Problem 9-4A (Video)
Colter Company prepares monthly cash budgets. Relevant data from
operating budgets for 2020 are as follows.
January
February
Sales$360,000$400,000
Direct materials purchases120,000125,000
Direct labor90,000100,000
Manufacturing overhead70,00075,000
Selling and administrative expenses79,00085,000
All sales are on account. Collections are expected to be 50% in the
month of sale, 30% in the first month following the sale, and 20%
in the second month following the sale. Sixty percent (60%) of
direct materials purchases are paid in cash in the month of
purchase, and the balance due is paid in the month following the
purchase. All other items above are paid in the month incurred
except for selling and administrative expenses that include $1,000
of depreciation per month.
Other data:
1.Credit sales: November 2019, $250,000; December 2019, $320,000.
2.Purchases of direct materials: December 2019, $100,000.
3.Other receipts: January—Collection of December 31, 2019, notes receivable $15,000;
February—Proceeds from sale of securities $6,000.
4.Other disbursements: February—Payment of $6,000 cash dividend.
The company’s cash balance on January 1, 2020, is expected to be
$60,000. The company wants to maintain a minimum cash balance of
$50,000.
Prepare schedules for (1) expected collections from customers and
(2) expected payments for direct materials purchases for January
and February.
Expected Collections from Customers
January
February
November
$
$
December
January
February
Total collections$$
Expected Payments for Direct Materials
January
February
December
$
$
January
February
Total payments$$
Prepare a cash budget for January and February in columnar
form.
COLTER COMPANY
Cash Budget
For the Two Months Ending February 28, 2020February 28, 2020For the Quarter Ending February 28, 2020
January
February
Ending Cash BalanceManufacturing OverheadNotes ReceivableExcess (Deficiency) of Available Cash Over Cash DisbursementsTotal DisbursementsReceiptsRepaymentsTotal ReceiptsDirect MaterialsSale of SecuritiesBorrowingsDisbursementsFinancingCollections from CustomersDirect LaborSelling and Administrative ExpensesTotal Available CashCash DividendBeginning Cash Balance
$$
AddLess
:
BorrowingsExcess (Deficiency) of Available Cash Over Cash DisbursementsCollections from CustomersTotal DisbursementsTotal Available CashManufacturing OverheadTotal ReceiptsDirect LaborDirect MaterialsRepaymentsFinancingDisbursementsEnding Cash BalanceNotes ReceivableReceiptsSale of SecuritiesSelling and Administrative ExpensesCash DividendBeginning Cash Balance
Repayments Receipts Cash Dividend Excess (Deficiency) of Available Cash Over Cash Disbursements Sale of Securities Selling and Administrative Expenses Total Available Cash Notes Receivable Total Disbursements Total Receipts Beginning Cash Balance Collections from Customers Borrowings Disbursements Direct Labor Direct Materials Ending Cash Balance Financing Manufacturing Overhead
Manufacturing Overhead Notes Receivable Sale of Securities Beginning Cash Balance Total Disbursements Excess (Deficiency) of Available Cash Over Cash Disbursements Total Receipts Repayments Direct Materials Receipts Collections from Customers Selling and Administrative Expenses Total Available Cash Cash Dividend Borrowings Direct Labor Disbursements Financing Ending Cash Balance
Cash Dividend Beginning Cash Balance Total Receipts Disbursements Direct Labor Borrowings Notes Receivable Total Disbursements Financing Total Available Cash Collections from Customers Direct Materials Manufacturing Overhead Receipts Sale of Securities Ending Cash Balance Repayments Selling and Administrative Expenses Excess (Deficiency) of Available Cash Over Cash Disbursements
Disbursements Total Receipts Sale of Securities Total Disbursements Cash Dividend Total Available Cash Ending Cash Balance Manufacturing Overhead Receipts Beginning Cash Balance Notes Receivable Borrowings Excess (Deficiency) of Available Cash Over Cash Disbursements Repayments Selling and Administrative Expenses Collections from Customers Direct Labor Direct Materials Financing
BorrowingsFinancingReceiptsDirect MaterialsCollections from CustomersTotal ReceiptsBeginning Cash BalanceRepaymentsTotal Available CashCash DividendTotal DisbursementsEnding Cash BalanceDisbursementsManufacturing OverheadDirect LaborExcess (Deficiency) of Available Cash Over Cash DisbursementsNotes ReceivableSelling and Administrative ExpensesSale of Securities
AddLess
:
Manufacturing OverheadFinancingExcess (Deficiency) of Available Cash Over Cash DisbursementsRepaymentsCash DividendDirect LaborTotal Available CashBorrowingsBeginning Cash BalanceSelling and Administrative ExpensesEnding Cash BalanceTotal DisbursementsSale of SecuritiesNotes ReceivableReceiptsTotal ReceiptsDirect MaterialsCollections from CustomersDisbursements
Ending Cash Balance Cash Dividend Excess (Deficiency) of Available Cash Over Cash Disbursements Beginning Cash Balance Manufacturing Overhead Selling and Administrative Expenses Direct Labor Collections from Customers Direct Materials Total Disbursements Total Available Cash Financing Disbursements Notes Receivable Borrowings Total Receipts Receipts Repayments Sale of Securities
Total Available Cash Cash Dividend Selling and Administrative Expenses Total Disbursements Total Receipts Borrowings Direct Materials Beginning Cash Balance Excess (Deficiency) of Available Cash Over Cash Disbursements Financing Collections from Customers Repayments Manufacturing Overhead Notes Receivable Receipts Direct Labor Disbursements Ending Cash Balance Sale of Securities
Excess (Deficiency) of Available Cash Over Cash Disbursements Disbursements Notes Receivable Financing Receipts Collections from Customers Sale of Securities Manufacturing Overhead Ending Cash Balance Direct Materials Total Disbursements Repayments Selling and Administrative Expenses Borrowings Direct Labor Beginning Cash Balance Total Available Cash Total Receipts Cash Dividend
Total Available Cash Borrowings Direct Labor Manufacturing Overhead Disbursements Repayments Total Receipts Cash Dividend Direct Materials Ending Cash Balance Receipts Beginning Cash Balance Financing Selling and Administrative Expenses Total Disbursements Excess (Deficiency) of Available Cash Over Cash Disbursements Notes Receivable Collections from Customers Sale of Securities
Total Disbursements Disbursements Direct Materials Direct Labor Ending Cash Balance Borrowings Excess (Deficiency) of Available Cash Over Cash Disbursements Financing Manufacturing Overhead Notes Receivable Selling and Administrative Expenses Receipts Repayments Total Receipts Cash Dividend Sale of Securities Total Available Cash Collections from Customers Beginning Cash Balance
Total Available Cash Beginning Cash Balance Direct Labor Cash Dividend Sale of Securities Total Disbursements Total Receipts Borrowings Financing Collections from Customers Excess (Deficiency) of Available Cash Over Cash Disbursements Direct Materials Disbursements Selling and Administrative Expenses Ending Cash Balance Manufacturing Overhead Notes Receivable Receipts Repayments
Total DisbursementsTotal ReceiptsManufacturing OverheadCollections from CustomersCash DividendBeginning Cash BalanceNotes ReceivableFinancingDirect LaborBorrowingsRepaymentsDirect MaterialsDisbursementsExcess (Deficiency) of Available Cash Over Cash DisbursementsEnding Cash BalanceReceiptsSale of SecuritiesSelling and Administrative ExpensesTotal Available Cash
Notes ReceivableCollections from CustomersSale of SecuritiesDirect MaterialsCash DividendTotal DisbursementsDisbursementsBeginning Cash BalanceManufacturing OverheadExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingDirect LaborReceiptsRepaymentsEnding Cash BalanceSelling and Administrative ExpensesTotal Available CashTotal ReceiptsBorrowings
AddLess
:
RepaymentsDirect MaterialsCash DividendManufacturing OverheadSale of SecuritiesSelling and Administrative ExpensesBeginning Cash BalanceFinancingBorrowingsTotal ReceiptsCollections from CustomersNotes ReceivableReceiptsDisbursementsTotal Available CashTotal DisbursementsDirect LaborEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash Disbursements
AddLess
:
Excess (Deficiency) of Available Cash Over Cash DisbursementsFinancingManufacturing OverheadTotal Available CashBeginning Cash BalanceCollections from CustomersCash DividendTotal ReceiptsRepaymentsReceiptsDirect LaborNotes ReceivableBorrowingsDirect MaterialsDisbursementsEnding Cash BalanceSale of SecuritiesSelling and Administrative ExpensesTotal Disbursements
Notes ReceivableCash DividendEnding Cash BalanceFinancingManufacturing OverheadReceiptsRepaymentsExcess (Deficiency) of Available Cash Over Cash DisbursementsSale of SecuritiesDirect LaborCollections from CustomersSelling and Administrative ExpensesTotal DisbursementsTotal Available CashBeginning Cash BalanceTotal ReceiptsBorrowingsDirect MaterialsDisbursements
$$
In: Accounting
As the new accountant for Cohen & Co., you have been asked to provide a succinct analysis of financial performance for the year just ended. You obtain the following information that pertains to the company’s sole product: Actual Master (Static) Budget Units sold 25,000 30,000 Sales $ 402,000 $ 456,000 Variable costs 232,000 276,000 Fixed costs 161,000 141,000 Required: 1. What was the actual operating income for the period? 2. What was the company’s master (static) budget operating income for the period? 3. (a) What was the total master (static) budget variance, in terms of operating income, for the period? (b) Is this variance favorable (F) or unfavorable (U)? (Note: The total master (static) budget variance is also referred to as the total operating income variance for the period.) (If a variance has no amount, select "None" in the corresponding dropdown cell.) 4. The total master (static) budget variance for a period can be decomposed into a total flexible-budget variance and a sales volume variance. (a) What was the total flexible-budget variance for the period? (b) Was this variance favorable (F) or unfavorable (U)? (c) What was the sales volume variance for the period? (d) Was this variance favorable (F) or unfavorable (U)? (Do not round your intermediate calculations. If a variance has no amount, select "None" in the corresponding dropdown cell.)
In: Accounting
NOPAT is
a. net income with costs removed that managers at the divisional
level are unable to control.
b. net income plus noncash flow amounts.
c. net income less the cost of financing.
d. net income minus noninterest-bearing current liabilities.
In: Accounting
Exercise 9-14 (Video)
Danner Company expects to have a cash balance of $45,000 on
January 1, 2020. Relevant monthly budget data for the first 2
months of 2020 are as follows.
Collections from customers: January $85,000, February $150,000.
Payments for direct materials: January $50,000, February $75,000.
Direct labor: January $30,000, February $45,000. Wages are paid in the month they are incurred.
Manufacturing overhead: January $21,000, February $25,000. These costs include depreciation of $1,500 per month. All other overhead costs are paid as incurred.
Selling and administrative expenses: January $15,000, February $20,000. These costs are exclusive of depreciation. They are paid as incurred.
Sales of marketable securities in January are expected to realize
$12,000 in cash. Danner Company has a line of credit at a local
bank that enables it to borrow up to $25,000. The company wants to
maintain a minimum monthly cash balance of $20,000.
Prepare a cash budget for January and February.
DANNER COMPANY
Cash Budget
For the Quarter Ending February 28, 2020For the Two Months Ending February 28, 2020February 28, 2020
January
February
Direct MaterialsCollections from CustomersBeginning Cash BalanceFinancingRepaymentsDirect LaborManufacturing OverheadDisbursementsBorrowingsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsReceiptsSale of Marketable SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsTotal Receipts
$
$
AddLess
:
Collections from CustomersDirect LaborTotal DisbursementsDirect MaterialsTotal Available CashSale of Marketable SecuritiesSelling and Administrative ExpensesDisbursementsTotal ReceiptsBorrowingsRepaymentsReceiptsManufacturing OverheadFinancingEnding Cash BalanceBeginning Cash BalanceExcess (Deficiency) of Available Cash Over Cash Disbursements
Financing Excess (Deficiency) of Available Cash Over Cash Disbursements Total Disbursements Selling and Administrative Expenses Manufacturing Overhead Receipts Repayments Disbursements Ending Cash Balance Sale of Marketable Securities Total Available Cash Total Receipts Beginning Cash Balance Borrowings Collections from Customers Direct Labor Direct Materials
Total Available Cash Direct Materials Collections from Customers Disbursements Direct Labor Sale of Marketable Securities Ending Cash Balance Excess (Deficiency) of Available Cash Over Cash Disbursements Manufacturing Overhead Financing Total Disbursements Receipts Repayments Total Receipts Selling and Administrative Expenses Beginning Cash Balance Borrowings
Receipts Repayments Total Available Cash Manufacturing Overhead Beginning Cash Balance Sale of Marketable Securities Total Receipts Financing Borrowings Total Disbursements Selling and Administrative Expenses Collections from Customers Direct Labor Direct Materials Disbursements Ending Cash Balance Excess (Deficiency) of Available Cash Over Cash Disbursements
Total ReceiptsManufacturing OverheadDirect LaborExcess (Deficiency) of Available Cash Over Cash DisbursementsReceiptsDisbursementsEnding Cash BalanceBeginning Cash BalanceRepaymentsBorrowingsFinancingSale of Marketable SecuritiesSelling and Administrative ExpensesTotal Available CashTotal DisbursementsDirect MaterialsCollections from Customers
AddLess
:
Sale of Marketable SecuritiesTotal ReceiptsDirect LaborSelling and Administrative ExpensesDirect MaterialsFinancingRepaymentsBeginning Cash BalanceDisbursementsTotal Available CashExcess (Deficiency) of Available Cash Over Cash DisbursementsCollections from CustomersManufacturing OverheadTotal DisbursementsEnding Cash BalanceBorrowingsReceipts
Sale of Marketable Securities Collections from Customers Receipts Total Receipts Direct Labor Selling and Administrative Expenses Direct Materials Beginning Cash Balance Excess (Deficiency) of Available Cash Over Cash Disbursements Financing Total Available Cash Manufacturing Overhead Repayments Disbursements Ending Cash Balance Total Disbursements Borrowings
Collections from Customers Selling and Administrative Expenses Manufacturing Overhead Total Receipts Direct Materials Direct Labor Repayments Total Available Cash Receipts Sale of Marketable Securities Disbursements Beginning Cash Balance Borrowings Ending Cash Balance Total Disbursements Excess (Deficiency) of Available Cash Over Cash Disbursements Financing
Excess (Deficiency) of Available Cash Over Cash Disbursements Sale of Marketable Securities Total Available Cash Disbursements Direct Materials Borrowings Ending Cash Balance Collections from Customers Financing Selling and Administrative Expenses Direct Labor Total Disbursements Manufacturing Overhead Total Receipts Receipts Beginning Cash Balance Repayments
Financing Disbursements Manufacturing Overhead Direct Labor Borrowings Receipts Repayments Total Receipts Ending Cash Balance Excess (Deficiency) of Available Cash Over Cash Disbursements Selling and Administrative Expenses Sale of Marketable Securities Total Available Cash Total Disbursements Beginning Cash Balance Direct Materials Collections from Customers
Total Receipts Selling and Administrative Expenses Receipts Total Disbursements Disbursements Manufacturing Overhead Financing Ending Cash Balance Sale of Marketable Securities Excess (Deficiency) of Available Cash Over Cash Disbursements Beginning Cash Balance Repayments Borrowings Total Available Cash Collections from Customers Direct Labor Direct Materials
Total Available CashManufacturing OverheadDisbursementsDirect LaborFinancingTotal DisbursementsReceiptsBeginning Cash BalanceTotal ReceiptsDirect MaterialsBorrowingsCollections from CustomersEnding Cash BalanceRepaymentsExcess (Deficiency) of Available Cash Over Cash DisbursementsSale of Marketable SecuritiesSelling and Administrative Expenses
Beginning Cash BalanceDirect LaborTotal ReceiptsEnding Cash BalanceBorrowingsDisbursementsCollections from CustomersDirect MaterialsReceiptsRepaymentsSale of Marketable SecuritiesExcess (Deficiency) of Available Cash Over Cash DisbursementsSelling and Administrative ExpensesFinancingManufacturing OverheadTotal Available CashTotal Disbursements
LessAdd
:
Direct LaborTotal ReceiptsExcess (Deficiency) of Available Cash Over Cash DisbursementsBeginning Cash BalanceDisbursementsDirect MaterialsSelling and Administrative ExpensesRepaymentsTotal Available CashReceiptsManufacturing OverheadTotal DisbursementsBorrowingsFinancingSale of Marketable SecuritiesCollections from CustomersEnding Cash Balance
AddLess
:
RepaymentsTotal DisbursementsTotal ReceiptsSelling and Administrative ExpensesBeginning Cash BalanceDirect LaborDirect MaterialsReceiptsDisbursementsEnding Cash BalanceExcess (Deficiency) of Available Cash Over Cash DisbursementsManufacturing OverheadSale of Marketable SecuritiesFinancingTotal Available CashBorrowingsCollections from Customers
Collections from CustomersTotal Available CashDirect LaborEnding Cash BalanceDirect MaterialsDisbursementsExcess (Deficiency) of Available Cash Over Cash DisbursementsFinancingRepaymentsTotal ReceiptsManufacturing OverheadReceiptsSale of Marketable SecuritiesSelling and Administrative ExpensesTotal DisbursementsBeginning Cash BalanceBorrowings
$$
In: Accounting
One test that is often conducted for the acquisition and payment cycle is the Accounts Payable Cutoff Test. What category does this test fall under? Can you explain the test and why it is performed?
In: Accounting
Freese, Inc., is in the process of preparing the fourth quarter budget for 2016, and the following data have been assembled: The company sells a single product at a price of $70 per unit. The estimated sales volume for the next six months is as follows: September 14,300 units October 13,200 units November 15,400 units December 22,000 units January 9,900 units February 11,000 units All sales are on account. The company's collection experience has been that 30% of a month's sales are collected in the month of sale, 68% are collected in the month following the sale, and 2% are uncollectible. It is expected that the net realizable value of accounts receivable (i.e., accounts receivable less allowance for uncollectible accounts) will be $680,680 on September 30, 2016. Management's policy is to maintain ending finished goods inventory each month at a level equal to 30% of the next month's budgeted sales. The finished goods inventory on September 30, 2016, is expected to be 3,960 units. To make one unit of finished product, 4 pounds of materials are required. Management's policy is to have enough materials on hand at the end of each month to equal 40% of the next month's estimated usage. The raw materials inventory is expected to be 22,176 pounds on September 30, 2016. The cost per pound of raw material is $6, and 70% of all purchases are paid for in the month of purchase; the remainder is paid in the following month. The accounts payable for raw material purchases is expected to be $100,267 on September 30, 2016.
Required: a. Prepare a sales budget in units and dollars, by month and in total, for the fourth quarter (October, November, and December) of 2016.
b. Prepare a schedule of cash collections from sales, by month and in total, for the fourth quarter of 2016.
c. Prepare a production budget in units, by month and in total, for the fourth quarter of 2016.
d. Prepare a materials purchases budget in pounds, by month and in total, for the fourth quarter of 2016.
e. Prepare a schedule of cash payments for materials, by month and in total, for the fourth quarter of 2016. (Do not round intermediate calculations.)
In: Accounting
Please provide your understanding on cashflow from Operating, Investing and Financing activities and why we add Depreciation and Amortization in the net income?
In: Accounting
The following gifts are received and sold in the current year:
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||||||||||||||||||||||||||||||||||||||||||||||||||||
Determine the basis for gain and basis for loss and realized gain or realized loss. Enter "0" if the field should be blank or if an amount is zero.
|
In: Accounting
|
Estimated sales |
15,000 |
books |
|
Beginning inventory |
0 |
books |
|
Average selling price |
$81 |
per book |
|
Variable production costs |
$54 |
per book |
|
Fixed production costs |
$225,000 |
per semester |
The fixed cost allocation rate is based on expected sales and is therefore equal to
$ 225,000/15,000 books =$ 15 per book.
Managers who are paid a bonus that is a function of gross margin may be inspired to produce a product in excess of demand to maximize their own bonus. There are metrics to discourage managers from producing products in excess of demand. Do you think the following metrics will accomplish this objective? Show your work.
a. Incorporate a charge of 5% of the cost of the ending inventory as an expense for evaluating the manager. (Complete all answer boxes. For a $0 change, make sure to enter "0" in the appropriate cell.) Please show formulas for solving
|
15,000 books |
21,000 books |
31,500 books |
|||
|
Gross margin |
|||||
|
Ending inventory charge |
|||||
|
Adjusted gross margin |
In: Accounting
Explain the current capital structure of Amazon and recommendations to optimize capital structure. Include cost of debt and equity (e.g. interest rates, preferred dividends, other required annual cash payments from financing).
In: Accounting
“[M]anagement take risks … but the processes that generate those … are somewhat removed from the classical processes of choosing from alternative actions in terms of expected value”.
Discuss this statement in 500 words
In: Accounting
On September 1, the balance of the Accounts Receivable control account in the general ledger of Montgomery Company was $10,520. The customers’ subsidiary ledger contained account balances as follows: Hurley $1,450, Andino $2,290, Fowler $2,080, and Sogard $4,700. At the end of September, the various journals contained the following information. Sales journal: Sales to Sogard $750, to Hurley $1,100, to Giambi $1,360, and to Fowler $1,120. Cash receipts journal: Cash received from Fowler $1,370, from Sogard $2,130, from Giambi $330, from Andino $1,710, and from Hurley $1,190. General journal: An allowance is granted to Sogard $110. -Set up control and subsidiary accounts and enter the beginning balances. -Post the various journals. Post the items as individual items or as totals, whichever would be the appropriate procedure. -Prepare a schedule of accounts receivable and prove the agreement of the controlling account with the subsidiary ledger at September 30, 2017. -
In: Accounting
Maxey & Sons manufactures two types of storage cabinets—Type A and Type B—and applies manufacturing overhead to all units at the rate of $112 per machine hour. Production information follows.
| Type A | Type B | |||||
| Anticipated volume (units) | 22,400 | 42,000 | ||||
| Direct-material cost per unit | $ | 24 | $ | 36 | ||
| Direct-labor cost per unit | 29 | 29 | ||||
The controller, who is studying the use of activity-based costing, has determined that the firm’s overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities’ three respective cost drivers, follow.
| Type A | Type B | Total | |||||||
| Setups | 132 | 92 | 224 | ||||||
| Machine hours | 44,800 | 63,000 | 107,800 | ||||||
| Outgoing shipments | 200 | 150 | 350 | ||||||
The firm’s total overhead of $12,073,600 is subdivided as follows: manufacturing setups, $2,634,240; machine processing, $7,244,160; and product shipping, $2,195,200.
Required:
1. Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company’s current overhead costing procedures.
2. Compute the unit manufacturing cost of Type A and Type B storage cabinets by using activity-based costing.
3. Is the cost of the Type A storage cabinet overstated or understated (i.e., distorted) by the use of machine hours to allocate total manufacturing overhead to production? By how much?
4. Assume that the current selling price of a Type A storage cabinet is $332.50 and the marketing manager is contemplating a $38 discount to stimulate volume. Is this discount advisable?
Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company’s current overhead costing procedures.
|
Compute the unit manufacturing cost of Type A and Type B storage cabinets by using activity-based costing. (Round activity based application rates, overhead application and the final answers to 2 decimal places.)
|
Is the cost of the Type A storage cabinet overstated or understated (i.e., distorted) by the use of machine hours to allocate total manufacturing overhead to production? By how much? (Do not round intermediate calculations. Round activity based application rates, overhead application and the final answers to 2 decimal places.)
|
Assume that the current selling price of a Type A storage cabinet is $332.50 and the marketing manager is contemplating a $38 discount to stimulate volume. Is this discount advisable?
|
In: Accounting
Q) Pepsi Cola Company wants to estimate the cost for each process. It is a beverage manufacturing unit and only produce different flavors of beverages.
Required:
a. Classify each of the following costs as either direct or indirect with respect to production process.
b. Classify each of the following costs as either fixed or variable with respect to Pepsi Cola Company per day.
| Direct | Indirect | Fixed | Variable | |
| Admin & Security | ||||
| Tools & Accessaries | ||||
| Employee Wages | ||||
| Employees Transportation | ||||
| Plant & Machinery |
In: Accounting
Crest Industries sells a single model of satellite radio receivers for use in the home. The radios have the following price and cost characteristics: Sales price $80.00 per radio Variable costs $32.00 per radio Fixed costs $360,000.00 per month Crest is subject to an income tax rate of 40.00% a. How many receivers must Crest sell every month to break even? b. How many receivers must Crest sell to earn a monthly operating profit of $90,000.00 after taxes?
2. Cesar's Bottlers bottle soft drinks in a factory that can operate either one shift, two shifts, or three shifts per day. Each shift is eight hours long. The factory is closed on weekends. The sales price of $2.00 per case bottled and the variable cost of $0.90 per case remain constant regardless of volume. Cesar's Bottlers can increase volume by opening and staffing additional shifts. The company has the following three choices: Daily Volume Range Total Fixed (# of cases bottled) Costs per Day 1 Shift 0 - 2,000 $1,980.00 2 Shifts 2,001 - 3,600 $3,740.00 3 Shifts 3,601 - 5,000 $5,170.00 a. Calculate the break-even point(s). b. If Cesar's Bottlers can sell all the units it can produce, should it operate at one, two or three shifts?
In: Accounting