Question

In: Accounting

CollegePak Company produced and sold 72,000 backpacks during the year just ended at an average price...

CollegePak Company produced and sold 72,000 backpacks during the year just ended at an average price of $32 per unit. Variable manufacturing costs were $13.00 per unit, and variable marketing costs were $4.92 per unit sold. Fixed costs amounted to $542,000 for manufacturing and $217,600 for marketing. There was no year-end work-in-process inventory. (Ignore income taxes.)

Required:

Compute CollegePak’s break-even point in sales dollars for the year. (Do not round intermediate calculations. Round your final answer up to the nearest whole dollar.)

Compute the number of sales units required to earn a net income of $550,000 during the year. (Do not round intermediate calculations. Round your final answer up to nearest whole number.)

CollegePak's variable manufacturing costs are expected to increase by 10 percent in the coming year. Compute the firm’s break-even point in sales dollars for the coming year. (Do not round intermediate calculations. Round your final answer up to the nearest whole dollar.)

If CollegePak’s variable manufacturing costs do increase by 10 percent, compute the selling price that would yield the same contribution-margin ratio in the coming year. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Solutions

Expert Solution

1) Break even point in sales dollars = Fixed costs/CM Ratio
Fixed costs = 542000+217600 = $      7,59,600
Variable expenses per unit = 13.00+4.92 = $            17.92
Contribution margin per unit = 32 - 17.92 = $            14.08
CM ratio = Contribution margin/Sales = 14.08/32 = 44.00%
BEP in sales dollars = 759600/44% = $    17,26,364
2) Fixed costs = 542000+217600 = $      7,59,600
Variable expenses per unit = 13.00*110%+4.92 = $            19.22
Contribution margin per unit = 32 - 19.22 = $            12.78
CM ratio = Contribution margin/Sales = 12.78/32 = 39.94%
BEP in sales dollars = 759600/44% = $    19,01,972
3) CM Ratio = Revised Contribution margin per unit/Sales price per unit
Sales price to yield 44% CM Ratio = 12.78/44% = $            29.05

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

CollegePak Company produced and sold 73,000 backpacks during the year just ended at an average price...
CollegePak Company produced and sold 73,000 backpacks during the year just ended at an average price of $33 per unit. Variable manufacturing costs were $13.50 per unit, and variable marketing costs were $4.32 per unit sold. Fixed costs amounted to $543,000 for manufacturing and $218,400 for marketing. There was no year-end work-in-process inventory. (Ignore income taxes.) Required: 1. Compute CollegePak’s break-even point in sales dollars for the year. (Do not round intermediate calculations. Round your final answer up to the...
CollegePak Company produced and sold 88,000 backpacks during the year just ended at an average price...
CollegePak Company produced and sold 88,000 backpacks during the year just ended at an average price of $48 per unit. Variable manufacturing costs were $21.00 per unit, and variable marketing costs were $4.92 per unit sold. Fixed costs amounted to $558,000 for manufacturing and $230,400 for marketing. There was no year-end work-in-process inventory. (Ignore income taxes.) Required: Compute CollegePak’s break-even point in sales dollars for the year. (Do not round intermediate calculations. Round your final answer up to the nearest...
Luxvano Co. produced and sold 65,000 units during the year at an average price of $20...
Luxvano Co. produced and sold 65,000 units during the year at an average price of $20 per unit. Variable manufacturing costs were $9 per unit, and variable marketing costs were $3 per unit sold. Fixed costs amounted to $220,000 for manufacturing and $80,000 for marketing. There was no year-end work-in-process inventory. Assume the income tax rate of 40%. REQUIRED: (Show your detailed computations!) a. Compute Luxvano’s break-even point in sales dollars for the year. b. Compute the margin of safety...
Luxvano Co. produced and sold 65,000 units during the year at an average price of $20...
Luxvano Co. produced and sold 65,000 units during the year at an average price of $20 per unit. Variable manufacturing costs were $9 per unit, and variable marketing costs were $3 per unit sold. Fixed costs amounted to $220,000 for manufacturing and $80,000 for marketing. There was no year-end work-in-process inventory. Assume the income tax rate of 40%. (SHOW WORK) a. compute luvano's break-even point in sales dollars for the year b.compute the margin of safety in units c. compute...
Perez owns 70% of Junior, Inc. During the year just ended, Perez sold goods to Junior...
Perez owns 70% of Junior, Inc. During the year just ended, Perez sold goods to Junior for $474,533 with a 36% gross profit. Junior sold all of these goods during the year. In its consolidated financial statements for the year, by what amount should the Sales and Cost of Goods Sold line be adjusted for this transaction? (use a plus sign for an increase and a minus sign for a decrease).
Alard Company produces blenders and coffee makers. During the past year, the company produced and sold...
Alard Company produces blenders and coffee makers. During the past year, the company produced and sold 65,000 blenders and 75,000 coffee makers. Fixed costs for Alard totaled $340,000, of which $184,000 can be avoided if the blenders are not produced and $142,500 can be avoided if the coffee makers are not produced. Revenue and variable cost information follows: Blenders Coffee Makers Selling price per appliance $24 $29 Variable expenses per appliance 18 27 Required: 1. Prepare segmented income statements. Separate...
During the year ended December 31, 2019, Parent Company (the parent) sold merchandise to Subsidiary Corporation...
During the year ended December 31, 2019, Parent Company (the parent) sold merchandise to Subsidiary Corporation (a 90%-owned subsidiary) for a price of $32,340, at a markup of 32% of cost. Subsidiary sold merchandise acquired from Parent to outsider customers for $38,500 during 2019. Included in Subsidiary’s January 1, 2019, inventories were goods acquired from Parent at a billed price of $3,036 and included in Subsidiary’s December 31, 2019, inventories were goods acquired from Parent at a billed price of...
During the year ended December 31, 2019, Parent Company (the parent) sold merchandise to Subsidiary Corporation...
During the year ended December 31, 2019, Parent Company (the parent) sold merchandise to Subsidiary Corporation (a 90%-owned subsidiary) for a price of $32,340, at a markup of 32% of cost. Subsidiary sold merchandise acquired from Parent to outsider customers for $38,500 during 2019. Included in Subsidiary’s January 1, 2019, inventories were goods acquired from Parent at a billed price of $3,036 and included in Subsidiary’s December 31, 2019, inventories were goods acquired from Parent at a billed price of...
East West Company produced 204,000 watches last year and sold all of them during the last...
East West Company produced 204,000 watches last year and sold all of them during the last year. The average selling price per watch was $20.00 The average fixed manufacturing cost was $7.00 per unit The company reported a gross margin of $1,428,000 in last year's income statement. Company had no beginning or ending inventory for the last year. Assume that company incurred no other costs. Required: (A) Unit variable manufacturing cost during the last year (B) Total variable manufacturing cost...
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units....
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units. During 2022, XYZ Company produced 30,000 units and sold 32,000 units. The following information was taken from XYZ's accounting records for 2021 and 2022: 2021 2022 Direct materials cost per unit ............ $18 $17 Direct labor cost per unit ................ $16 $21 Variable overhead cost per unit ........... $7 $9 Variable selling & admin cost per unit .... $4 $6 Fixed overhead (total cost)...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT