the following table. (Click the icon to view the table.) Compute the missing amounts. (Enter the contribution margin ratio to nearest percent, X%.)

A Number of units Sales price per unit Variable costs per unit

B

C

1,300 units $ 100

3,600 units $40

7,500 units $125

40

10

100

Total fixed costs Target profit Calculate: Contribution margin per unit Contribution margin ratio Required units to achieve target profit Required units to breakeven Required sales dollars to breakeven

72,000 180,000

60,000 75,000

40,000 100,000

$ 60 (100-40)

$ 30 (40-10)

$ 25 (125-100)

60% (60/100) *100

75% (30/40) *100

20% (25/125) *100

4,500 ((60,000+75,000)/30)

4,200 ((72,000+180,000)/60)

5,600 ((40,000+100,000)/25)

1,200 (72,000/60)

2,000 (60,000/30)

1,600 (40,000/25)

$120,000 ((72,000/60%)

$ 80,000 (60,000/30%)

$ 200,000 (40,000/25%)

S20-11: Funday Park competes with Fun World by providing a variety of rides. Funday sells tickets at $90 per person as a one-day entrance fee. Variable costs are $18 perperson, and fixed costs are $464,400 per month. Under these conditions, the breakeven point in tickets is 6,450 and the breakeven point in sales dollars is 580,500. Requirement 1. Suppose Funday Park cuts its ticket price from $90 to $72 to increase the number of tickets sold. Compute the new breakeven point in tickets and in sales dollars. Begin by selecting the formula labels and then entering the amounts to compute the number of tickets Funday must sell to break even under this scenario. (Abbreviation used: CM = contribution margin. Complete all answer boxes. For items with a zero value, enter "0".)

( Fixed costs + Target profit ) / (

$464,400

+

$0

CM per unit

) / $54 (72 – 18)

=

Required sales in units

=

8,600

Next, select the formula and then enter the amounts to calculate the sales in dollars Funday needs to break even under this scenario. (Abbreviation used: CM = contribution margin. Enter the contribution margin ratio to the nearest percent, X%. Complete all answer boxes. For items with a zero value, enter "0".)

( (

Fixed costs + Target profit ) / CM ratio $464,400 + $0 ) / 75 (54 /72 *100)

= % =

Required sales in dollars $619,200

Requirement 2. Ignore the information in Requirement 1. Instead, assume that Funday Park increases the variable cost from $18 to $54 per ticket. Compute the new breakeven point in tickets and in sales dollars.

The new breakeven point in tickets is

12,900 (464,400+0) / (90-54)

The new breakeven point in sales dollars is $

1. 90-54=36 2. 36/90*100=40% 1,161,000 (464,400/40%)

. .

S20-12: Story Park competes with Splash World by providing a variety of rides. Story sells tickets at $100 per person as a one-day entrance fee. Variable costs are $20 perperson, and fixed costs are $480,000 per month. Under these conditions the breakeven point in tickets is 6,000 and in sales dollars is $600,000. Suppose Story Park reduces fixed costs from $480,000 per month to $300,000 per month. Compute the new breakeven point in tickets and in sales dollars Begin by selecting the formula labels and then entering the amounts to compute the number of tickets

Story must sell to break even if its fixed costs are reduced to $300,000. (Abbreviation used: CM = contribution margin. Complete all answer boxes. For items with a zero value, enter "0".)

( (

Fixed costs + Target profit ) / CM per unit $300,000 + $0 ) / $80 (100-20)

= Required sales in units = 3,750

Next, select the formula and then enter the amounts to calculate the sales in dollars Story needs to break even if its fixed costs are reduced to $300,000. (Abbreviation used: CM = contribution margin. Enter the contribution margin ratio to the nearest percent, X%. Complete all answer boxes. For items with a zero value, enter "0".)

( (

Fixed costs + Target profit ) / $300,000 + $0 )/

CM ratio 80 (80/100) *100

= Required sales in dollars % = $375,000

S20-13: Playpals Park competes with Cool World by providing a variety of rides. Playpals sells tickets at $125 per person as a one-day entrance fee. Variable costs are $75 per person, and fixed costs are $325,000 per month. The breakeven number of tickets is 6,500. If Playpals Park expects to sell 6,600 tickets, compute the margin of safety in tickets and in sales dollars. Begin by selecting the formula labels and then entering the amounts to compute the margin of safety in units.

Expected sales 6,600

-

Breakeven sales 6,500

= Margin of safety in units = 100

Begin by selecting the formula labels and then entering the amounts to compute the margin of safety in units.

Margin of safety in units

x

Sales price per unit

=

100

x

$125

=

Margin of safety in dollars $12,500

S20-14: Playpals Park competes with Fun World by providing a variety of rides. Playpals sells tickets at $60 per person as a one-day entrance fee. Variable costs are $24 perperson, and fixed costs are $226,800 per month. The breakeven number of tickets is 6,300. If Playpals Park expects to sell 6,475 tickets, compute the operating leverage. Estimate the operating income if sales increase by 10%. Begin by selecting the formula labels and then entering the amounts to compute the degree of operating leverage for Playpals Park. (Round the degree of operating leverage to four decimal places, X. XXXX.)

Contribution margin $233,100 (60*6,475) – (24*6,475)

/

Operating income

/ $6,300 (233,100-266,800)

= =

Degree of operating leverage 37

Estimate the new operating income if total sales increase by 10%. (Round your final answer to the nearest dollar.) The estimated operating income will

$ 29,61029,610 (6,300+10%+37) +6,300)

be

S20-15: Fun in the Sun Swim Park sells individual and family tickets. With a ticket, each person receives a meal, three beverages, and unlimited use of the swimming pools. Fun in the Sun has the following ticket prices and variable costs for 2016: Individual Family

Sale price per ticket

$25

$75

10

40

Variable cost per ticket

Fun in the Sun expects to sell one individual ticket for every four family tickets. Fun in the Sun's total fixed costs are $77,500. Requirements 1. Compute the weighted-average contribution margin per ticket. 2. Calculate the total number of tickets Fun in the Sun must sell to break even. 3. Calculate the number of individual tickets and the number of family tickets the company must sell to break even. Requirement 1. Compute the weighted-average contribution margin per ticket. Complete the table below to calculate the weighted-average contribution margin. (Round the weighted-average contribution margin per unit to the nearest cent.)

Individual

Family

Sales price per unit - Variable cost per unit

$25 10

$75 40

Contribution margin per unit x Sales mix in units

15 1

35 4

Contribution margin

$15

$140

Total

5 (1+4) $155 (10+15)

Weighted-average contribution margin per unit

$31.00 (155/5)

Requirement 2. Calculate the total number of tickets Fun in the Sun must sell to break even. Start by selecting the formula and entering the amounts to calculate the total number of tickets Fun in the Sun must sell to break even. (Abbreviation used: CM = contribution margin. Complete all answer boxes. For items with a zero value, enter "0".)

(

Fixed costs

+

Target profit

(

$77,500

+

$0

Weighted-avg. CM = per unit )/ $31.00 =

)/

Required sales in units 2,500

Requirement 3. Calculate the number of individual tickets and the number of family tickets the company must sell to break even.

Numbers of tickets to break even 2,500 2,500

Breakeven sales of tickets = 500 = 2,000

x Proportion of the sales mix =

Individual x 1/5 Family x 4/5 S21-1: Classify each cost by placing an X in the appropriate columns. The first cost is completed as an example.

Absorption Costing

Variable Costing Product Cost Period Cost Product Cost

a. Direct materials b. Direct labor Variable manufacturing c. overhead d. Fixed manufacturing overhead

X X

X X

X

X

X

Period Cost

X

Variable selling and e. administrative costs Fixed selling and administrative f. costs

X

X

X

X

S21-2: Burlington Company reports the following information for June: Sales Revenue Variable Cost of Goods Sold Fixed Cost of Goods Sold Variable Selling and Administrative Costs Fixed Selling and Administrative Costs

$740,000 215,000 192,000 156,000 71,000

Calculate the contribution margin and operating income for June using variable costing. Begin by selecting the labels and entering the amounts to compute the contribution margin. Then, select the labels and enter the amounts to compute the operating income.

Variable Costing Sales Revenue Variable Costs: Variable Cost of Goods Sold Variable Selling and Administrative Costs Contribution Margin Fixed Costs: Fixed Cost of Goods Sold Fixed Selling and Administrative Costs Operating Income

$740,000 $215,000 156,000 371,000 (215,000+156,000) 369,000 (740,000-371,000) 192,000 71,000 263,000 (192,000+71,000) $106,000 (369,000-263,000)

S21-3: Cambridge Company reports the following information for June: Sales Revenue Variable Cost of Goods Sold Fixed Cost of Goods Sold Variable Selling and Administrative Costs Fixed Selling and Administrative Costs

$720,000 195,000 186,000 154,000 87,000

Calculate the gross profit and operating income for June using absorption costing. Begin by selecting the labels and entering the amounts to compute the contribution margin. Then, select the labels and enter the amounts to compute the operating income.

Absorption Costing Sales Revenue Cost of Goods Sold Variable Cost of Goods Sold Fixed Cost of Goods Sold

$720,000 $195,000 186,000 381,000 (195,000+186,000)

Gross Profit Selling and Administrative Costs: Variable Selling and Administrative Costs Fixed Selling and Administrative Costs Operating Income

339,000 (720,000-381,000) 154,000 87,000 241,000 (154,000+87,000) $98,000 (399,000-241,000)

S21-5: Mel Company had the following costs: Units produced

340

units

Direct materials

$69

per unit

Direct labor

36

per unit

Variable manufacturing overhead

16

per unit

6,460

per year

22

per unit

2,040

per year

Fixed manufacturing overhead Variable selling and administrative costs Fixed selling and administrative costs

Select the labels and enter the amounts to compute the unit product cost using variable costing. (If a box is not used in the table leave the box empty; do not select a label or enter a zero.)

Variable Costing Direct materials Direct labor Variable manufacturing overhead

$69.00 36.00 16.00

Total unit product cost

$121.00

S21-6: Adams, Inc. has the following cost data for Product X: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead

$42

per unit

54 9

per unit per unit

20,000

per year

Calculate the unit product cost using absorption costing when production is 2,000 units, 2,500 units, and 5,000 units. Select the labels and enter the amounts to compute the unit product cost using absorption costing.

2,000 units Direct materials $42 Direct labor 54 Variable manufacturing overhead 9

2,500 units $42 54 9

5,000 units $42 54 9

Fixed manufacturing overhead

10 (20,000/2,000)

8 (20,000/2,500)

4 (20,000/5,000)

Total unit product cost

$115

$113

$109

S21-8: Wang Company reports the following data: Finished Goods Inventory: Beginning balance, in units

1,000

Units produced

2,200 (1,300)

Units sold

1,900

Ending balance, in units Production Costs: Variable manufacturing costs per unit

$53

Total fixed manufacturing costs 33,000 Calculate the product cost per unit and the total cost of the 1,900 units in ending inventory using absorption costing and variable costing. Calculate the cost per unit using absorption costing and variable costing. (If a box is not used in the table leave the box empty; do not enter a zero.)

Variable manufacturing costs Fixed manufacturing overhead

Absorption Variable Costing Costing $53.00 $53.00 15.00 (33,000/2,200)

Total unit product cost

$68.00

$53.00

Calculate the total cost of the 1,900 units in ending inventory using absorption costing.

The total cost of the 1,900 units in ending inventory using absorption costing is

$129,200 (68*1,900) .

Calculate the total cost of the 1,900 units in ending inventory using variable costing.

The total cost of the 1,900 units in ending inventory using variable costing is

$100,700 (53*1,900)

S21-10: Calvin Company has divided its business into segments based on sales territories: East Coast, Midland, and West Coast. Following is Calvin Company's income statement using the contribution margin format: Calvin Company Contribution Margin Income Statement For the Year Ended December 31, 2016 East Coast

Midland

West Coast

Total

Unit Sold

77 units

64 units

55 units

Sales Revenue Variable Costs

$816,200 563,178

$812,800 414,528

$665,500 346,060

$2,294,500 1,323,766

Contribution Margin

$253,022

$398,272

$319,440

970,734

Fixed Costs Operating Income

435,000 $535,734

.

Which business segment provided the greatest total contribution margin? Which business segment had the highest contribution margin ratio? Which business segment provided the greatest total contribution margin? The Midland business...