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In: Accounting
JAMES Hospitality Products, Inc. is a small-sized food product manufacturer based in the Rocky Mountain regions...
JAMES Hospitality Products, Inc. is a small-sized food product manufacturer based in the Rocky Mountain regions of the US mid-west. The company started operations in January 2005 and quickly gained a reputation for its highly popular designer cakes. The following information is taken from the company’s budget for 2021:
Sales (5,100 units) $897,600
Variable costs $714,000
Fixed costs $139,600
1. Determine the break-even point in units and dollars for 2021. 4 marks
2. What sales volume in dollars would be necessary to earn an after-tax net operating income of $80,800 if the income tax rate is 35 percent? 4 marks
3. What sales volume in units would be necessary to earn a profit before tax equal to 20 percent of sales? 4 marks
4. What effect would an increase of 16 percent in the selling price per unit have on the break-even point? 4 marks
5. Compute (a) the degree of operating leverage, and (b) the margin of safety in both dollar and percentage terms. 4 marks
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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Fixed costs $139,600
Required: 1. Determine the break-even point in units and dollars
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Direct materials
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$
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1
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Estimated annual
production and sales
20,000
units
70,000
units
The company has a conventional costing system in which
manufacturing overhead is applied to units based on direct
labor-hours. Data concerning manufacturing overhead and direct...
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