Question

In: Accounting

Camera Products Inc. produces two different products with the following monthly data for July: Digital Cameras...

Camera Products Inc. produces two different products with the following monthly data for July:

Digital

Cameras

Tripods

Total

Selling price per unit

$300

$100

Variable cost per unit

$240

$ 60

Expected unit sales

28,000

7,000

35,000

Sales mix

80%

20%

100%

Fixed costs

$700,000

If the sales mix shifts to 85 percent cameras and 15 percent tripods, what happens to the break-even point in units?

Brevard Company makes a single product. The company has monthly fixed costs totaling $250,000 and variable costs of $20 per unit. Each unit of product is sold for $35. Brevard expects to sell 25,000 units each month.

What would be the operating profit if the unit sales price increases 10 percent?

Group of answer choices

$462,500

$212,500

$412,500

$362,500

The following segmented annual income statement is for Action Batteries, Inc.

Product Lines

C-Cells

D-Cells

9-Volt

Total

Sales revenue

$50,000

$200,000

$250,000

$500,000

Variable costs

30,000

100,000

170,000

300,000

Contribution margin

$20,000

$100,000

$ 80,000

$200,000

Direct fixed costs

8,000

12,000

18,000

38,000

Allocated fixed costs

           ?

             ?

             ?

    45,000

Profit (loss)

$         ?

$           ?

$           ?

$           ?

The following segmented annual income statement is for Action Batteries, Inc.

Product Lines

C-Cells

D-Cells

9-Volt

Total

Sales revenue

$50,000

$200,000

$250,000

$500,000

Variable costs

30,000

100,000

170,000

300,000

Contribution margin

$20,000

$100,000

$ 80,000

$200,000

Direct fixed costs

8,000

12,000

18,000

38,000

Allocated fixed costs

           ?

             ?

             ?

45,000

Profit (loss)

$         ?

$           ?

$           ?

$           ?

If allocated fixed costs are based on sales revenue for each product line as a proportion of total sales revenue, what is the total profit or (loss) for all product lines?

Group of answer choices

$117,000

$72,000

$252,000

$500,000

If allocated fixed costs are based on sales revenue for each product line as a proportion of total sales revenue, what is the profit or (loss) for D-Cells?

Group of answer choices

$88,000

$70,000

$43,000

$52,000

Solutions

Expert Solution

Camera Products Inc.
Particulars Digital Cameras Tripods
Selling Price 300 100
Less: Variable Cost 240 60
Contribution 60 40
Contibution as per Sales Mix 85% 15%
51 6
Total Contibution per Unit = 57
Breakeven Point in Units = Total Fixed Cost/Contribution Per Unit
= 7,00,000/57
= 12,281 Units (Approx)
No. of Units of Digital Cameras = 12,281*85/100 = 10,439
No. of Units of Tripods = 12,281*15/100 = 1,842
Brevard Company
Particular Per Unit Amount
Sales 38.5               962,500
Less: Variable Cost 20               500,000
Less: Fixed Cost               250,000
Operating Profit               212,500
Action Battries
Particular C-Cells D-Cells 9_Volt Total
Sales Revenue                     50,000               200,000               250,000               500,000
Less: Variable cost                     30,000               100,000               170,000               300,000
Less: Direct Fixed Cost                       8,000                  12,000                 18,000                 38,000
Allocated Fixed Cost Ratio                             50                        200                       250                       500
Less: Allocated Fixed Cost                       4,500                  18,000                 22,500                 45,000
Total Profit                       7,500                  70,000                 39,500               117,000
Total Profit = 117,000
D-Cells Profit = 70,000

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