Question
In: Accounting
Exercise 5-14 Break-Even and Target Profit Analysis [LO5-3, LO5-4, LO5-5, LO5-6] Lindon Company is the exclusive...
Exercise 5-14 Break-Even and Target Profit Analysis [LO5-3, LO5-4, LO5-5, LO5-6]
|
Lindon Company is the exclusive distributor for an automotive product that sells for $38.00 per unit and has a CM ratio of 39%. The company’s fixed expenses are $355,680 per year. The company plans to sell 25,000 units this year. |
Required:
| 1. |
What are the variable expenses per unit? (Round your answer to 2 decimal places.) |
||
| 2. | Use the equation method: |
| a. |
What is the break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) |
| b. |
What amount of unit sales and dollar sales is required to earn an annual profit of $74,100? (Do not round intermediate calculations.) |
| c. |
Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4.30 per unit. What is the company’s new break-even point in unit sales and in dollar sales? (Do not round intermediate calculations. Round up break even point answers to the nearest whole number.) |
| 3. | Repeat (2) above using the formula method. |
| a. |
What is the break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.) |
| b. |
What amount of unit sales and dollar sales is required to earn an annual profit of $74,100? (Do not round intermediate calculations.) |
| c. |
Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4.30 per unit. What is the company’s new break-even point in unit sales and in dollar sales? (Do not round intermediate calculations. Round up break even point answers to the nearest whole number.) |
Solutions
ekkarill92 answered 3 weeks agoRelated Solutions
Exercise 5-14 Break-Even and Target Profit Analysis [LO5-3, LO5-4, LO5-5, LO5-6] Lindon Company is the exclusive...
Exercise 5-14 Break-Even and Target Profit Analysis [LO5-3,
LO5-4, LO5-5, LO5-6]
Lindon Company is the exclusive distributor for an automotive
product that sells for $18.00 per unit and has a CM ratio of 30%.
The company’s fixed expenses are $92,340 per year. The company
plans to sell 13,200 units this year.
Required:
1.
What are the variable expenses per unit? (Round your
answer to 2 decimal places.)
2.
Use the equation method:
a.
What is the break-even point in...
Exercise 5-18 Break-Even and Target Profit Analysis; Margin of Safety; CM Ratio [LO5-1, LO5-3, LO5-5, LO5-6,...
Exercise 5-18 Break-Even and Target Profit Analysis; Margin of
Safety; CM Ratio [LO5-1, LO5-3, LO5-5, LO5-6, LO5-7]
Menlo Company distributes a
single product. The company’s sales and expenses for last month
follow:
Total
Per Unit
Sales
$
632,000
$
40
Variable
expenses
442,400
28
Contribution
margin
189,600
$
12
Fixed expenses
145,200
Net operating
income
$
44,400
Required:
1.
What is the monthly
break-even point in unit sales and in dollar sales?
2.
Without...
Exercise 5-17 Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6] Outback Outfitters sells recreational equipment. One...
Exercise 5-17 Break-Even and Target Profit Analysis [LO5-4,
LO5-5, LO5-6]
Outback Outfitters sells recreational equipment. One of the
company’s products, a small camp stove, sells for $130 per unit.
Variable expenses are $91 per stove, and fixed expenses associated
with the stove total $163,800 per month.
Required:
1. What is the break-even point in unit sales and in dollar
sales?
2. If the variable expenses per stove increase as a percentage
of the selling price, will it result in a...
Exercise 5-17 Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6] Outback Outfitters sells recreational equipment. One...
Exercise 5-17 Break-Even and Target Profit Analysis [LO5-4,
LO5-5, LO5-6]
Outback Outfitters sells recreational equipment. One of the
company’s products, a small camp stove, sells for $140 per unit.
Variable expenses are $98 per stove, and fixed expenses associated
with the stove total $189,000 per month.
Required:
1. What is the break-even point in unit sales and in dollar
sales?
2. If the variable expenses per stove increase as a percentage
of the selling price, will it result in a...
Exercise 5-17 Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6] Outback Outfitters sells recreational equipment. One...
Exercise 5-17 Break-Even and Target Profit Analysis [LO5-4,
LO5-5, LO5-6]
Outback Outfitters sells recreational equipment. One of the
company’s products, a small camp stove, sells for $100 per unit.
Variable expenses are $70 per stove, and fixed expenses associated
with the stove total $129,000 per month.
Required:
1. What is the break-even point in unit sales and in dollar
sales?
2. If the variable expenses per stove increase as a percentage
of the selling price, will it result in a...
Case 5-32 (Algo) Cost Structure; Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6] Pittman Company is...
Case 5-32 (Algo) Cost Structure; Break-Even and Target Profit
Analysis [LO5-4, LO5-5, LO5-6]
Pittman Company is a small but growing manufacturer of
telecommunications equipment. The company has no sales force of its
own; rather, it relies completely on independent sales agents to
market its products. These agents are paid a sales commission of
15% for all items sold.
Barbara Cheney, Pittman’s controller, has just prepared the
company’s budgeted income statement for next year as follows:
Pittman Company
Budgeted Income Statement...
Problem 5-25A Changes in Fixed and Variable Expenses; Break-Even and Target Profit Analysis [LO5-4, LO5-5, LO5-6]...
Problem 5-25A Changes in Fixed and Variable Expenses; Break-Even
and Target Profit Analysis [LO5-4, LO5-5, LO5-6] Neptune Company
produces toys and other items for use in beach and resort areas. A
small, inflatable toy has come onto the market that the company is
anxious to produce and sell. The new toy will sell for $2.50 per
unit. Enough capacity exists in the company’s plant to produce
30,700 units of the toy each month. Variable expenses to
manufacture and sell one...
Problem 5-20 (Algo) CVP Applications: Break-Even Analysis; Cost Structure; Target Sales [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6,...
Problem 5-20 (Algo) CVP Applications: Break-Even Analysis; Cost
Structure; Target Sales [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6,
LO5-8]
Northwood Company manufactures basketballs. The company has a
ball that sells for $25. At present, the ball is manufactured in a
small plant that relies heavily on direct labor workers. Thus,
variable expenses are high, totaling $15.00 per ball, of which 60%
is direct labor cost.
Last year, the company sold 54,000 of these balls, with the
following results:
Sales (54,000 balls)
$...
Problem 5-20 CVP Applications: Break-Even Analysis; Cost Structure; Target Sales [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6, LO5-8]...
Problem 5-20 CVP Applications: Break-Even Analysis; Cost
Structure; Target Sales [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6,
LO5-8]
Northwood Company manufactures basketballs. The company has a
ball that sells for $34. At present, the ball is manufactured in a
small plant that relies heavily on direct labor workers. Thus,
variable expenses are high, totaling $24.00 per ball, of which 71%
is direct labor cost.
Last year, the company sold 30,000 of these balls, with the
following results:
Sales (30,000
balls)
$
1,020,000...
Problem 5-20A Various CVP Questions: Break-Even Point; Cost Structure; Target Sales [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6,...
Problem 5-20A Various CVP Questions: Break-Even Point;
Cost Structure; Target Sales [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6,
LO5-8]
Northwood Company manufactures basketballs. The company has a
ball that sells for $35. At present, the ball is manufactured in a
small plant that relies heavily on direct labor workers. Thus,
variable expenses are high, totaling $24.50 per ball, of which 70%
is direct labor cost.
Last year, the company sold 55,000 of
these balls, with the following results:
Sales (55,000 balls)
$...
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