Question
In: Accounting
In 2013, Granny Co. has sales of P800,000, flexible (variable) costs of P200,000, and Capaciity-related (fixed)...
In 2013, Granny Co. has sales of P800,000, flexible (variable)
costs of P200,000, and Capaciity-related (fixed) costs of P300,000.
In 2014, Granny Co. expects annual property taxes to decrease by
P15,000.
a. Calculate operating income and the breakeven point for
2013.
b. Calculate the breakeven point for 2014.
Solutions
Expert Solution
- All working forms part of the answer
- Requirement ‘a’
--Operating Income for 2013
|
A |
Sales |
P 800,000.00 |
|
B |
Variable cost |
P 200,000.00 |
|
C = A - B |
Contribution margin |
P 600,000.00 |
|
D |
Fixed Cost |
P 300,000.00 |
|
E = C - D |
Operating Income |
P 300,000.00 |
--2013’s Break Even point
|
A |
Contribution margin |
P 600,000.00 |
|
B |
Sales |
P 800,000.00 |
|
C = (A/B) x 100 |
CM Ratio |
75% |
|
D |
Fixed Cost |
P 300,000.00 |
|
E = D/C |
Break Even point |
P 400,000.00 |
- Requirement ‘b’
|
A = 300000 - 15000 |
2014's Fixed Cost |
P 285,000.00 |
|
B |
CM Ratio |
75% |
|
C = A/B |
2014's Break Even point |
P 380,000.00 |
ekkarill92 answered 1 year agoRelated Solutions
Hamood Plumbing Co. estimates that variable costs will be 70% of sales and fixed costs will...
Hamood Plumbing Co. estimates that variable costs will be 70% of
sales and fixed costs will total OMR 2,160,000. The selling price
of the product is OMR 10, and 750,000 units will be sold.
Instructions
Using the mathematical equation,
(a) Compute the break-even point in units and Omani Riyals.
(b) Compute the margin of safety in Riyals and as a ratio.
(c) Compute net income.
Problem 2
Ibri, Inc. owns a machine that produces baskets for the gift
packages the...
Garida Co. is considering an investment that will have the following sales, variable costs, and fixed...
Garida Co. is considering an investment that will have the
following sales, variable costs, and fixed operating costs:
Year 1
Year 2
Year 3
Year 4
Unit sales
4,800
5,100
5,000
5,120
Sales price
$22.33
$23.45
$23.85
$24.45
Variable cost per unit
$9.45
$10.85
$11.95
$12.00
Fixed operating costs
$32,500
$33,450
$34,950
$34,875
This project will require an investment of $20,000 in new
equipment. Under the new tax law, the equipment is eligible for
100% bonus deprecation at t =...
Fox Co. is considering an investment that will have the following sales, variable costs, and fixed...
Fox Co. is considering an investment that will have the
following sales, variable costs, and fixed operating costs:
Year 1
Year 2
Year 3
Year 4
Unit sales
4,200
4,100
4,300
4,400
Sales price
$29.82
$30.00
$30.31
$33.19
Variable cost per unit
$12.15
$13.45
$14.02
$14.55
Fixed operating costs
$41,000
$41,670
$41,890
$40,100
This project will require an investment of $10,000 in new
equipment. Under the new tax law, the equipment is eligible for
100% bonus deprecation at t =...
McFann Co. is considering an investment that will have the following sales, variable costs, and fixed...
McFann Co. is considering an investment that will have the
following sales, variable costs, and fixed operating costs:
Year 1
Year 2
Year 3
Year 4
Unit sales
4,800
5,100
5,000
5,120
Sales price
$22.33
$23.45
$23.85
$24.45
Variable cost per unit
$9.45
$10.85
$11.95
$12.00
Fixed operating costs except depreciation
$32,500
$33,450
$34,950
$34,875
Accelerated depreciation rate
33%
45%
15%
7%
This project will require an investment of $10,000 in new
equipment. The equipment will have no salvage value...
Yeatman Co. is considering an investment that will have the following sales, variable costs, and fixed...
Yeatman Co. is considering an investment that will have the
following sales, variable costs, and fixed operating costs:
Year 1
Year 2
Year 3
Year 4
Unit Sales
5,500
5,200
5,700
5,820
Sale price
$42.57
$43.55
$44.76
$46.79
Variable cost per unit
$22.83
$22.97
$23.45
$23.87
Fixed Operating costs except depreciation
$66,750
$68,950
$69,690
$68,900
Accelerated Depreciation Rate
33%
45%
15%
7%
The project will require an investment of $25,000 in new
equipment. The equipment will have a no salvage...
McFann Co. is considering an investment that will have the following sales, variable costs, and fixed...
McFann Co. is considering an investment that will have the
following sales, variable costs, and fixed operating costs:
Year 1
Year 2
Year 3
Year 4
Unit sales
5,500
5,200
5,700
5,820
Sales price
$42.57
$43.55
$44.76
$46.79
Variable cost per unit
$22.83
$22.97
$23.45
$23.87
Fixed operating costs except depreciation
$66,750
$68,950
$69,690
$68,900
Accelerated depreciation rate
33%
45%
15%
7%
This project will require an investment of $15,000 in new
equipment. The equipment will have no salvage value...
Yeatman Co. is considering an investment that will have the following sales, variable costs, and fixed...
Yeatman Co. is considering an investment that will have the
following sales, variable costs, and fixed operating costs:
Year 1
Year 2
Year 3
Year 4
Unit sales
4,800
5,100
5,000
5,120
Sales price
$22.33
$23.45
$23.85
$24.45
Variable cost per unit
$9.45
$10.85
$11.95
$12.00
Fixed operating costs
$32,500
$33,450
$34,950
$34,875
This project will require an investment of $20,000 in new
equipment. Under the new tax law, the equipment is eligible for
100% bonus deprecation at t =...
126 Sheridan Company has fixed costs of $2300000 and variable costs are 20% of sales. What...
126
Sheridan Company has fixed costs of $2300000 and variable costs
are 20% of sales. What are the required sales if Sheridan desires
net income of $400000?
$3375000
$2875000
$13500000
$11500000
At a sales level of 10,000 units, Darly Corporation has variable costs of $40,000, fixed costs...
At a sales level of 10,000 units, Darly Corporation has variable
costs of $40,000, fixed costs of $48,000, and sales of $80,000.
Calculate the sales level that would put the company at its
break-even point. A - What is the selling price per unit? $ B -
What is the variable cost per unit? $ C - What is the unit
contribution margin? $ D - What is the break-even point in units? E
- What is the break-even point...
Evans Company has current sales of $300000 and variable costs of $180000. The company's fixed costs...
Evans Company has current sales of $300000 and variable costs of
$180000. The company's fixed costs equal $100000. The marketing
manager is considering a new advertising campaign, which will
increase fixed costs by $5000. She anticipates that the campaign
will cause sales to increase by 5 Per cent as a result.
Should the company implement the new advertising campaign? What
will be the impact on Evans' profit?
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 4. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes: a....
- The Financial Accounting Standards Board (FASB) is responsible for the Generally Accepted Accounting Principles (GAAP). Select...
- The weather report says the temperature is 78.0°F, the barometer is at 29.90 inches Hg, the...
- An acute viral disease infects a population of chipmunks, and only those homozygous for allele b...
- 5.-Competitiveness of the Home Market. A strongly competitive home market can sharpen a firm’s competitive advantage...
- A 10.0 mg sample of a nonvolatile organic compound is dissolved in 1.0 g of camphor,...
- Question text Susan hires a small construction organization to repair and renovate her hourse. The company...
ADVERTISEMENT