Managerial Accounting 1B Ch18

Orlando Company management
predicts that it will incur fixed costs of $250,000 and earn pretax income of
$350,000 in the next period. Its expected contribution margin ratio is 60%.

Required:

1.

Compute the amount of total dollar
sales.(Omit the “$” sign in your
response.)

Total dollar sales

2.

Compute the amount of total
variable costs.(Omit the “$” sign
in your response.)

Total variable costs

Apollo Company manufactures a
single product that sells for $168 per unit and whose total variable costs
are $126 per unit. The company’s annual fixed costs are $630,000.

(a)

Compute the company’s contribution
margin.(Omit the “$” sign in your
response.)

Contribution margin

(b)

Compute the company’s contribution
margin ratio.(Omit the “%” sign in
your response.)

Contribution margin
ratio

(c)

Compute the company’s break-even
point in units.

Break-even point

(d)

Compute the company’s break-even point
in dollars of sales.(Omit the “$”
sign in your response.)

Break-even point

Apollo Company manufactures a
single product that sells for $168 per unit and whose total variable costs
are $126 per unit. The company’s annual fixed costs are $630,000.

(1)

Prepare a contribution margin
income statement for Apollo Company at the break-even point.(Leave no cells blank – be certain to enter “0”
wherever required. Input all amounts as positive values. Omit the
“$” sign in your response.)

(2)

Assume if the company’s fixed
costs increase by $135,000, what amount of sales (in dollars) is needed to
break even point?(Omit the “$”
sign in your response. )

Break-even

Apollo Company manufactures a
single product that sells for $168 per unit and whose total variable costs
are $126 per unit. The company targets an annual after-tax income of $840,000.
The company is subject to a 20% income tax rate. Assume that fixed costs
remain at $630,000.

(1)

Compute the unit sales to earn the
target after-tax net income.

Unit sales

(2)

Compute the dollar sales to earn
the target after-tax net income.(Omit the
“$” sign in your response.)

Dollar sales

Greenspan Company management
predicts $500,000 of variable costs, $800,000 of fixed costs, and a pretax
income of $100,000 in the next period. Management also predicts that the
contribution margin per unit will be $60.

(1)

Compute the total expected dollar
sales for next period.(Omit the
“$” sign in your response.)

Total expected dollar
sales

(2)

Compute the number of units
expected to be sold next period.

Expected unit sales

Home Builders sells windows and
doors in the ratio of 8:2 (windows:doors). The selling price of each window
is $100 and of each door is $250. The variable cost of a window is $62.50 and
of a door is $175. Fixed costs are $450,000.

(1)

Determine the selling price per
composite unit.(Omit the “$” sign
in your response.)

Selling price per
composite unit

(2)

Determine the variable costs per
composite unit.(Omit the “$” sign
in your response.)

Variable costs per
composite unit

(3)

Determine the break-even point in composite
units.

Break-even point

composite
units

(4)

Determine the number of units of
each product that will be sold at the break-even point.

Unit sales of windows
at break-even point

Unit sales of doors at
break-even point

The following costs result from
the production and sale of 4,000 drum sets manufactured by Vince Drum Company
for the year ended December 31, 2011. The drum sets sell for $250 each. The
company has a 25% income tax rate.

Required:

1.

Prepare a contribution margin
income statement for the company.(Input all
amounts as positive values. Omit the “$” sign in your response.)

2.1

Compute its contribution margin
per unit.(Input all amounts as positive
values. Omit the “$” sign in your response.)

2.2

Compute its contribution margin
ratio.(Omit the “%” sign in your
response.)

Contribution margin
ratio

National Co. manufactures and
sells three products: red, white, and blue. Their unit sales prices are red,
$55; white, $85; and blue, $110. The per unit variable costs to manufacture
and sell these products are red, $40; white, $60; and blue, $80. Their sales
mix is reflected in a ratio of 5:4:2 (red:white:blue). Annual fixed costs
shared by all three products are $150,000. One type of raw material has been
used to manufacture all three products. The company has developed a new
material of equal quality for less cost. The new material would reduce
variable costs per unit as follows: red, by $10; white, by $20; and blue, by
$10. However, the new material requires new equipment, which will increase
annual fixed costs by $20,000.

Required:

1.

Assume if the company continues to
use the old material, determine its break-even point in both sales units and
sales dollars of each individual product.(Always
round your composite units up (ceiling rounding) to next whole unit. Then use
the Sales Units to calculate Sales Dollars. Omit the “$” sign in
your response.)

Break-Even
Points

Sales
Units

Sales
Dollars

Red at break-even

White at break-even

Blue at break-even

2.

Assume if the company uses the new
material, determine its new break-even point in both sales units and sales
dollars of each individual product.(Always
round your composite units up (ceiling rounding) to next whole unit. Then use
the Sales Units to calculate Sales Dollars. Omit the “$” sign in
your response.)

Break-Even
Points

Sales
Units

Sales
Dollars

Red at break-even

White at break-even

Blue at break-even