Is it possible to post into an asset account and a revenue account? Give two examples with debiting and crediting an asset account?

The break-even point tells a company the number of units or the amount of revenue that it must sell or earn in order to pay for all of its costs. At this point, the company has neither profit nor loss.

Companies have two main types of costs: variable costs and fixed costs.

Variable costs are those costs that vary with the number of units produced. Examples of variable costs are direct labor, direct materials and overhead.

Fixed costs are those costs that a company incurs that do not depend on production. For example, most selling, and all administrative costs are fixed. A company must pay these costs even if it does not have any production activity.

The formulas for computing break-even follow:

B/E _{(# units)} = .     Fixed Cost              .

                         Contribution Margin

B/E _(Revenue) = .     Fixed Cost              .

                     Contribution Margin Ratio

If you will notice, both formulas use something called Contribution Margin. Contribution Margin represents the amount of revenue available after all variable costs have been paid for. It represents what is left over to pay for the fixed costs. The Contribution Margin ratio is the percentage Revenue that the Contribution Margin represents. In concept this is similar to Gross Profit.

In Cost Accounting Variable Costs are grouped together, and Fixed Costs are grouped together to create a variation of the traditional Income Statement. This variation is called a Contribution Margin Income Statement.

Read the following ethical dilemma.

Spillproof Company produces molded plastic cup holders for automobiles. Below is a summary of its Contribution Margin Income Statement from last year:

• Revenues: $5,750,000
• Variable costs: $3,850,000
• Fixed costs: $2,000,000
• Net Loss: ($100,000)

Because the company’s CEO is very concerned about the firm’s net losses, she asks the production manager if there are any ways in which they can reduce costs.

A few weeks later, the production manager returns with a proposal to reduce variable costs to 53% of revenues by lowering the cost estimates that the company uses for environmental clean-up costs. Some years the company has to perform waste clean-up and other years it does not. Either way, the company records this estimated cost as part of Variable Cost since it is based on the number of units produced.

The CEO likes the new projected net income and new break-even point, but is concerned that this change in the estimate will misrepresent the potential liability. The manager disagrees. He feels that the company will not be violating any laws by changing their estimate, and that there is only a possibility of environmental costs in the future anyway.

Requirements for your Main thread post:

1. Calculate the CURRENT breakeven revenues using the current Contribution Margin Income Statement information above.  Show us your work!
2. Re-calculate the breakeven revenues if variable costs are 53% of revenues.  Show us your work!
3. Calculate Spillproof’s projected Net Income/Loss.   Show us your work!
4. Discuss the following:

• 1. What are the ethical issues involved in this case? Explain your answer.
  2. Do you feel that the Production Manager is acting improperly or immorally? Why or why not? Please explain your response.
  3. What stakeholders would be affected if the CEO implemented the Production Managers suggestions? Why?
  4. What should the CEO do?

The project is about airline revenue and the factors that impact it. All the knowledge you obtain in chapter 4, is enough to do the project.

Revenue of an airline is influenced by several factors, including fuel cost, employees’ salary, operating expenses, maintenance costs, fleet size, available seats. This project aims to find out the influence of some of these factors on revenue for U.S. airline industry for the period of 11 years.

In airline industry one of the variables that represent revenue is “Revenue Passenger mile”.

Attached is the data (revenue passenger mile, fuel cost, salary cost and seat available” of some U.S. airlines for the period of 2005 till 2015. Data has been collected from The Bureau of Transportation Statistics (BTS) database.

Each team should use regression tool to interpret the relation between revenue of airlines and the above mention factors for each year.

Each team should run a regression for each year separately, write the regression equations for each year and compare in which year each of these three factors impacts revenue the most and the least.

Finally, run the regression for whole the period and write the equation line for all observation and interpret the result in terms of the positive/negative influence of factors on revenue.

The revenue for the total window cleaning market is $1,574,000. The market shares for each of the companies in this market are as follows: 1) Sunnyside – 8.8%, 2) White Shark – 23.2%, 3) Paneless Perfection – 11.7%, 4) Squeegies – 19.1%, 5) Precision Cleaning – 27.6%, 6) Glass First – 9.6%. What is the revenue to the nearest dollar for the third company in this list?

The diagram indicates that the marginal revenue of the sixth unit of output is.

How do I find the marginal revenue and show it on the graph for a monopoly?

1) For a monopoly, marginal revenue is less than price because
A) the demand for the firm's output is downward sloping.
B) the firm has no supply curve.
C) the firm can sell all of its output at any price.
D) the demand for the firm's output is perfectly elastic.

2) The monopoly maximizes profit by setting
A) price equal to marginal cost.
B) price equal to marginal revenue.
C) marginal revenue equal to marginal cost.
D) marginal revenue equal to zero.

3) The ability of a monopoly to charge a price that exceeds marginal cost depends on A) the price elasticity of supply.
B) price elasticity of demand.
C) slope of the demand curve.
D) shape of the marginal cost curve.

You are evaluating a project with a 4 year life. Sales revenue is projected to be $320,000 in year 1, $400,000 in year 2, $424,000 in year 3, and $475,000 in year 4. Operating expenses (excluding depreciation) are $200,000 per year. The project requires an initial investment in equipment of $240,000 which will be depreciated straight-line to zero over its four-year life. However, the actual market value of the equipment at the end of year 4 is expected to be $23,000. The level of net working capital required in each year is projected to be 10% of sales in the following year. The tax rate is 40% and the required return on the project is 15%.

(a) What is operating cash flow in the second year (t=2) of the project? Show all your work and clearly identify your final answer. (25 points)

(b) What is the investment in net working capital in the third year (t=3) of the project? Indicate clearly whether this would be a positive or negative number in your cash flow worksheet. Show all your work and clearly identify your final answer. (25 points)

(c) What is the after-tax cash flow from the sale of the equipment in year 4? Show all your work and clearly identify your final answer. (25 points)