All Related Questions of Contribution Margin

Q: Janitorial Products, Inc., manufactures two products, brooms and mops

Janitorial Products, Inc., manufactures two products, brooms and mops, which are sold in two territories designated by the company as East Territory and West Territory. The following income statement...

Q: The sales price per unit is $13 for the Dakota Company’s

The sales price per unit is $13 for the Dakota Company’s only product. The variable cost per unit is $5. In year 2011, the company sold 80,000 units, which was 10,000 units above the break-even point....

Q: A company has sales of $1,000,000,

A company has sales of $1,000,000, variable costs of $250,000, and fixed costs of $600,000. Compute the following: 1. Contribution margin ratio. 2. Break-even sales volume. 3. Margin of safety ratio....

Q: Go to the Web site for Delta Air Lines, which is

Go to the Web site for Delta Air Lines, which is linked to the text Web site at www.cengage.com/accounting/vanderbeck. Click on ‘‘Specials,’’ then ‘‘Web Fares’’ and do the following: 1. Find a fare de...

Q: Branson Manufacturing, Inc., produces a single type of small motor

Branson Manufacturing, Inc., produces a single type of small motor. The bookkeeper who does not have an in-depth understanding of accounting principles prepared the following performance report with t...

Q: Use the information in Figure 7-12 of the chapter.

Use the information in Figure 7-12 of the chapter. Required: Prepare flexible budgets for the production and sale of 29,000 units and 31,000, respectively.

Q: South-Central Publishing Company prepares income statements segmented by divisions,

South-Central Publishing Company prepares income statements segmented by divisions, but the chief operating officer is not certain about how the company is actually performing. Financial data for the...

Q: The Nut House, Inc., sells three types of nuts:

The Nut House, Inc., sells three types of nuts: almonds, cashews, and walnuts. Ten thousand cans of nuts were sold in 2011, and the amount of walnuts sold were twice as much as the number of cans of c...

Q: What is the difference between the contribution margin ratio and the margin

What is the difference between the contribution margin ratio and the margin of safety ratio?

Q: Limerick Enterprises, Inc., is considering building a manufacturing plant in

Limerick Enterprises, Inc., is considering building a manufacturing plant in Dublin. Predicting sales of 100,000 units, Limerick estimates the following expenses: An Irish firm that specializes in ma...

Q: Digital Software, Inc., has two product lines. The income

Digital Software, Inc., has two product lines. The income statement for the year ended December 31 shows the following: The products, Num 1 and Num 2, are sold in two territories, North and South, as...

Q: Miller Company’s most recent contribution format income statement is shown below:

Miller Company’s most recent contribution format income statement is shown below: Required: Prepare a new contribution format income statement under each of the following conditions...

Q: Menlo Company distributes a single product. The company’s sales and expenses

Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Required: 1. What is the monthly break-even point in units sold and in sales doll...

Q: Last month when Holiday Creations, Inc., sold 50,000

Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, and fixed expenses were $65,000. Required: 1. What is the company’s contri...

Q: Data for Hermann Corporation are shown below: /

Data for Hermann Corporation are shown below: Fixed expenses are $30,000 per month and the company is selling 2,000 units per month. Required: 1. The marketing manager argues that a $5,000 increase i...

Q: Engberg Company installs lawn sod in home yards. The company’s most

Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows: Required: 1. Compute the company’s...

Q: Olongapo Sports Corporation is the distributor in the Philippines of two premium

Olongapo Sports Corporation is the distributor in the Philippines of two premium golf balls—the Flight Dynamic and the Sure Shot. Monthly sales, expressed in pesos (P), and the contr...

Q: Lucido Products markets two computer games: Claim jumper and Makeover.

Lucido Products markets two computer games: Claim jumper and Makeover. A contribution format income statement for a recent month for the two games appears on the following page: Required: 1. Compute...

Q: Whirly Corporation’s most recent income statement is shown below: /

Whirly Corporation’s most recent income statement is shown below: Required: Prepare a new contribution format income statement under each of the following conditions (consider each...

Q: Gold Star Rice, Ltd., of Thailand exports Thai rice throughout

Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company grows three varieties of rice—Fragrant, White, and Loonzain. (The currency in Thailand is the baht, w...

Q: What is meant by a product’s contribution margin ratio? How is

What is meant by a product’s contribution margin ratio? How is this ratio useful in planning business operations?

Q: The questions in this exercise are based on the Benetton Group,

The questions in this exercise are based on the Benetton Group, a company headquartered in Italy and known in the United States primarily for one of its brands of fashion apparel—United Colors of Bene...

Q: Angie Silva has recently opened The Sandal Shop in Brisbane, Australia

Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in fashionable sandals. Angie has just received a degree in business and she is anxious to apply the pr...

Q: Barlow Company manufactures three products: A, B, and C

Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, andcontribution margin for one unit of each product follow: The same raw material is used in all three prod...

Q: TufStuff, Inc., sells a wide range of drums, bins

TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in thechemical industry. One of the company’s products is a heavy-duty corrosion-resistan...

Q: Come-Clean Corporation produces a variety of cleaning compounds and solutions

Come-Clean Corporation produces a variety of cleaning compounds and solutions for both industrialand household use. While most of its products are processed independently, a few are related, such as t...

Q: The Walton Toy Company manufactures a line of dolls and a doll

The Walton Toy Company manufactures a line of dolls and a doll dress sewing kit. Demand for thedolls is increasing, and management requests assistance from you in determining an economicalsales and pr...

Q: Benoit Company produces three products, A, B, and C

Benoit Company produces three products, A, B, and C. Data concerning the three products follow(per unit): Demand for the company’s products is very strong, with far more orders each...

Q: The Regal Cycle Company manufactures three types of bicycles—a dirt

The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, anda racing bike. Data on sales and expenses for the past quarter follow: Management is con...

Q: : Bed & Bath, a retailing company, has two departments

Bed & Bath, a retailing company, has two departments, Hardware and Linens. The company’smost recent monthly contribution format income statement follows: A study indicates that...

Q: Raner, Harris, & Chan is a consulting firm that specializes

Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical anddental clinics. The firm has two offices—one in Chicago and one in Minneapolis....

Q: Refer to the data in Exercise 12–13.

Refer to the data in Exercise 12–13. Data from Exercise 12-13: Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical anddental clinics....

Q: Wingate Company, a wholesale distributor of videotapes, has been experiencing

Wingate Company, a wholesale distributor of videotapes, has been experiencing losses for sometime, as shown by its most recent monthly contribution format income statement, which follows: Sales . . ....

Q: Posters.com is a small Internet retailer of high-quality

Posters.com is a small Internet retailer of high-quality posters. The company has $1,000,000 in operating assets and fixed expenses of $150,000 per year. With this level of operating assets and fixed...

Q: Mason Paper Company (MPC) manufactures commodity grade papers for use

Mason Paper Company (MPC) manufactures commodity grade papers for use in computer printers and photocopiers. MPC has reported net operating losses for the last two years due to intense price pressure...

Q: Calloway Cab Company determines its break-even strictly on the basis

Calloway Cab Company determines its break-even strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $400,000, but 20 percent of this value is represented by dep...

Q: Air Purifier, Inc., computes its break-even point strictly

Air Purifier, Inc., computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $2,400,000, but 15 percent of this value is represented b...

Q: Boise Timber co. computes its break-even point strictly on

Boise Timber co. computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $6,000,000, but 25 percent of this value is represented by d...

Q: If the company’s original contribution margin was 40 percent, calculate the

If the company’s original contribution margin was 40 percent, calculate the new contribution margin if price is increased 10 percent. Refer to Appendix 2, Marketing by the Numbers, paying attention to...

Q: Determine by how much sales can drop and still let the company

Determine by how much sales can drop and still let the company maintain the total contribution it had when the contribution margin was 40 percent.

Q: Nombre Company management predicts $390,000 of variable costs,

Nombre Company management predicts $390,000 of variable costs, $430,000 of fixed costs, and a pretax income of $155,000 in the next period. Management also predicts that the contribution margin per un...

Q: Cooper Company expects to sell 200,000 units of its product

Cooper Company expects to sell 200,000 units of its product next year, which would generate total sales of $17 million. Management predicts that pretax net income for next year will be $1,250,000 and...

Q: Bloom Company management predicts that it will incur fixed costs of $

Bloom Company management predicts that it will incur fixed costs of $160,000 and earn pretax income of $164,000 in the next period. Its expected contribution margin ratio is 25%. Use this information...

Q: Xcite Equipment Co. manufactures and markets a number of rope products

Xcite Equipment Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding that has not been as profitable as planned....

Q: Astro Co. sold 20,000 units of its only product

Astro Co. sold 20,000 units of its only product and incurred a $50,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2014’s activities,...

Q: Vanna Co. produces and sells two products, T and O

Vanna Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company...

Q: This year Bertrand Company sold 40,000 units of its only

This year Bertrand Company sold 40,000 units of its only product for $25 per unit. Manufacturing and selling the product required $200,000 of fixed manufacturing costs and $325,000 of fixed selling an...

Q: The following costs result from the production and sale of 1,

The following costs result from the production and sale of 1,000 drum sets manufactured by TomThompson Company for the year ended December 31, 2013. The drum sets sell for $500 each. The company has...

Q: Hip-Hop Co. manufactures and markets several products. Management

Hip-Hop Co. manufactures and markets several products. Management is considering the future of one product, electronic keyboards that has not been as profitable as planned. Since this product is manuf...

Q: Rivera Co. sold 20,000 units of its only product

Rivera Co. sold 20,000 units of its only product and incurred a $50,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2014’s activities...

Q: Mingei Co. produces and sells two products, BB and TT

Mingei Co. produces and sells two products, BB and TT. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the compa...

Q: This year Best Company earned a disappointing 5.6% after

This year Best Company earned a disappointing 5.6% after-tax return on sales (net income/sales) from marketing 100,000 units of its only product. The company buys its product in bulk and repackages it...

Q: The following costs result from the production and sale of 12,

The following costs result from the production and sale of 12,000 CD sets manufactured by Gilmore Company for the year ended December 31, 2013. The CD sets sell for $18 each. The company has a 25% inc...

Q: US-Mobile Company manufactures and sells two products, conventional phones

US-Mobile Company manufactures and sells two products, conventional phones and smart phones, in the ratio of 5:3. Fixed costs are $105,000, and the contribution margin per composite unit is $125. What...

Q: Compute and interpret the contribution margin ratio using the following data:

Compute and interpret the contribution margin ratio using the following data: sales, $5,000; total variable cost, $3,000.

Q: SBD Phone Company sells its cordless phone for $90 per unit

SBD Phone Company sells its cordless phone for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per unit. Determine the (1) contribution margin per unit and (2) break-even point in...

Q: Refer to QS 5-6. Determine the (1)

Refer to QS 5-6. Determine the (1) contribution margin ratio and (2) break-even point in dollars.

Q: A recent income statement for Volkswagen reports the following (in €

A recent income statement for Volkswagen reports the following (in € millions). Assume 75 percent of the cost of sales and 75 percent of the selling and administrative costs are variable costs, and th...

Q: Explain how contribution margin analysis is useful for managerial decisions and performance

Explain how contribution margin analysis is useful for managerial decisions and performance evaluations.

Q: Define and explain the contribution margin ratio.

Define and explain the contribution margin ratio.

Q: Define and describe contribution margin per unit.

Define and describe contribution margin per unit.

Q: A jeans maker is designing a new line of jeans called the

A jeans maker is designing a new line of jeans called the Slims. The jeans will sell for $205 per pair and cost $164 per pair in variable costs to make. (1) Compute the contribution margin per pair. (...

Q: Blanchard Company manufactures a single product that sells for $180 per

Blanchard Company manufactures a single product that sells for $180 per unit and whose total variable costs are $135 per unit. The company’s annual fixed costs are $562,500. (1) Use this information t...

Q: Tee-Pro has three types of costs: t-shirt

Tee-Pro has three types of costs: t-shirt cost, factory rent cost, and utilities cost. This company sells its shirts for $16.50 each. Management has prepared the following estimated cost information f...

Q: Polarix is a retailer of ATVs (all-terrain vehicles)

Polarix is a retailer of ATVs (all-terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell, on average, for $3,800. Variable sell...

Q: Refer to Exercise 5-10. (1) Prepare a

Refer to Exercise 5-10. (1) Prepare a contribution margin income statement for Blanchard Company showing sales, variable costs, and fixed costs at the break-even point. (2) If the company’s fixed cost...

Q: Refer to information about Azule Company in Problem 6-1B.

Refer to information about Azule Company in Problem 6-1B. In the company’s planning documents,Roberta Azule, the company president, reports that the company’s break-even volume in unit sales is 55,715...

Q: KTM’s managers rely on reports of variable costs. How variable costing

KTM’s managers rely on reports of variable costs. How variable costing reports can prepared using the contribution margin format help managers in computing break-even volume in units?

Q: Multiproduct break-even analysis is often viewed differently when actually applied

Multiproduct break-even analysis is often viewed differently when actually applied in practice.You are to visit a local fast-food restaurant and count the number of items on the menu. To apply multip...

Q: Polaris offers extended service contracts that provide repair and maintenance coverage over

Polaris offers extended service contracts that provide repair and maintenance coverage over its products. As you complete the following requirements, assume that the Polaris services department uses m...

Q: Describe the contribution margin ratio in layperson’s terms.

Describe the contribution margin ratio in layperson’s terms.

Q: Refer to information about Dowell Company in Problem 6-1A.

Refer to information about Dowell Company in Problem 6-1A. In the company’s planning documents, Kyra Dowell, the company’s president, reports that the break-even volume (in units) for the company is 2...

Q: Sung Company is able to produce two products, R and T

Sung Company is able to produce two products, R and T, with the same machine in its factory. The following information is available. The company presently operates the machine for a single eight-hou...

Q: Excel Memory Company can sell all units of computer memory X and

Excel Memory Company can sell all units of computer memory X and Y that it can produce, but it has limited production capacity. It can produce two units of X per hour or three units of Y per hour, and...

Q: Adria Lopez has found that her line of computer desks and chairs

Adria Lopez has found that her line of computer desks and chairs has become very popular and she is finding it hard to keep up with demand. She knows that she cannot fill all of her orders for both it...

Q: Bert Asiago, a salesperson for Convertco, received an order from

Bert Asiago, a salesperson for Convertco, received an order from a potential new customer for50,000 units of Convertco’s single product at a price $25 below its regular selling price of $65. Asiago k...

Q: Charlie Fyffe of Charlie’s Browniesmakes brownies and other sweets. Charlie must

Charlie Fyffe of Charlie’s Browniesmakes brownies and other sweets. Charlie must decideon the best sales mix for his products. Assume that his company has a capacity of 400 hours of...

Q: Marinette Company makes several products, including canoes. The company has

Marinette Company makes several products, including canoes. The company has been experiencing losses from its canoe segment and is considering dropping that product line. The following information is...

Q: Colt Company owns a machine that can produce two specialized products.

Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is two units per hour and for Product MTV is five units per hour. The machine’s...

Q: Edgerron Company is able to produce two products, G and B

Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available. The company presently operates the machine for a single eight...

Q: The Dollar Store’s cost structure is dominated by variable costs with a

The Dollar Store’s cost structure is dominated by variable costs with a contribution margin ratio of .30 and fixed costs of $30,000. Every dollar of sales contributes 30 cents toward...

Q: Foxx Company’s cost structure is dominated by variable costs with a contribution

Foxx Company’s cost structure is dominated by variable costs with a contribution margin ratio of .25 and fixed costs of $100,000. Every dollar of sales contributes 25 cents toward fixed costs and prof...

Q: How does the total contribution margin differ from the gross margin that

How does the total contribution margin differ from the gross margin that is often shown on companies’ financial statements?

Q: Carson Corporation produces and sells three products, Alpha, Beta,

Carson Corporation produces and sells three products, Alpha, Beta, and Gamma, in a local market and in a regional market. At the end of the first quarter of the current year, the following income stat...

Q: Slavin Corporation manufactures two products, Alpha and Delta. Each product

Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products...

Q: Layton Machining Company (LMC) manufactures two versions of a basic

Layton Machining Company (LMC) manufactures two versions of a basic machine tool. One version is a standard model and one is a custom model, which requires some additional work and slightly higher-gra...

Q: Refer to the facts in Exercise 4-42. Mel suddenly

Refer to the facts in Exercise 4-42. Mel suddenly finds an opportunity to sell boxed dinners. The new opportunity would require the use of the 30 percent unused capacity. The contribution margin from...

Q: Atlantic Soup Company is presently operating at 75 percent of capacity.

Atlantic Soup Company is presently operating at 75 percent of capacity. Worried about the company’s performance, the president is considering dropping its clam chowder line. If clam...

Q: The following data apply to the provision of psychological testing services:

The following data apply to the provision of psychological testing services: Sales price per unit (1 unit = 1 test plus feedback to client) ...................... $ 600 Fixed costs (per month): Sellin...

Q: Refer to Exercise 2-44. In Exercise 2

Refer to Exercise 2-44. In Exercise 2-44 Larcker Manufacturing’s cost accountant has provided you with the following information for January operations: Direct materials . . . . . . . . . . . . . . ....

Q: Terracotta, Inc., provides you with the following data for their

Terracotta, Inc., provides you with the following data for their single product: Sales price per unit ......................................................................................... $ 25 Fix...

Q: The following data are from the accounting records of Fremont Products for

The following data are from the accounting records of Fremont Products for year 2: Units produced and sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,500 Total revenues and costs Sal...

Q: Carmen Beverages reports the following information for July: Units produced

Carmen Beverages reports the following information for July: Units produced and sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,800 Per unit revenue and costs: Sales revenue . . . . ....

Q: Three entrepreneurs were looking to start a new brewpub near Sacramento,

Three entrepreneurs were looking to start a new brewpub near Sacramento, California, called Roseville Brewing Company (RBC). Brewpubs provide two products to customers—food from the...

Q: Cortez Company is planning to introduce a new product that will sell

Cortez Company is planning to introduce a new product that will sell for $96 a unit. The following manufacturing cost estimates have been made on 20,000 units to be produced the first year: Direct mat...

Q: Anu’s Amusement Center has collected the following data for operations for the

Anu’s Amusement Center has collected the following data for operations for the year: Total revenues . . . . . . . . . . . . . . . . . $1,600,000 Total fixed costs . . . . . . . . . . . . . . . . . $ 4...

Q: The manager of Kima’s Food Mart estimates operating costs for the year

The manager of Kima’s Food Mart estimates operating costs for the year will include $900,000 in fixed costs. Required a. Find the break-even point in sales dollars with a contribution margin ratio of...

Q: Old Rosebud is a Kentucky horse farm that specializes in boarding thoroughbred

Old Rosebud is a Kentucky horse farm that specializes in boarding thoroughbred breeding mares and their foals. Customers bring their breeding mares to Old Rosebud for delivery of their foals and after...

Q: Sue Young sells fax machines for Fast Fax. There are two

Sue Young sells fax machines for Fast Fax. There are two fax machines: model 700 and model 800. At the beginning of the month, Sue’s sales budget is as follows: At the end of the mon...

Q: Background Artisans Shirtcraft manufactures and sells hand-painted shirts of

Background Artisans Shirtcraft manufactures and sells hand-painted shirts of original design. The company was founded in 1999 by three sisters: Cathy, Linda, and Valerie Montgomery. Shirtcraft started...

Q: Woodley Furniture is a small boutique manufacturer of high quality contemporary wood

Woodley Furniture is a small boutique manufacturer of high quality contemporary wood tables. They make two models: end tables and coffee tables in a variety of different woods and finishes. Current an...

Q: Tilist Golf is a premier producer of golf clubs and golf balls

Tilist Golf is a premier producer of golf clubs and golf balls. The Ball Division makes two types of balls: a professional ball (the “Masters”) played by profession...

Q: You are a new consultant with the Boston Group and have been

You are a new consultant with the Boston Group and have been sent to advise the executives of Penury Company. The company recently acquired product line L from an out-of-state concern and now plans to...

Q: Why is it necessary to calculate a weighted-average contribution margin

Why is it necessary to calculate a weighted-average contribution margin ratio for a multi- product company when calculating the breakeven point for that company? Why can’t all of the products’ contrib...

Q: Is the contribution margin ratio of a grocery store likely to be

Is the contribution margin ratio of a grocery store likely to be higher or lower than that of a plastics manufacturer? Explain the difference in cost structure between a grocery store and a plastics m...

Q: Bay Area Limos operates transportation services to Bay City airport. The

Bay Area Limos operates transportation services to Bay City airport. The price of service is fixed at a flat rate for each trip and most costs of providing the service are fixed for each trip. Betty S...

Q: What does the term sales mix mean? How is a weighted

What does the term sales mix mean? How is a weighted-average unit contribution margin computed?

Q: Fill in the missing data for each of the following independent cases

Fill in the missing data for each of the following independent cases. (Ignore income taxes.)

Q: Brad’s Bicycle Shop sells 21-speed bicycles. For purposes of

Brad’s Bicycle Shop sells 21-speed bicycles. For purposes of a cost-volume-profit analysis, t he shop owner has divided sales into two categories, as follows: Seventy percent of the...

Q: Central Pennsylvania Limestone Company produces thin limestone sheets used for cosmetic facing

Central Pennsylvania Limestone Company produces thin limestone sheets used for cosmetic facing on buildings. The following income statement represents the operating results for the year just ended. Th...

Q: Boundaries, a chain of retail stores, sells books and music

Boundaries, a chain of retail stores, sells books and music CDs. Condensed monthly income data are presented in the following table for November 20x4. (Ignore income taxes.) Additional information: &...

Q: Phoenix-based CompTronics manufactures audio speakers for desktop computers. The

Phoenix-based CompTronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 42,000 speaker sets: Sales .............

Q: Briefly explain each of the following methods of computing a break-

Briefly explain each of the following methods of computing a break-even point in units: (a) contribution margin approach, (b) equation approach, and (c) graphical approach.

Q: Superstore is a large discount supermarket. Profits have declined, so

Superstore is a large discount supermarket. Profits have declined, so the manager has collected data on revenues and costs for different food categories. The following data pertain to some of the froz...

Q: Klear Camera Company is considering introducing a new video camera. Its

Klear Camera Company is considering introducing a new video camera. Its selling price is projected to be $1,000 per unit. Variable manufacturing costs are estimated to be $500 per unit. Variable selli...

Q: Patterson Parkas Company’s sales revenue is $30 per unit, variable

Patterson Parkas Company’s sales revenue is $30 per unit, variable costs are $19.50 per unit, and fixed costs are $147,000. Required (a) Compute Patterson’s contribution margin per unit and contribut...

Q: Johnson Company and Smith Company are competing firms that offer limousine service

Johnson Company and Smith Company are competing firms that offer limousine service from the Charlesburg airport. While Johnson pays most of its employees on a per-ride basis, Smith prefers to pay its...

Q: Last month, Capetini Capacitor Company sold capacitors to its distributors for

Last month, Capetini Capacitor Company sold capacitors to its distributors for $250 per capacitor. The sales level of 3,000 capacitors per month was less than the single-shift capacity of 4,400 capaci...

Q: Merchant Company manufactures and sells three models of electronic printers. Ken

Merchant Company manufactures and sells three models of electronic printers. Ken Gail, president of the company, is considering dropping model JT484 from its product line because the company has exper...

Q: Santos Company is considering introducing a new compact disc player model at

Santos Company is considering introducing a new compact disc player model at a price of $105 per unit. Santos’s controller has compiled the following incremental cost information based on an estimate...

Q: What does the term contribution margin per unit mean? How is

What does the term contribution margin per unit mean? How is the contribution margin used in cost analysis to support managerial decisions?

Q: Explain the difference between the contribution margin ratio and contribution margin per

Explain the difference between the contribution margin ratio and contribution margin per unit.

Q: The decline in our profits has become intolerable. The severe price

The decline in our profits has become intolerable. The severe price cutting in pumps has dropped our pre-tax margin to less than 2%, far below our historical 15% margins. Fortunately, our competitors...

Q: Saunders Company has recently become aware of the large total discounts on

Saunders Company has recently become aware of the large total discounts on its orders and would like to know the impact on profit. The company computed its operating profit as follows: Required (a)...

Q: To facilitate a move toward JIT production, AB Company is considering

To facilitate a move toward JIT production, AB Company is considering a change in its plant layout. The plant controller, Anita Bentley, has been asked to evaluate the costs and benefits of the change...

Q: The following budget information for the year ending December 31, 2011

The following budget information for the year ending December 31, 2011, pertains to Rust Manufacturing Company’s operations: The following information is also provided: 1. Rust has...

Q: The following information pertains to Torasic Company’s budgeted income statement for the

The following information pertains to Torasic Company’s budgeted income statement for the month of June 2011: Required (a) Determine the company’s breakeven point...

Q: Aramis Aromatics Company produces and sells its product AA100 to well-

Aramis Aromatics Company produces and sells its product AA100 to well-known cosmetics companies for $940 per ton. The marketing manager is considering the possibility of refining AA100 further into fi...

Q: A Votre Santé (AVS) is a small, independent winery

A Votre Santé (AVS) is a small, independent winery owned by Kay Aproveche. Kay has a relationship with a grower who grows two types of wine grapes, a Chardonnay and a generic white grape....

Q: At the monthly management meeting, Leslie Smith, president of Mama

At the monthly management meeting, Leslie Smith, president of Mama Fran’s Fantastic Foods, was reviewing the April budget report with some satisfaction. “Our actual...

Q: Lexi Belcher picked up the monthly report that Irvin Santamaria left on

Lexi Belcher picked up the monthly report that Irvin Santamaria left on her desk. She smiled as her eyes went straight to the bottom line of the report and saw the favorable variance for operating inc...

Q: Barnes Entertainment Corporation prepared a master budget for the month of November

Barnes Entertainment Corporation prepared a master budget for the month of November that was based on sales of 150,000 board games. The budgeted income statement for the period is as follows. During...

Q: Anthony Herrera recently fulfilled his long-time dream of opening a

Anthony Herrera recently fulfilled his long-time dream of opening a gym that offers spinning exercise classes for $5 per person. To differentiate his gym and better serve his clients, Anthony provides...

Q: Whirlwind Industries is a multiproduct company with several manufacturing plants. The

Whirlwind Industries is a multiproduct company with several manufacturing plants. The Brownwood Plant manufactures and distributes two carpet cleaning products, Household and Commercial, under the Kar...

Q: Erin Brushwood sells gourmet chocolate chip cookies. The results of her

Erin Brushwood sells gourmet chocolate chip cookies. The results of her last month of operations are as follows: Required: a. Prepare a contribution format income statement for Erin. b. If Erin sells...

Q: Every year Underwood Industries manufactures 15,000 units of part 231

Every year Underwood Industries manufactures 15,000 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials…………………….…………..$ 6 Direct labor……...

Q: Balloon, Inc. produces three types of balloons—small,

Balloon, Inc. produces three types of balloons—small, medium, and large—with the following characteristics: The company has only 2,000 machine hours available eac...

Q: In response to a growing awareness of gluten allergies, Outland Bakery

In response to a growing awareness of gluten allergies, Outland Bakery tried using gluten-free fl our in its three most popular cookies. After several attempts and a lot of inedible cookies, the compa...

Q: Twinkie Trivia Co. manufactures and sells two trivia products, the

Twinkie Trivia Co. manufactures and sells two trivia products, the Square Trivia Game and the Round Trivia Game. Last quarter’s operating profits, by product, and for the company as...

Q: Physical Phitness, Inc. operates three divisions, Weak, Average

Physical Phitness, Inc. operates three divisions, Weak, Average, and Strong. As it turns out, the Weak division has the lowest operating income, and the president wants to close it. “...

Q: Ridley and Scott Mercantile operates two stores, one on Maple Avenue

Ridley and Scott Mercantile operates two stores, one on Maple Avenue and the other on Fenner Road. Results for the month of May, which is representative of all months, are as follows: The following...

Q: Marwick Innovations, Inc. produces exercise and fitness gear. Two

Marwick Innovations, Inc. produces exercise and fitness gear. Two of its newer products require a finishing process that can only be completed on machines that were recently purchased for this purpose...

Q: Betsy Willis owns Test Tutor, an educational tutoring center in Baytown

Betsy Willis owns Test Tutor, an educational tutoring center in Baytown, Florida. The center offers private tutoring in math, writing, and science. Information about the tutoring sessions is as follow...

Q: Capital Toys’ management is considering eliminating product A, which has been

Capital Toys’ management is considering eliminating product A, which has been showing a loss for several years. The company’s annual income statement, in $000s, is...

Q: Farmville Regional Airport is modernizing its terminal facilities in anticipation of significant

Farmville Regional Airport is modernizing its terminal facilities in anticipation of significant growth in the number of passengers using the airport. A consultant’s study commissioned by the airport’...

Q: Jewel Pix currently uses a six-year-old molding machine

Jewel Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $85,000 for the machine, which was state of the art at the time of purchase. Although the...

Q: Thompson Manufacturing has been in business for over 50 years, making

Thompson Manufacturing has been in business for over 50 years, making a variety of consumer electronics products. Mary Felix recently joined the business as vice president of the Conley division, one...

Q: Jane Baldwin, Anderson Flooring’s accounting intern, has prepared the following

Jane Baldwin, Anderson Flooring’s accounting intern, has prepared the following income statement for the month of June. In preparing the income statement, Jane was unsure what to d...

Q: Jim Coston was reviewing the latest income statement for Trenton Communications.

Jim Coston was reviewing the latest income statement for Trenton Communications. For the second year in a row, the Audio division was showing a negative segment margin, and Jim thought it was time to...

Q: Shoe Shock Innovations manufactures athletic shoe inserts that cushion the foot and

Shoe Shock Innovations manufactures athletic shoe inserts that cushion the foot and reduce the impact of exercise on the joints. The company has two divisions, Sole Inserts and Heel Inserts. A segment...

Q: Marlys Consolidated has several divisions, two of which transfer their products

Marlys Consolidated has several divisions, two of which transfer their products to other divisions. The Mining division refines toldine, which it then transfers to the Metals division. The Metals divi...

Q: Refer to Exhibit 2-11 on page 65. /

Refer to Exhibit 2-11 on page 65. Required: a. What is Universal Sports Exchange’s operating profit equation? b. If Universal Sports Exchange sells 55,000 jerseys, what total expens...

Q: Mighty Bright Window Cleaners’ monthly income statement at several levels of activity

Mighty Bright Window Cleaners’ monthly income statement at several levels of activity is as follows: Required: a. Identify each expense as fixed, variable, or mixed. b. Prepare a co...

Q: Lasley Cash, Ltd. operates a chain of exclusive ski hat

Lasley Cash, Ltd. operates a chain of exclusive ski hat boutiques in the western United States. The stores purchase several hat styles from a single distributor at $12 each. All other costs incurred b...

Q: Scott Confectionery sells its Stack-o-Choc candy bar for

Scott Confectionery sells its Stack-o-Choc candy bar for $0.80. The variable cost per unit for the candy bar is $0.45; total fixed costs are $175,000. Required: a. What is the contribution margin per...

Q: Julianna Abdallah owns and operates FirstCakes, a bakery that creates personalized

Julianna Abdallah owns and operates FirstCakes, a bakery that creates personalized birthday cakes for a child’s first birthday. The cakes, which sell for $40 and feature an edible pi...

Q: “I’ll never understand this accounting stuff,” Blake Dunn yelled,

“I’ll never understand this accounting stuff,” Blake Dunn yelled, waving the income statement he had just received from his accountant in the morn...

Q: Josh Ward is a young entrepreneur preparing to start a company that

Josh Ward is a young entrepreneur preparing to start a company that will sell floating lounge chairs for use in private pools. As part of a loan package, the bank has asked him to prepare a business p...

Q: MathTot sells a learning system that helps preschool and elementary students learn

MathTot sells a learning system that helps preschool and elementary students learn basic math facts and concepts. The company’s income statement from last month is as follows: Requi...

Q: a. James Shaw owns several shaved ice stands that operate in

a. James Shaw owns several shaved ice stands that operate in the summer along the Outer Banks of North Carolina. His contribution margin ratio is 60%. If James increases his sales revenue by $25,000 w...

Q: Amazon.com announced in a May 19, 2011, news

Amazon.com announced in a May 19, 2011, news release that the company was selling more Kindle books than traditional print books. From their first sales in November 2007, these ebooks have continued t...

Q: Abado Profi les provides testing services to school districts that wish to

Abado Profi les provides testing services to school districts that wish to assess students’ reading and mathematical abilities. Last year Abado evaluated 60,000 math tests and 20,000...

Q: Briggs Herrera, president of Retro Recreation Products, Inc., is

Briggs Herrera, president of Retro Recreation Products, Inc., is concerned about declines that he is beginning to see in the demand for the company’s line of old school logo basketballs as new competi...

Q: CB Markets imports and sells small bear-shaped piñatas. In

CB Markets imports and sells small bear-shaped piñatas. In planning for the coming year, the company’s owner is evaluating several scenarios. For each scenario under c...

Q: JenSteel, Inc., had the following results for last year:

JenSteel, Inc., had the following results for last year: Prepare a new income statement for each of the following scenarios. Consider each scenario independently. Required: a. Sales volume increase...

Q: Kipmar Company produces a molded briefcase that is distributed to luggage stores

Kipmar Company produces a molded briefcase that is distributed to luggage stores. The following operating data for the current year has been accumulated for planning purposes. Sales price………………………………...

Q: Under Armour, a company that wants to “empower athletes everywhere

Under Armour, a company that wants to “empower athletes everywhere,” started out to produce a superior T-shirt that would help regulate an athlete’...

Q: Complete each of the following contribution format income statements by supplying the

Complete each of the following contribution format income statements by supplying the missing numbers.

Q: Palmer/Davis Designs sells customized mobile phone covers. The company’s

Palmer/Davis Designs sells customized mobile phone covers. The company’s controller prepared the following income statement for the upcoming monthly management meeting. Required: a....

Q: Colonial Cookies, Inc., bakes cookies for retail stores. The

Colonial Cookies, Inc., bakes cookies for retail stores. The company’s best-selling cookie is chocolate nut supreme which is marketed as a gourmet cookie and regularly sells for $8.0...

Q: LakeMaster Company manufactures outboard motors that are sold throughout the United States

LakeMaster Company manufactures outboard motors that are sold throughout the United States and Canada. The company uses a comprehensive budgeting process and compares actual results to budgeted amount...

Q: Vermont Sky T ours is a small sightseeing tour company based in

Vermont Sky T ours is a small sightseeing tour company based in Burlington, Vermont. The firm specializes in aerial tours of the New England countryside during September and October, when the fall col...

Q: Bear Mountain Sled Company manufactures children’s snow sleds. The company’s performance

Bear Mountain Sled Company manufactures children’s snow sleds. The company’s performance report for December is as follows. The company uses sales variance analysi...

Q: Ozarks Lighting Company had operating income for the first 10 months of

Ozarks Lighting Company had operating income for the first 10 months of the current year of $300,000. One hundred thousand units were manufactured during this period, and 100,000 units were sold. Fixe...

Q: Mitachlordion Technology, Inc. (MTI), has two divisions:

Mitachlordion Technology, Inc. (MTI), has two divisions: Birmingham and Tampa. Birmingham currently sells a diode reducer to manufacturers of aircraft navigation systems for $1,550 per unit. Variable...

Q: Redstone Industrial Resources Company (RIRC) has several divisions. However

Redstone Industrial Resources Company (RIRC) has several divisions. However, only two divisions transfer products to other divisions. The Mining Division refines toldine, which is then transferred to...

Q: Plato Corporation manufactures two products, Alpha and Beta. Contribution margin

Plato Corporation manufactures two products, Alpha and Beta. Contribution margin data follow. Plato Corporation’s production process uses highly skilled labor, which is in short sup...

Q: Refer to the data given in the preceding exercise for Plato Corporation

Refer to the data given in the preceding exercise for Plato Corporation. Assume that the d irect-labor rate is $12 per hour, and 11,000 labor hours are available per year. In addition, the company has...

Q: List and explain three key features of the segmented income statement shown

List and explain three key features of the segmented income statement shown in Exhibit 12–7. Exhibit 12–7:

Q: What is meant by the term contribution margin per unit of scarce

What is meant by the term contribution margin per unit of scarce resource?  

Q: Fit-for-Life Foods Inc., a manufacturer of breakfast

Fit-for-Life Foods Inc., a manufacturer of breakfast cereals and snack bars, has experienced several years of steady growth in sales, profits, and dividends while maintaining a relatively low level of...

Q: Assume you are a sales representative for Sweet Tooth Candy Company.

Assume you are a sales representative for Sweet Tooth Candy Company. One of your customers is interested in buying some candy that will be given to the members of a high school Substance Abuse Awarene...

Q: Tommy Appleton is in charge of arranging the “attitude adjustment”

Tommy Appleton is in charge of arranging the “attitude adjustment” period and dinner for the monthly meetings of the local chapter of the Management Accountants Association. Tommy is negotiating with...

Q: High Tech, Inc., and Old Time Co. compete within

High Tech, Inc., and Old Time Co. compete within the same industry and had the following operating results in 2010: Required: a. Calculate the break-even point for each firm in terms of revenue. b....

Q: Jackman, Inc. makes and sells many consumer products. The

Jackman, Inc. makes and sells many consumer products. The firm’s average contribution margin ratio is 30 percent. Management is considering adding a new product that will require an additional $21,000...

Q: Meyers Corp. has annual revenues of $450,000,

Meyers Corp. has annual revenues of $450,000, an average contribution margin ratio of 35%, and fixed expenses of $175,000. Required: a. Management is considering adding a new product to the company’s...

Q: The management of Rocko’s Pizzeria is considering a special promotion for the

The management of Rocko’s Pizzeria is considering a special promotion for the last two weeks of October, which is normally a relatively low-demand period. The special promotion would involve selling t...

Q: Ozark, Inc., produces small-scale replicas of vintage automobiles

Ozark, Inc., produces small-scale replicas of vintage automobiles for collectors and museums. Finished products are built on a 1/20 scale of originals. The firm’s income statement showed the following...

Q: Shown here is an income statement in the traditional format for a

Shown here is an income statement in the traditional format for a firm with a sales volume of 20,000 units. Cost formulas also are shown: Revenues . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Presented here is the income statement for Big Surf, Inc.,

Presented here is the income statement for Big Surf, Inc., for the month of May: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Presented here is the income statement for Edwards Co. for February

Presented here is the income statement for Edwards Co. for February: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $80,00...

Q: Nautical Canvas Co. currently makes and sells two models of a

Nautical Canvas Co. currently makes and sells two models of a boat cover. Data applicable to the current operation are summarized in the following columns labeled Current Operation. Management is cons...

Q: Body Sculpture, Inc., makes three models of high-performance

Body Sculpture, Inc., makes three models of high-performance weight-training benches. Current operating data are summarized here: Required: a. Calculate the contribution margin ratio of each product...

Q: The president of Truman, Inc., attended a seminar about the

The president of Truman, Inc., attended a seminar about the contribution margin model and returned to her company full of enthusiasm about it. She requested that last year’s traditio...

Q: Vogel Co. produces three models of heating and air conditioning thermostat

Vogel Co. produces three models of heating and air conditioning thermostat components. The following table summarizes data about each model: Required: a. Criticize the preceding presentation. On wha...

Q: Product S has a contribution margin of $150 per unit and

Product S has a contribution margin of $150 per unit and requires three hours of machine time. Product T requires four hours of machine time and provides $200 of contribution margin per unit. Require...

Q: The segmented income statement for XYZ Company for the year ended December

The segmented income statement for XYZ Company for the year ended December 31, 2010, follows: The company is concerned about the performance of product A, and you have been asked to analyze the situ...

Q: Explain why contribution margin per unit becomes profit per unit above the

Explain why contribution margin per unit becomes profit per unit above the break-even point.

Q: Suppose a firm with a contribution margin ratio of 0.3

Suppose a firm with a contribution margin ratio of 0.3 increased its advertising expenses by $10,000 and found that sales increased by $30,000. Was it a good decision to increase advertising expenses?...

Q: Jellico Inc.’s projected operating income (based on sales of

Jellico Inc.’s projected operating income (based on sales of 450,000 units) for the coming year is as follows: Total Sales …………………………………………………… $11,700,000 Total variable cost …………………………………… 8,190,00...

Q: Suppose that Adams Company sells a product for $20. Unit

Suppose that Adams Company sells a product for $20. Unit costs are as follows: Direct materials …………………………………………………….. $1.90 Direct labor …………………………………………………………….. 1.40 Variable factory overhead …………...

Q: For each of the following independent situations, calculate the amount(

For each of the following independent situations, calculate the amount(s) required. Required: 1. At the break-even point, Jefferson Company sells 115,000 units and has fixed cost of $349,600. The var...

Q: The controller of Pelley Company prepared the following projected income statement:

The controller of Pelley Company prepared the following projected income statement: Sales ……………………………………………………………….. $95,000 Total variable cost ……………………………………………… 68,400 Contribution margin ……………………...

Q: Arberg Company’s controller prepared the following budgeted income statement for the coming

Arberg Company’s controller prepared the following budgeted income statement for the coming year: Sales ……………………………………………………….. $415,000 Total variable cost ……………………………………… 302,950 Contribution margi...

Q: Klamath Company produces a single product. The projected income statement for

Klamath Company produces a single product. The projected income statement for the coming year is as follows: Sales (54,600 units @ $34) …………………………………….. $1,856,400 Total variable cost ………………………………………...

Q: Parker Pottery produces a line of vases and a line of ceramic

Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the same equipment and labor; hence, there are no traceable fixed costs. Common fixed cost equals $30,000. Parke...

Q: Income statements for two different companies in the same industry are as

Income statements for two different companies in the same industry are as follows: Required: 1. Compute the degree of operating leverage for each company. 2. CONCEPTUAL CONNECTION Compute the break-...

Q: Khumbu Company’s projected profit for the coming year is as follows:

Khumbu Company’s projected profit for the coming year is as follows: Required: 1. Compute the break-even point in units. 2. How many units must be sold to earn a profit of $240,000...

Q: Aldovar Company produces a variety of chemicals. One division makes reagents

Aldovar Company produces a variety of chemicals. One division makes reagents for laboratories. The division’s projected income statement for the coming year is: Sales (203,000 units @ $70) …………………………...

Q: Elgart Company produces plastic mailboxes. The projected income statement for the

Elgart Company produces plastic mailboxes. The projected income statement for the coming year follows: Sales ……………………………………………………………… $460,300 Total variable cost …………………………………………….. 165,708 Contribu...

Q: Carlyle Lighting Products produces two different types of lamps: a floor

Carlyle Lighting Products produces two different types of lamps: a floor lamp and a desk lamp. Floor lamps sell for $30, and desk lamps sell for $20. The projected income statement for the coming year...

Q: Polaris Inc. manufactures two types of metal stampings for the automobile

Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and trim kits. Fixed cost equals $146,000. Each door handle sells for $12 and has variable cost of $9;...

Q: Abraham Company had revenues of $830,000 last year with

Abraham Company had revenues of $830,000 last year with total variable costs of $647,400 and fixed costs of $110,000. Required: 1. What is the variable cost ratio for Abraham? What is the contributio...

Q: Candy land Inc. produces a particularly rich praline fudge. Each

Candy land Inc. produces a particularly rich praline fudge. Each 10-ounce box sells for $5.60. Variable unit costs are as follows: Pecans ………………………………………………….. $0.70 Sugar ……………………………………………………… 0.35...

Q: What is the variable cost ratio? The contribution margin ratio?

What is the variable cost ratio? The contribution margin ratio? How are the two ratios related?

Q: If the variable cost per unit goes down, /

If the variable cost per unit goes down,

Q: The amount of revenue required to earn a targeted profit is equal

The amount of revenue required to earn a targeted profit is equal to a. total fixed cost divided by contribution margin. b. total fixed cost divided by the contribution margin ratio. c. targeted prof...

Q: Break-even revenue for the multiple-product firm can

Break-even revenue for the multiple-product firm can a. be calculated by dividing total fixed cost by the overall contribution margin ratio. b. be calculated by dividing segment fixed cost by the ove...

Q: The contribution margin is the a. amount by which

The contribution margin is the a. amount by which sales exceed total fixed cost. b. difference between sales and total cost. c. difference between sales and operating income. d. difference between sa...

Q: Dartmouth Company produces a single product with a price of $12

Dartmouth Company produces a single product with a price of $12, variable cost per unit of $3, and total fixed cost of $7,200. The variable cost ratio and the contribution margin ratio for Dartmouth a...

Q: If a company’s total fixed cost decreases by $10,000

If a company’s total fixed cost decreases by $10,000, which of the following will be true? a. The break-even point will increase. b. The variable cost ratio will increase. c. The break-even point wil...

Q: Head-First Company now sells both bicycle helmets and motorcycle helmets

Head-First Company now sells both bicycle helmets and motorcycle helmets. Next year, Head First expects to produce total revenue of $570,000 and incur total variable cost of $388,000. Total fixed cost...

Q: Head-First Company plans to sell 5,000 bicycle helmets

Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Product costs include: Direct materials per helmet …………………………………… $ 30 Direct labor per helmet ……………………………………………...

Q: Head-First Company plans to sell 5,000 bicycle helmets

Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selli...

Q: Head-First Company plans to sell 5,000 bicycle helmets

Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selli...

Q: Head-First Company plans to sell 5,000 bicycle helmets

Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total fixed cost equals $...

Q: Head-First Company plans to sell 5,000 bicycle helmets

Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selli...

Q: Head-First Company plans to sell 5,000 bicycle helmets

Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total fixed cost equals $...

Q: Suppose that Head-First Company now sells both bicycle helmets and

Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $75 and have variable costs of $45 each. The motorcycle helmets are priced at $...

Q: What is meant by the term contribution margin per unit of scarce

What is meant by the term contribution margin per unit of scarce resource?

Q: Bair Company is a manufacturer of standard and c ustom-designed

Bair Company is a manufacturer of standard and c ustom-designed bottling equipment. Early in December 20x0 Lyan Company asked Bair to quote a price for a custom-designed bottling machine to be deliver...

Q: Medical Arts Hospital’s board of trustees is considering the addition of a

Medical Arts Hospital’s board of trustees is considering the addition of a comprehensive medical testing laboratory. In the past, the hospital has sent all blood and tissue specimens to Diagnostic Tes...

Q: Refer to the data in the preceding problem regarding Medical Arts Hospital

Refer to the data in the preceding problem regarding Medical Arts Hospital. Data from preceding problem: Medical Arts Hospital’s board of trustees is considering the addition of a comprehensive medic...

Q: Martinez, Inc., is a small firm involved in the production

Martinez, Inc., is a small firm involved in the production and sale of electronic business products. The company is well known for its attention to quality and innovation. During the past 15 months, a...

Q: Time Saver Meals, Inc., offers monthly service plans providing prepared

Time Saver Meals, Inc., offers monthly service plans providing prepared meals that are delivered to the customers’ homes. The target market for these meal plans includes double-income families with no...

Q: Galaxy Candy Company manufactures two popular candy bars, the Eclipse bar

Galaxy Candy Company manufactures two popular candy bars, the Eclipse bar and the Nova bar. Both candy bars go through a mixing operation where the various ingredients are combined, and the Coating De...

Q: Contemporary Trends sells paint and paint supplies, carpet, and wallpaper

Contemporary Trends sells paint and paint supplies, carpet, and wallpaper at a single-store location in suburban Baltimore. Although the company has been very profitable over the years, management has...

Q: Plato Corporation manufactures two products, Alpha and Beta. Contribution margin

Plato Corporation manufactures two products, Alpha and Beta. Contribution margin data follow. Plato Corporation’s production process uses highly skilled labor, which is in short sup...

Q: Refer to the data given in the preceding exercise for Plato Corporation

Refer to the data given in the preceding exercise for Plato Corporation. Assume that the direct-labor rate is $12 per hour, and 11,000 labor hours are available per year. In addition, the company has...

Q: All Sports Company’s production manager, Chris Adler, had requested to

All Sports Company’s production manager, Chris Adler, had requested to have lunch with the company president. Adler wanted to put forward his suggestion to add a new product line. As...

Q: Madrigal Theater Company is interested in estimating fixed and variable costs.

Madrigal Theater Company is interested in estimating fixed and variable costs. The following data are available for the month of December: Required: a. Use account analysis to estimate fixed cost pe...

Q: Rhetorix, Inc., produces stereo speakers. The selling price per

Rhetorix, Inc., produces stereo speakers. The selling price per pair of speakers is $1,000. The variable cost of production is $300 and the fixed cost per month is $49,000. Required: a. Calculate th...

Q: Wilde Home & Garden is organized into three departments. The following

Wilde Home & Garden is organized into three departments. The following sales and cost data are available for the prior year: Required: a. What is the weighted average contribution margin ratio?...

Q: Refer to the data in Exercise 4-16. (Round

Refer to the data in Exercise 4-16. (Round all decimal answers to four places and all dollar answers to the nearest dollar.) Required: a. Calculate profit as a percent of sales in the prior year. b...

Q: Dvorak Music produces two durable music stands: /

Dvorak Music produces two durable music stands: Stand A requires 2 labor hours and stand B requires 1 labor hour. The company has only 350 available labor hours per week. Further, the company can sel...

Q: Consider two companies, Oakland Hill Golf Course and Brooks Men’s Clothing

Consider two companies, Oakland Hill Golf Course and Brooks Men’s Clothing. Required: Which company is more likely to focus on the contribution margin per unit, and which is more likely to focus on...

Q: Edison Entrepreneur Services, Inc., is a legal services firm that

Edison Entrepreneur Services, Inc., is a legal services firm that files the paperwork to incorporate a business. Edison charges $1,200 for the incorporation application package and plans to file 1,600...

Q: Fidelity Multimedia sells audio and video equipment and car stereo products.

Fidelity Multimedia sells audio and video equipment and car stereo products. After performing a study of fixed and variable costs in the prior year, the company prepared a product-line profit statemen...

Q: National Tennis Racquet Co. produces and sells three models:

National Tennis Racquet Co. produces and sells three models: Required: (Round all percentages to two decimal places and monetary calculations to the nearest dollar.) a. What is the weighted average...

Q: Fleet Valley Shoes produces two models: the Nx100 (a shoe

Fleet Valley Shoes produces two models: the Nx100 (a shoe aimed at competitive runners) and the Mx100 (a shoe aimed at fitness buffs). Sales and costs for the most recent year are indicated: Required...

Q: Lancer Audio produces a high-end DVD player that sells for

Lancer Audio produces a high-end DVD player that sells for $1,300. Total operating expenses for July were as follows: Units produced and sold………………150 Component costs………………..$ 71,000 Supplies………………………...

Q: What is the difference between the contribution margin and the contribution margin

What is the difference between the contribution margin and the contribution margin ratio?

Q: In a multiproduct setting, when would it not be appropriate to

In a multiproduct setting, when would it not be appropriate to focus on a weighted average contribution margin per unit?

Q: RainRuler Stains produces a variety of exterior wood stains that have excellent

RainRuler Stains produces a variety of exterior wood stains that have excellent coverage and longevity. In 2017, the company produced and sold 310,000 gallons of stain. There was no beginning inventor...

Q: Below is a variable costing income statement for the Wilner Glass Company

Below is a variable costing income statement for the Wilner Glass Company, a maker of bottles for the beverage industry. For the coming year, the company is considering hiring two additional sales rep...

Q: Below is a variable costing income statement for Trio Office Supplies,

Below is a variable costing income statement for Trio Office Supplies, a company well known for its quality high-volume automatic staplers. For the coming year, the company is considering hiring three...

Q: Miller Heating is a small manufacturer of auxiliary heaters. The units

Miller Heating is a small manufacturer of auxiliary heaters. The units sell for $300 each. In 2017, the company produced 1,000 units and sold 800 units. There was no beginning inventory. Below are var...

Q: The Octavius Company produces a 10-inch chef knife used by

The Octavius Company produces a 10-inch chef knife used by commercial chefs. The knives sell for $50 each. In 2017, the company produced 50,000 units and sold 45,000 units. There was no beginning inve...

Q: Diamond & Turf Inc. is considering an investment in one of

Diamond & Turf Inc. is considering an investment in one of two machines. The sewing machine will increase productivity from sewing 150 baseballs per hour to sewing 290 per hour. The contribution m...

Q: What is the appropriate measure of a product’s value when a firm

What is the appropriate measure of a product’s value when a firm is operating under production bottlenecks? Answer The proper measure of product value in a bottlenecked process is the contribution...

Q: Charles Schwab Corporation is one of the more innovative brokerage and financial

Charles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as...

Q: Munch N’ Crunch Snack Company is considering two possible investments: a

Munch N’ Crunch Snack Company is considering two possible investments: a delivery truck or a bagging machine. The delivery truck would cost $43,056 and could be used to deliver an ad...

Q: Cityscape Hotels has 200 rooms available in a major metropolitan city.

Cityscape Hotels has 200 rooms available in a major metropolitan city. The hotel is able to attract business customers during the weekdays and leisure customers during the week- end. However, the leis...

Q: Youngstown Glass Company manufactures three types of safety plate glass: large

Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass it c...

Q: Product A has a unit contribution margin of $24. Product

Product A has a unit contribution margin of $24. Product B has a unit contribution mar - gin of $30. Product A requires four testing hours, while Product B requires six testing hours. Determine the mo...

Q: Product K has a unit contribution margin of $120. Product

Product K has a unit contribution margin of $120. Product L has a unit contribution mar - gin of $100. Product K requires five furnace hours, while Product L requires four furnace hours. Determine the...

Q: Beck Inc. and Bryant Inc. have the following operating data

Beck Inc. and Bryant Inc. have the following operating data: a. Compute the operating leverage for Beck Inc. and Bryant Inc. b. How much would income from operations increase for each company if the...

Q: AutoSource Inc. designs and manufactures tires for automobiles. The company’s

AutoSource Inc. designs and manufactures tires for automobiles. The company’s strategy is to design products that incorporate the full environmental impact of the product over its li...

Q: SungSam Enterprises reports the following data: / Determine

SungSam Enterprises reports the following data: Determine SungSam Enterprises’s operating leverage

Q: Westminster Co. reports the following data: / Determine

Westminster Co. reports the following data: Determine Westminster Co.’s operating leverage.

Q: An examination of the accounting records of Clowney Company disclosed a high

An examination of the accounting records of Clowney Company disclosed a high contribution margin ratio and production at a level below maximum capacity. Based on this information, suggest a likely mea...

Q: Wolsey Industries Inc. expects to maintain the same inventories at the

Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y8 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to t...

Q: In the following equations, based on the variable costing income statement

In the following equations, based on the variable costing income statement, identify the items designated by X: a. Net Sales – X = Manufacturing Margin b. Manufacturing Margin – X = Contribution Mar...

Q: Belmain Co. expects to maintain the same inventories at the

Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of...

Q: Suppose that a firm produces two products. Should the firm always

Suppose that a firm produces two products. Should the firm always place the most emphasis on the product with the largest contribution margin per unit? Explain.

Q: When a company faces a production constraint or scarce resource (e

When a company faces a production constraint or scarce resource (e.g., only a certain number of machine hours are available), it is important to a. produce the product with the highest contribution m...

Q: In the keep-or-drop decision, the company will

In the keep-or-drop decision, the company will find which of the following income statement formats most useful? a. A segmented income statement in the contribution margin format b. A segmented incom...

Q: Comfy Fit Company manufactures two types of university sweatshirts, the Swoop

Comfy Fit Company manufactures two types of university sweatshirts, the Swoop and the Rufus, with unit contribution margins of $5 and $15, respectively. Regardless of type, each sweatshirt must be fed...

Q: Shown below is a segmented income statement for Hickory Company’s three wooden

Shown below is a segmented income statement for Hickory Company’s three wooden flooring product lines: Relevant fixed costs associated with this line include 80% of parquetâ...

Q: Comfy Fit Company manufactures two types of university sweatshirts, the Swoop

Comfy Fit Company manufactures two types of university sweatshirts, the Swoop and the Rufus, with unit contribution margins of $5 and $15, respectively. Regardless of type, each sweatshirt must be fed...

Q: Billings Company produces two products, Product Reno and Product Tahoe.

Billings Company produces two products, Product Reno and Product Tahoe. Each product goes through its own assembly and finishing departments. However, both of them must go through the painting departm...

Q: Billings Company produces two products, Product Reno and Product Tahoe.

Billings Company produces two products, Product Reno and Product Tahoe. Each product goes through its own assembly and finishing departments. However, both of them must go through the painting departm...

Q: Lansing Electronics Inc. manufactures a variety of printers, scanners,

Lansing Electronics Inc. manufactures a variety of printers, scanners, and fax machines in its two divisions: the PSF Division and the Components Division. The Components Division produces electronic...

Q: Petoskey Company produces three products: Alanson, Boyne, and Conway

Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Direct fixed expenses consist of depreciation and plant...

Q: Petoskey Company produces three products: Alanson, Boyne, and Conway

Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Direct fixed expenses consist of depreciation and plant...

Q: Petoskey Company produces three products: Alanson, Boyne, and Conway

Petoskey Company produces three products: Alanson, Boyne, and Conway. A segmented income statement, with amounts given in thousands, follows: Direct fixed expenses consist of depreciation and plant...

Q: Audio Mart is a retailer of radios, stereos, and televisions

Audio Mart is a retailer of radios, stereos, and televisions. The store carries two portable sound systems that have radios, tape players, and speakers. System A, of slightly higher quality than Syste...

Q: Sealing Company manufactures three types of DVD storage units. Each of

Sealing Company manufactures three types of DVD storage units. Each of the three types requires the use of a special machine that has a total operating capacity of 15,000 hours per year. Information o...

Q: Norton Company produces two products (Juno and Hera) that use

Norton Company produces two products (Juno and Hera) that use the same material input. Juno uses two pounds of the material for every unit produced, and Hera uses five pounds. Currently, Norton has 16...

Q: The results of operations for the Preston Manufacturing Company for the fourth

The results of operations for the Preston Manufacturing Company for the fourth quarter of 2017 were as follows: Note: Preston Manufacturing uses the variable costing method. Thus, only variable produ...

Q: The results of operations for the Garret Bug Spray Manufacturing Company for

The results of operations for the Garret Bug Spray Manufacturing Company for the fourth quarter of 2017 were as follows (in thousands): Note: Garret uses the variable costing method. Thus, only varia...

Q: K&J Web Designs creates websites for businesses. K&

K&J Web Designs creates websites for businesses. K&J has a basic website creation package that it offers for a flat fee of $750. This package includes everything that a business would need to have a s...

Q: Pantheon Gaming, a computer enhancement company, has three product lines

Pantheon Gaming, a computer enhancement company, has three product lines: audio enhancers, video enhancers, and connection-speed accelerators. Common costs are allocated based on relative sales. A pro...

Q: At Dalton Playground Equipment, the powder-coating process is a

At Dalton Playground Equipment, the powder-coating process is a bottleneck. Typically, it takes approximately 2 hours to switch between jobs. The time is spent cleaning nozzles and paint tanks and rec...

Q: Reece Herbal Supplements purchases, in bulk, a variety of dietary

Reece Herbal Supplements purchases, in bulk, a variety of dietary supplements that the company bottles, packages, and ships to health-food stores and drugstores around the country. The company has a g...

Q: Computer Village sells computer equipment and home office furniture. Currently the

Computer Village sells computer equipment and home office furniture. Currently the furniture product line takes up approximately 50 percent of the company’s retail floor space. The p...

Q: Five Star Tools is a small family-owned firm that manufactures

Five Star Tools is a small family-owned firm that manufactures diamond-coated cutting tools (chisels and saws) used by jewelers. Production involves three major processes. First, steel â€&#...

Q: The Museum of America is preparing for its annual appreciation dinner for

The Museum of America is preparing for its annual appreciation dinner for contributing members. Last year, 525 members attended the dinner. Tickets for the dinner were $24 per attendee. The profit r...

Q: Zahner Corporation manufactures housewares products that are sold through a network of

Zahner Corporation manufactures housewares products that are sold through a network of external sales agents. The agents are paid a commission of 20% of revenues. Zahner is considering replacing the s...

Q: The Ronowski Company has three product lines of belts—A,

The Ronowski Company has three product lines of belts—A, B, and C— with contribution margins of $3, $2, and $1, respectively. The president foresees sales of 200,000 units in the coming period, consis...

Q: Define contribution margin, contribution margin per unit, and contribution margin

Define contribution margin, contribution margin per unit, and contribution margin percentage.

Q: Juicy Beauty manufactures and sells a face cream to small specialty stores

Juicy Beauty manufactures and sells a face cream to small specialty stores in the greater Los Angeles area. It presents the monthly operating income statement shown here to George Lopez, a potential i...

Q: Garrett Manufacturing sold 410,000 units of its product for $

Garrett Manufacturing sold 410,000 units of its product for $68 per unit in 2017. Variable cost per unit is $60, and total fixed costs are $1,640,000. Required: 1. Calculate (a) contribution margin a...

Q: Perfect Fit Jeans Co. sells blue jeans wholesale to major retailers

Perfect Fit Jeans Co. sells blue jeans wholesale to major retailers across the country. Each pair of jeans has a selling price of $50 with $35 in variable costs of goods sold. The company has fixed ma...

Q: Suppose Morrison Corp.’s breakeven point is revenues of $1

Suppose Morrison Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000. Required: 1. Compute the contribution margin percentage. 2. Compute the selling price if variable costs a...

Q: Chartz 1-2-3 is a top-selling electronic

Chartz 1-2-3 is a top-selling electronic spreadsheet product. Chartz is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previousl...

Q: The Kenosha Company has three product lines of beer mugs—A

The Kenosha Company has three product lines of beer mugs—A, B, and C—with contribution margins of $5, $4, and $3, respectively. The president foresees sales of 175,000 units in the coming period, cons...

Q: Welch Men’s Clothing’s revenues and cost data for 2017 are as follows

Welch Men’s Clothing’s revenues and cost data for 2017 are as follows: Mr. Welch, the owner of the store, is unhappy with the operating results. An analysis of oth...

Q: Jack’s Jax has total fixed costs of $25,000.

Jack’s Jax has total fixed costs of $25,000. If the company’s contribution margin is 60%, the income tax rate is 25% and the selling price of a box of Jax is $20, how many boxes of Jax would the compa...

Q: During the current year, XYZ Company increased its variable SG&

During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the same. As a result, XYZ’s: a. Contribution margin and gross margin will be lower. b. Cont...

Q: Under the contribution income statement, a company’s contribution margin will be

Under the contribution income statement, a company’s contribution margin will be: a. Higher if fixed SG&A costs decrease. b. Higher if variable SG&A costs increase. c. Lower if fixed manufacturing ove...

Q: Once a company exceeds its breakeven level, operating income can be

Once a company exceeds its breakeven level, operating income can be calculated by multiplying: a. The sales price by unit sales in excess of breakeven units. b. Unit sales by the difference between th...

Q: The Sweetwater Candy Company would like to buy a new machine that

The Sweetwater Candy Company would like to buy a new machine that would automatically “dip” chocolates. The dipping operation is currently done largely by hand. The machine the company is considering...

Q: The Fore Corporation is an integrated food processing company that has operations

The Fore Corporation is an integrated food processing company that has operations in over two dozen countries. Fore’s corporate headquarters is in Chicago, and the company’s executives frequently trav...

Q: Zeitgeist Company manufactures silicon sleeves for MP3 players. In August 2013

Zeitgeist Company manufactures silicon sleeves for MP3 players. In August 2013, Zeitgeist began producing the colorful sleeves. During the month of August, 16,000 were produced, and 14,750 were sold a...

Q: Fun Time Company produces three lines of greeting cards: scented,

Fun Time Company produces three lines of greeting cards: scented, musical, and regular. Segmented income statements for the past year are as follows: Kathy Bunker, president of Fun Time, is concerne...

Q: In a segmented income statement, which of the following statements is

In a segmented income statement, which of the following statements is true? a. Segment margin is greater than contribution margin. b. Common fixed expenses must be allocated to each segment. c. Contr...

Q: What is the difference between contribution margin and segment margin?

What is the difference between contribution margin and segment margin?

Q: The April 2010 income statement for Fabio’s Fashions has just been received

The April 2010 income statement for Fabio’s Fashions has just been received by Diana Caffrey, Vice-President of Marketing. The firm uses a variable costing system for internal report...

Q: Georgia Shacks produces small outdoor buildings. The company began operations in

Georgia Shacks produces small outdoor buildings. The company began operations in 2010, producing 2,000 buildings and selling 1,500. A variable costing income statement for 2010 follows. During the yea...

Q: Benoit Company produces three products, A, B, and C

Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per unit): Demand for the company’s products is very strong, with far more orders ea...

Q: The Walton Toy Company manufactures a line of dolls and a doll

The Walton Toy Company manufactures a line of dolls and a doll dress sewing kit. Demand for the dolls is increasing, and management requests assistance from you in determining an economical sales and...

Q: Barlow Company manufactures three products: A, B, and C

Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: The same raw material is used in all three pr...

Q: Thalassines Kataskeves, S.A., of Greece makes marine equipment

Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format...

Q: TufStuff, Inc., sells a wide range of drums, bins

TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry. One of the company’s products is a heavy-duty corrosion-resista...

Q: Miller Company’s most recent contribution format income statement is shown below:

Miller Company’s most recent contribution format income statement is shown below: Required: Prepare a new contribution format income statement under each of the following condition...

Q: What is meant by a product’s contribution margin ratio? How is

What is meant by a product’s contribution margin ratio? How is this ratio useful in planning business operations?

Q: Menlo Company distributes a single product. The company’s sales and expenses

Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Required: 1. What is the monthly break-even point in units sold and in sales dol...

Q: Gold Star Rice, Ltd., of Thailand exports Thai rice throughout

Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company grows three varieties of rice—Fragrant, White, and Loonzain. (The currency in Thailand is the baht, w...

Q: Last month when Holiday Creations, Inc., sold 50,000

Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, and fixed expenses were $65,000. Required: 1. What is the company’s cont...

Q: Fill in the missing amounts in each of the eight case situations

Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. a. Assume that only one product is being sold in each of the four following case situati...

Q: Olongapo Sports Corporation is the distributor in the Philippines of two premium

Olongapo Sports Corporation is the distributor in the Philippines of two premium golf balls—the Flight Dynamic and the Sure Shot. Monthly sales, expressed in pesos (P), and the contr...

Q: Lucido Products markets two computer games: Claim jumper and Makeover.

Lucido Products markets two computer games: Claim jumper and Makeover. A contribution format income statement for a recent month for the two games appears below: Required: 1. Compute the overall con...

Q: Mason Paper Company (MPC) manufactures commodity grade papers for use

Mason Paper Company (MPC) manufactures commodity grade papers for use in computer printers and photocopiers. MPC has reported net operating losses for the last two years due to intense price pressure...

Q: Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant

Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below: Janet Dunn, w...

Q: Raner, Harris, & Chan is a consulting firm that specializes

Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis....

Q: Posters.com is a small Internet retailer of high-quality

Posters.com is a small Internet retailer of high-quality posters. The company has $1,000,000 in operating assets and fixed expenses of $150,000 per year. With this level of operating assets and fixed...

Q: The contribution format income statement for Huerra Company for last year is

The contribution format income statement for Huerra Company for last year is given below: The company had average operating assets of $2,000,000 during the year. Required: 1. Compute the company&ac...

Q: Joyce Brown has run Medical Maids, a specialty cleaning service for

Joyce Brown has run Medical Maids, a specialty cleaning service for medical and dental offices, for the past 10 years. Her static budget and actual results for April 2017 are shown below. Joyce has on...

Q: How can the concept of a composite unit be used to explain

How can the concept of a composite unit be used to explain why an unfavorable total sales-mix variance of contribution margin occurs?

Q: Candyland uses standard costing to produce a particularly popular type of candy

Candyland uses standard costing to produce a particularly popular type of candy. Candyland’s president, Jack McCay, was unhappy after reviewing the income statements for the first th...

Q: The Garvis Company uses an absorption-costing system based on standard

The Garvis Company uses an absorption-costing system based on standard costs. Variable manufacturing cost consists of direct material cost of $4.50 per unit and other variable manufacturing costs of $...

Q: Dr. Young, of Young and Associates, LLP, is

Dr. Young, of Young and Associates, LLP, is examining how overhead costs behave as a function of monthly physician contact hours billed to patients. The historical data are as follows: Required: 1. C...

Q: Chade Corp. is considering a special order brought to it by

Chade Corp. is considering a special order brought to it by a new client. If Chade determines the variable cost to be $9 per unit, and the contribution margin of the next best alternative of the facil...

Q: In order to determine whether a special order should be accepted at

In order to determine whether a special order should be accepted at full capacity, the sales price of the special order must be compared to the per unit: a. Contribution margin of the special order. b...

Q: Lees Corp. is deciding whether to keep or drop a small

Lees Corp. is deciding whether to keep or drop a small segment of its business. Key information regarding the segment includes: Contribution margin……………. 35,000 Avoidable fixed costs…………..30,000 Unavo...

Q: The actual contribution margin per unit will impact the following sales variance

The actual contribution margin per unit will impact the following sales variance: a. Flexible-budget variance b. Market-size variance c. Market-share variance. d. Sales-quantity variance

Q: Lexota, Inc., an auto manufacturer, reported the following budgeted

Lexota, Inc., an auto manufacturer, reported the following budgeted and actual sales of its vehicles during September, Year 2: The budgeted contribution margin is 20% for both vehicle types. Which of...

Q: The Iron City Company started business on January 1, 2017.

The Iron City Company started business on January 1, 2017. Iron City manufactures a specialty honey beer, which it sells directly to state-owned distributors in Pennsylvania. Honey beer is produced an...

Q: “Management should always maximize sales of the product with the highest

“Management should always maximize sales of the product with the highest contribution margin per unit.” Do you agree? Why?

Q: The Clarkson Company produces engine parts for car manufacturers. A new

The Clarkson Company produces engine parts for car manufacturers. A new accountant intern at Clarkson has accidentally deleted the company’s variance analysis calculations for the ye...

Q: Cascade, Inc., produces the basic fillings used in many popular

Cascade, Inc., produces the basic fillings used in many popular frozen desserts and treats—vanilla and chocolate ice creams, puddings, meringues, and fudge. Cascade uses standard cos...

Q: Tasty Beverages began business in 2010 selling bottles of a thirst-

Tasty Beverages began business in 2010 selling bottles of a thirst-quenching drink. Production for the first year was 104,000 bottles, and sales were 98,000 bottles. The selling price per bottle was $...

Q: Ten years ago, based on a pre-tax NPV analysis

Ten years ago, based on a pre-tax NPV analysis, Sante’s Sporting Goods decided to add a new product line. The data used in the analysis were as follows: Discount rate ………………………………………………….10% Life of p...

Q: Holly’s Fashions is considering expanding\ its building so it can stock

Holly’s Fashions is considering expanding\ its building so it can stock additional merchandise for travelers and tourists. Store z manager Jill Eliason anticipates that building expansion costs would...

Q: In its first year of operations, Utah Utility Trailers incurred the

In its first year of operations, Utah Utility Trailers incurred the following costs: Variable production cost …………………………………………$ 2,800 per unit Variable selling and administrative cost ……………………….200 pe...

Q: Casper Karts manufactures a three-wheeled shopping cart that sells for

Casper Karts manufactures a three-wheeled shopping cart that sells for $60. Variable manufacturing and variable selling cost are, respectively, $35 and $10 per unit. Annual fixed cost is $975,000. a....

Q: Beantown Baseball Company makes baseballs that sell for $13.00

Beantown Baseball Company makes baseballs that sell for $13.00 per two-pack. Current annual production and sales are 960,000 baseballs. Costs for each baseball are as follows: Direct material ……………………...

Q: The Glass Menagerie makes small pressed resin ducks and ducklings. For

The Glass Menagerie makes small pressed resin ducks and ducklings. For every duck sold, the company sells five ducklings. The following information is available about the company’s s...

Q: Nature’s Own makes three types of wood flooring: Oak, Hickory

Nature’s Own makes three types of wood flooring: Oak, Hickory, and Cherry. The company’s tax rate is 40 percent. The following costs are expected for 2011: Per-squ...

Q: Following is information pertaining to Dayton Co.’s operations of the

Following is information pertaining to Dayton Co.’s operations of the first and second quarter of 2010: Additional Information • There were no finished goods at Jan...

Q: Atlantic Fish Company is a wholesale distributor of cod. The company

Atlantic Fish Company is a wholesale distributor of cod. The company services restaurants in the Boston area. Small but steady growth in sales has been achieved by Atlantic Fish Company over the past...

Q: Kantrovitz Company is a manufacturer of industrial components. One of its

Kantrovitz Company is a manufacturer of industrial components. One of its products that is used as a subcomponent in appliance manufacturing is AP110. This product has the following information per un...

Q: Leather Accessories produces leather belts and key fobs that sell for $

Leather Accessories produces leather belts and key fobs that sell for $40 and $10, respectively. The company currently sells 100,000 units of each type with the following operating results: Corporate...

Q: Cellular Communications manufactures cell phones and two cell phone accessories: ear

Cellular Communications manufactures cell phones and two cell phone accessories: ear buds and a 12-volt (automotive) battery charger. (Each ear bud package contains a set of ear buds.) The ear buds an...

Q: Louisville Jar Co. has processing plants in Kentucky and Pennsylvania.

Louisville Jar Co. has processing plants in Kentucky and Pennsylvania. Both plants use recycled glass to produce jars that a variety of food processors use in food canning. The jars sell for $10 per h...

Q: Following are abbreviated income statements for two companies, Ainsley and Bard

Following are abbreviated income statements for two companies, Ainsley and Bard: Ainsley and Bard produce an identical product and both sell that product at $40. Both companies are searching for ways...

Q: Folsom Fashions sells a line of women’s dresses. Folsom’s performance report

Folsom Fashions sells a line of women’s dresses. Folsom’s performance report for November 2010 is shown below. The company uses a flexible budget to analyze its per...

Q: In each of the following cases, the Speaker Division can sell

In each of the following cases, the Speaker Division can sell all of its production of audio speakers externally or some internally to the Sound System Division and the remainder to outside customers....

Q: Cookie Delight Company has two divisions: Plain Cookies and Decorated Cookies

Cookie Delight Company has two divisions: Plain Cookies and Decorated Cookies. Lars Linden is the manager of Plain Cookies Division and Theresa Davis is the manager of Decorated Cookies Division. Comp...

Q: The president of Charlottetown Inc. has given the managers of the

The president of Charlottetown Inc. has given the managers of the company’s three decentralized divisions (O’Leary, Alberton, and Summerside) the authority to decide whether to sell externally or inte...

Q: What is the contribution margin ratio? How is it used to

What is the contribution margin ratio? How is it used to calculate the break-even point?

Q: A multiproduct company has a sales mix of nine widgees to three

A multiproduct company has a sales mix of nine widgees to three squigees. Widgees have a contribution margin ratio of 45 percent, and squigees have a contribution margin ratio of 80 percent. If the sa...

Q: Compute the answers to each of the following independent situations.

Compute the answers to each of the following independent situations. a. Orlando Ray sells liquid and spray mouthwash in a sales mix of 1:2, respectively. The liquid mouthwash has a contribution margin...

Q: Michigan Mfg. makes electronic products. Because the employees of one

Michigan Mfg. makes electronic products. Because the employees of one of the company’s plants are on strike, the Chicago plant is operating at peak capacity. It makes two electronic...

Q: Operations of Borderland Oil Drilling Services are separated into two geographical divisions

Operations of Borderland Oil Drilling Services are separated into two geographical divisions: United States and Mexico. The operating results of each division for 2010 are as follows: Corporate fixed...

Q: Pittsburg Tar Co. had the following income statement for 2010:

Pittsburg Tar Co. had the following income statement for 2010: a. Compute the break-even point using the equation approach. b. Prepare a CVP graph to reflect the relationships among cost, revenue, pr...

Q: Bill’s Cabinets sells a product for $360 per unit. The

Bill’s Cabinets sells a product for $360 per unit. The company’s variable cost per unit is $60 for direct material, $50 per unit for direct labor, and $34 per unit for overhead. Annual fixed productio...

Q: Indicate whether each of the following costs would be considered an ordering

Indicate whether each of the following costs would be considered an ordering cost (O), a carrying cost (C), or a cost of not carrying (N) inventory. For any costs that do not fit these categories, ind...

Q: What is the meaning of contribution margin ratio? How is this

What is the meaning of contribution margin ratio? How is this ratio useful in planning business operations?

Q: This Excel worksheet form is to be used to recreate Exhibit 1

This Excel worksheet form is to be used to recreate Exhibit 1–7. Download the workbook containing this form from Connect, where you will also receive instructions. Required: 1. Chec...

Q: Question: The Excel worksheet form that appears below is to be

The Excel worksheet form that appears below is to be used to recreate portions of the Review Problem relating to Voltar Company. Download the workbook containing this form from Connect, where you will...

Q: Olongapo Sports Corporation distributes two premium golf balls—Flight Dynamic and

Olongapo Sports Corporation distributes two premium golf balls—Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Fixed expe...

Q: Miller Company’s contribution format income statement for the most recent month is

Miller Company’s contribution format income statement for the most recent month is shown below: Required: 1. What is the revised net operating income if unit sales increase by 15%?...

Q: The.Alpine.House,.Inc.,.is a large retailer

The.Alpine.House,.Inc.,.is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: Amount Sales...................................................

Q: Whirly Corporation’s contribution format income statement for the most recent month is

Whirly Corporation’s contribution format income statement for the most recent month is shown below: Required: 1. What would be the revised net operating income per month if the sale...

Q: Todrick Company is a merchandiser that reported the following information based on

Todrick Company is a merchandiser that reported the following information based on 1,000 units sold: Sales ..............................................................................$300,000 Beginn...

Q: Island Novelties, Inc., of Palau makes two products—Hawaiian

Island Novelties, Inc., of Palau makes two products—Hawaiian Fantasy and Tahitian Joy. Each product’s selling price, variable expense per unit and annual sales volume are as follows:...

Q: Martinez Company’s relevant range of production is 7,500 units to

Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Average Cost per Unit Direc...

Q: Oslo Company prepared the following contribution format income statement based on a

Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales .....................

Q: The HIV/AIDS crisis has been called the worst pandemic since

The HIV/AIDS crisis has been called the worst pandemic since the fourteenth century’s Black Plague. The first incident of HIV/AIDS was discovered by the U.S. Centers for Disease Control in 1981. Over...

Q: Boeing finishes assembly of wide-bodied commercial aircraft in several sizes

Boeing finishes assembly of wide-bodied commercial aircraft in several sizes at the rate of about one per day. Customers first pay a deposit of one-third of $84 to $127 million for a 767, one-third of...

Q: Amazon’s new tablet computer, the Kindle Fire, has slim margins

Amazon’s new tablet computer, the Kindle Fire, has slim margins at its $199 retail price. Admittedly, this product is trying to change the way we read books. It is therefore positioned so as to penetr...

Q: Jordan Enterprises has estimated the contribution margin (P - MC)/

Jordan Enterprises has estimated the contribution margin (P - MC)/P for its Air Express model of basketball shoes to be 40 percent. Based on market research and past experience, Jordan estimates the f...

Q: Information Resources, Inc. (IRI), collects data on consumer

Information Resources, Inc. (IRI), collects data on consumer packaged goods at 32,000 scanner checkout counters and in panel surveys of 70,000 households. IRI records indicate that department store-br...

Q: Tennis Products, Inc., produces three models of high-quality

Tennis Products, Inc., produces three models of high-quality tennis rackets. The following table contains recent information on the sales, costs, and profitability of the three models: The company i...

Q: Safe Travel produces car seats for children from newborn to 2 years

Safe Travel produces car seats for children from newborn to 2 years old. Safe Travel’s only problem with its car seats was stitching in the straps. The problem can usually be detected and repaired dur...

Q: iCover produces bags for carrying laptop computers. iCover sells 1,

iCover produces bags for carrying laptop computers. iCover sells 1,000,000 units each year at a price of $20 per unit and a contribution margin of 40%. To respond to customer complaints, iCover’s mang...

Q: SpeedPrint manufactures and sells 18,000 high-technology printing presses

SpeedPrint manufactures and sells 18,000 high-technology printing presses each year. The variable and fixed costs of rework and repair are as follows: SpeedPrint’s current presses h...

Q: The Beach Comber is a take-out food store at a

The Beach Comber is a take-out food store at a popular beach resort. Sara Miller, owner of the Beach Comber, is deciding how much refrigerator space to devote to four different drinks. Pertinent data...

Q: Saina Supplies leases and sells materials, tools, and equipment and

Saina Supplies leases and sells materials, tools, and equipment and also provides add-on services such as ground maintenance and waterproofing to construction and mining sites. The company has grown r...

Q: Newbury Printers operates a printing press with a monthly capacity of 3

Newbury Printers operates a printing press with a monthly capacity of 3,200 machine-hours. Newbury has two main customers: Wallace Corporation and Kimberly Corporation. Data on each customer for Janua...

Q: Sierra Inc. consists of a semiconductor division and a process-

Sierra Inc. consists of a semiconductor division and a process-control division, each of which operates as an independent profit center. The semiconductor division employs craftsmen who produce two di...

Q: Damon Furniture (DF) produces fiberglass doors in two processes:

Damon Furniture (DF) produces fiberglass doors in two processes: molding and finishing. DF is currently producing two models: Masoline and Aldernite. Production in the molding department is limited by...

Q: Della Simpson, Inc., sells two popular brands of cookies:

Della Simpson, Inc., sells two popular brands of cookies: Della’s Delight and Bonny’s Bourbon. Della’s Delight goes through the Mixing and Baking...

Q: Miami Infonautics, Inc., produces handheld Windows CE™-compatible organizers

Miami Infonautics, Inc., produces handheld Windows CEâ„¢-compatible organizers. Miami Infonautics markets three different handheld models: PalmPro is a souped-up version for the execut...

Q: Miami Infonautics’ senior vice president of marketing prepared his budget at the

Miami Infonautics’ senior vice president of marketing prepared his budget at the beginning of the third quarter assuming a 25% market share based on total sales. Foolinstead Research estimated that th...

Q: The Robin’s Basket operates a chain of Italian gelato stores. Although

The Robin’s Basket operates a chain of Italian gelato stores. Although the Robin’s Basket charges customers the same price for all flavors, production costs vary, d...

Q: The Tristan Corporation sells 250,000 V262 valves to the automobile

The Tristan Corporation sells 250,000 V262 valves to the automobile and truck industry. Tristan has a capacity of 150,000 machine-hours and can produce two valves per machine-hour. V262’s contribution...

Q: The Chicago Tigers play in the American Ice Hockey League. The

The Chicago Tigers play in the American Ice Hockey League. The Tigers play in the Downtown Arena, which is owned and managed by the City of Chicago. The arena has a capacity of 15,000 seats (5,500 low...

Q: The Hiro Corporation sells two brands of wine glasses: Plain and

The Hiro Corporation sells two brands of wine glasses: Plain and Chic. Hiro provides the following information for sales in the month of June 2017: Static-budget total contribution margin…………………………$15...

Q: Kate Warner, a senior loan officer with Citybank in Cleveland,

Kate Warner, a senior loan officer with Citybank in Cleveland, Ohio, has both corporate and personal lending customers. On average, the profit contribution margin or interest rate spread is 1.5 percen...

Q: Hampton Company is considering the addition of a new product to its

Hampton Company is considering the addition of a new product to its cosmetics line. The company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. Relevant infor...

Q: David Catrow is the manufacturing production supervisor for Faraday Motor Works (

David Catrow is the manufacturing production supervisor for Faraday Motor Works (FMW), a company that manufactures electrical motors for industrial applications. Trying to explain why he did not get t...

Q: Arnold Vimka is a venture capitalist facing two alternative investment opportunities.

Arnold Vimka is a venture capitalist facing two alternative investment opportunities. He intends to invest $800,000 in a start-up firm. He is nervous, however, about future economic volatility. He ask...

Q: Ritchie Manufacturing Company makes a product that it sells for $150

Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs of $60 per unit. Variable selling expenses are $18 per unit, annual fixed...

Q: How does a contribution margin income statement differ from the income statement

How does a contribution margin income statement differ from the income statement used in financial reporting?

Q: Buckley Company operates three segments. Income statements for the segments imply

Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. Required: a. Explain the effect on profitability...

Q: Hensely Company, which produces and sells a small digital clock,

Hensely Company, which produces and sells a small digital clock, bases its pricing strategy on a 25 percent markup on total cost. Based on annual production costs for 25,000 units of product, comp...

Q: The following income statements illustrate different cost structures for two competing-

The following income statements illustrate different cost structures for two competing-companies. Required: a. Reconstruct Hill’s income statement, assuming that it serves 400 cust...

Q: AJ Manufacturing Company incurred $50,000 of fixed product cost

AJ Manufacturing Company incurred $50,000 of fixed product cost and $40,000 of variable product cost during its first year of operation. Also during its first year, AJ incurred $16,000 of fixed and $1...

Q: The following income statement was drawn from the records of Joel Company

The following income statement was drawn from the records of Joel Company, a merchandising firm. JOEL COMPANY Income Statement For the Year Ended December 31, 2018 Sales revenue (2,000 units × $125)…...

Q: The following income statement applies to Kawai Company for the current year

The following income statement applies to Kawai Company for the current year. Income Statement Sales revenue (200 units × $60)……………………………….$12,000 Variable cost (200 units × $36)…………………………………..(7,200...

Q: Chang Corporation sells products for $120 each that have variable costs

Chang Corporation sells products for $120 each that have variable costs of $80 per unit. Chang’s annual fixed cost is $720,000. Required: Use the per-unit contribution margin approach to determine th...

Q: Santiago Company incurs annual fixed costs of $66,000.

Santiago Company incurs annual fixed costs of $66,000. Variable costs for Santiago’s product are $34 per unit, and the sales price is $50 per unit. Santiago desires to earn an annual profit of $34,000...

Q: Information concerning a product produced by Ender Company appears here:

Information concerning a product produced by Ender Company appears here: Sales price per unit……………………………………………………………………….$200 Variable cost per unit………………………………………………………………………$80 Total annual fixed m...

Q: For a recent year, McDonald’s (MCD) company-owned

For a recent year, McDonald’s (MCD) company-owned restaurants had the following sales and expenses (in millions): Assume that the variable costs consist of food and packaging, payr...

Q: SunRise Inc. and SunSet Inc. have the following operating data

SunRise Inc. and SunSet Inc. have the following operating data: a. Compute the operating leverage for SunRise Inc. and SunSet Inc. b. How much would operating income increase for each company if the...

Q: a. Matzinger Company budgets sales of $10,400,

a. Matzinger Company budgets sales of $10,400,000, fixed costs of $1,100,000, and variable costs of $6,656,000. What is the contribution margin ratio for Matzinger Company? b. If the contribution marg...

Q: Chavez Chemical Company produces three products: ethylene, butane, and

Chavez Chemical Company produces three products: ethylene, butane, and ester. Each of these products has high demand in the market, and Chavez Chemical is able to sell as much as it can produce of all...

Q: Nygard Glass Company manufactures three types of safety plate glass: mirror

Nygard Glass Company manufactures three types of safety plate glass: mirror, laminated, and regular. All three products have high demand. Thus, Nygard Glass is able to sell all the safety glass that i...

Q: Using the data and your answers from MBA 12-2,

Using the data and your answers from MBA 12-2, determine the following: 1. The selling price necessary for Mirror glass to be as profitable as Regular glass. 2. Assuming the selling price for Mirror g...

Q: Using the data and your answers from MBA 12-2,

Using the data and your answers from MBA 12-2, determine the following: 1. The selling price necessary for Laminated glass to be as profitable as Regular glass. 2. Assuming the selling price for Lamin...

Q: Organic Health Care Products Inc. expects to maintain the same inventories

Organic Health Care Products Inc. expects to maintain the same inventories at the end of 20Y8 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be...

Q: If fixed costs increase, what would be the impact on the

If fixed costs increase, what would be the impact on the (a) contribution margin and (b) operating income?

Q: An examination of the accounting records of Larredo Company disclosed a high

An examination of the accounting records of Larredo Company disclosed a high contribution margin ratio and production at a level below maximum capacity. Based on this information, suggest a likely mea...

Q: The Charles Schwab Corporation (SCHW) is one of the more

The Charles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States. The company provided information about its major busi...

Q: Ball Sports Inc. is considering an investment in one of two

Ball Sports Inc. is considering an investment in one of two machines. The stitching machine will increase productivity from sewing 300 baseballs per hour to stitching 360 per hour. The contribution ma...

Q: Strahn Foods Inc. is considering two possible investments: a delivery

Strahn Foods Inc. is considering two possible investments: a delivery truck or a bagging machine. The delivery truck would cost $65,970 and could be used to deliver an additional 90,000 bags of taquit...

Q: Calculate the contribution margin for each department and income before taxes,

Calculate the contribution margin for each department and income before taxes, based on the following:

Q: Calculate the contribution margin for each department and income before taxes,

Calculate the contribution margin for each department and income before taxes, based on the following:

Q: Calculate the contribution margin for each department and income before taxes,

Calculate the contribution margin for each department and income before taxes, based on the following:

Q: Wendell’s Donut Shoppe is investigating the purchase of a new $18

Wendell’s Donut Shoppe is investigating the purchase of a new $18,600 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at...

Q: Derrick Iverson is a divisional manager for Holston Company. His annual

Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 20% each...

Q: Casey Nelson is a divisional manager for Pigeon Company. His annual

Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 20% each of t...

Q: Explain how the contribution margin differs from the segment margin.

Explain how the contribution margin differs from the segment margin.

Q: Diego Company manufactures one product that is sold for $80 per

Diego Company manufactures one product that is sold for $80 per unit in two geographic regions— the East and West regions. The following information pertains to the company’s first year of operations...

Q: Westerville Company reported the following results from last year’s operations:

Westerville Company reported the following results from last year’s operations: Sales .................................................................$1,000,000 Variable expenses ......................

Q: Cane Company manufactures two products called Alpha and Beta that sell for

Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capa...

Q: Cardinal Company is considering a five-year project that would require

Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company’s disco...

Q: Stavos Company’s Screen Division manufactures a standard screen for high-definition

Stavos Company’s Screen Division manufactures a standard screen for high-definition televisions (HDTVs). The cost per screen is: Variable cost per screen…â...

Q: The managers of Midwest Whitetails magazine (a magazine dedicated to deer

The managers of Midwest Whitetails magazine (a magazine dedicated to deer hunters) want to establish a price for customers wishing to place a full-page advertisement in their magazine for one month. T...

Q: Northport Company manufactures numerous products, one of which is called Sea

Northport Company manufactures numerous products, one of which is called Sea Breeze Skin Cleanser. The company has provided the following data regarding this product: Unit sales (a) ....................

Q: The postal service of St. Vincent, an island in the

The postal service of St. Vincent, an island in the West Indies, obtains a significant portion of its revenues from sales of special souvenir sheets to stamp collectors. The postal service purchases t...

Q: Gaston Company is considering a capital budgeting project that would require a

Gaston Company is considering a capital budgeting project that would require a $2,000,000 investment in equipment with a useful life of five years and no salvage value. The company’s...

Q: Matheson Electronics has just developed a new electronic device it believes will

Matheson Electronics has just developed a new electronic device it believes will have broad market appeal. The company has performed marketing and cost studies that revealed the following information:...

Q: Piedmont Company segments its business into two regions—North and South

Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format segmented income statement as shown below: Required: 1. Comput...

Q: Shannon Company segments its income statement into its North and South Divisions

Shannon Company segments its income statement into its North and South Divisions. The company’s overall sales, contribution margin ratio, and net operating income are $500,000, 46%, and $10,000, respe...

Q: Crossfire Company segments its business into two regions—East and West

Crossfire Company segments its business into two regions—East and West. The company prepared a contribution format segmented income statement as shown below: Required: 1. Compute t...

Q: Raner, Harris & Chan is a consulting firm that specializes in

Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis....

Q: Refer to the data in Exercise 8. Assume that Minneapolis’ sales

Refer to the data in Exercise 8. Assume that Minneapolis’ sales by major market are: The company would like to initiate an intensive advertising campaign in one of the two market s...

Q: Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant

Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below: Janet Dunn, wh...

Q: Outdoor Luggage, Inc., makes high-end hard-sided

Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports equipment. Data concerning three of the company’s most popular models appear below. Required: 1. If we assume tha...

Q: Portsmouth Company makes fine colonial reproduction furniture. Upholstered furniture is one

Portsmouth Company makes fine colonial reproduction furniture. Upholstered furniture is one of its major product lines and the bottleneck on this production line is time in the upholstery shop. Uphols...

Q: Benoit Company produces three products—A, B, and C

Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit): The company estimates that it can sell 800 units of each product per month....

Q: Apple offers extended service contracts that provide repair coverage for its products

Apple offers extended service contracts that provide repair coverage for its products. As you complete the following requirements, assume that Apple’s repair services department uses many of the compa...

Q: Colt Company owns a machine that can produce two specialized products.

Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is two units per hour and for Product MTV is five units per hour. The machine’s...

Q: Phoenix Company’s 2015 master budget included the following fixed budget report.

Phoenix Company’s 2015 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. Required 1. Classify all it...

Q: Edgerron Company is able to produce two products, G and B

Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available. The company presently operates the machine for a single eight...

Q: Sung Company is able to produce two products, R and T

Sung Company is able to produce two products, R and T, with the same machine in its factory. The following information is available. The company presently operates the machine for a single eight-hou...

Q: Zhao Co. has fixed costs of $354,000.

Zhao Co. has fixed costs of $354,000. Its single product sells for $175 per unit, and variable costs are $116 per unit. The company expects sales of 10,000 units. Prepare a contribution margin income...

Q: US-Mobile manufactures and sells two products, tablet computers and

US-Mobile manufactures and sells two products, tablet computers and smartphones, in the ratio of 5:3. Fixed costs are $105,000, and the contribution margin per composite unit is $125. What number of e...

Q: Singh Co. reports a contribution margin of $960,000

Singh Co. reports a contribution margin of $960,000 and fixed costs of $720,000. (1) Compute the company’s degree of operating leverage. (2) If sales increase by 15%, what amount of income will Sing...

Q: Compute and interpret the contribution margin ratio using the following data:

Compute and interpret the contribution margin ratio using the following data: sales, $5,000; total variable cost, $3,000.

Q: SBD Phone Company sells its waterproof phone case for $90 per

SBD Phone Company sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per unit. Determine the (1) contribution margin per unit and (2) break-even...

Q: SBD Phone Company sells its waterproof phone case for $90 per

SBD Phone Company sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per unit. Determine the (1) contribution margin ratio and (2) break-even poin...

Q: Excel Memory Company can sell all units of computer memory X and

Excel Memory Company can sell all units of computer memory X and Y that it can produce, but it has limited production capacity. It can produce two units of X per hour or three units of Y per hour, and...

Q: A recent income statement for Volkswagen reports the following (in €

A recent income statement for Volkswagen reports the following (in € millions). Assume 75 percent of the cost of sales and 75 percent of the selling and administrative costs are varia...

Q: The following costs result from the production and sale of 1,

The following costs result from the production and sale of 1,000 drum sets manufactured by Tight Drums Company for the year ended December 31, 2015. The drum sets sell for $500 each. The company has a...

Q: Praveen Co. manufactures and markets a number of rope products.

Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since P...

Q: Astro Co. sold 20,000 units of its only product

Astro Co. sold 20,000 units of its only product and incurred a $50,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2016’s activities,...

Q: Henna Co. produces and sells two products, T and O

Henna Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company...

Q: This year Burchard Company sold 40,000 units of its only

This year Burchard Company sold 40,000 units of its only product for $25 per unit. Manufacturing and selling the product required $200,000 of fixed manufacturing costs and $325,000 of fixed selling an...

Q: The following costs result from the production and sale of 12,

The following costs result from the production and sale of 12,000 CD sets manufactured by Gilmore Company for the year ended December 31, 2015. The CD sets sell for $18 each. The company has a 25% inc...

Q: Hip-Hop Co. manufactures and markets several products. Management

Hip-Hop Co. manufactures and markets several products. Management is considering the future of one product, electronic keyboards, that has not been as profitable as planned. Since this product is manu...

Q: Rivera Co. sold 20,000 units of its only product

Rivera Co. sold 20,000 units of its only product and incurred a $50,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2016’s activities...

Q: Stam Co. produces and sells two products, BB and TT

Stam Co. produces and sells two products, BB and TT. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company...

Q: This year Best Company earned a disappointing 5.6% after

This year Best Company earned a disappointing 5.6% after-tax return on sales (net income/sales) from marketing 100,000 units of its only product. The company buys its product in bulk and repackages it...

Q: Bloom Company management predicts that it will incur fixed costs of $

Bloom Company management predicts that it will incur fixed costs of $160,000 and earn pretax income of $164,000 in the next period. Its expected contribution margin ratio is 25%. Use this information...

Q: Cooper Company expects to sell 200,000 units of its product

Cooper Company expects to sell 200,000 units of its product next year, which would generate total sales of $17 million. Management predicts that pretax net income for next year will be $1,250,000 and...

Q: Refer to the information in Exercise 21-16. Assume the

Refer to the information in Exercise 21-16. Assume the company is considering investing in a new machine that will increase its fixed costs by $40,500 per year and decrease its variable costs by $9 pe...

Q: Refer to the information in Exercise 21-16. If the

Refer to the information in Exercise 21-16. If the company raises its selling price to $240 per unit, compute its (1) contribution margin per unit, (2) contribution margin ratio, (3) break-even point...

Q: Refer to the information in Exercise 21-16. The marketing

Refer to the information in Exercise 21-16. The marketing manager believes that increasing advertising costs by $81,000 in 2016 will increase the company’s sales volume to 11,000 uni...

Q: Nombre Company management predicts $390,000 of variable costs,

Nombre Company management predicts $390,000 of variable costs, $430,000 of fixed costs, and a pretax income of $155,000 in the next period. Management also predicts that the contribution margin per un...

Q: Refer to the information in Exercise 21-16. 1

Refer to the information in Exercise 21-16. 1. Compute the company’s degree of operating leverage for 2015. 2. If sales decrease by 5% in 2016, what will be the companyâ€&...

Q: A jeans maker is designing a new line of jeans called Slims

A jeans maker is designing a new line of jeans called Slims. The jeans will sell for $205 per pair and cost $164 per pair in variable costs to make. 1. Compute the contribution margin per pair. 2. Com...

Q: Refer to the information in Exercise 21-16. 1

Refer to the information in Exercise 21-16. 1. Assume Hudson Co. has a target pretax income of $162,000 for 2016. What amount of sales (in dollars) is needed to produce this target income? 2. If Hudso...

Q: Hudson Co. reports the contribution margin income statement for 2015 below

Hudson Co. reports the contribution margin income statement for 2015 below. Using this information, compute Hudson Co.’s (1) break-even point in units and (2) break-even point in sal...

Q: Easton Corporation makes two different boat anchors—a traditional fishing anchor

Easton Corporation makes two different boat anchors—a traditional fishing anchor and a high-end yacht anchor—using the same production machinery. The contribution margin of the yacht anchor is three t...

Q: Bill Johnson, sales manager, and Diane Buswell, controller,

Bill Johnson, sales manager, and Diane Buswell, controller, at Current Designs are beginning to analyze the cost considerations for one of the composite models of the kayak division. They have provide...

Q: The condensed income statement for the Peri and Paul partnership for 2014

The condensed income statement for the Peri and Paul partnership for 2014 is as follows. A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the selling expens...

Q: The Coca-Cola Company hardly needs an introduction. A line

The Coca-Cola Company hardly needs an introduction. A line taken from the cover of a recent annual report says it all: If you measured time in servings of Coca-Cola, “a billion CocaCola’s ago was yest...

Q: Current Designs manufactures two different types of kayaks, rotomolded kayaks and

Current Designs manufactures two different types of kayaks, rotomolded kayaks and composite kayaks. The following information is available for each product line. The company’s fixed costs are $820,000...

Q: E-Z Seats manufactures swivel seats for customized vans. It

E-Z Seats manufactures swivel seats for customized vans. It currently manufactures 10,000 seats per year, which it sells for $500 per seat. It incurs variable costs of $200 per seat and fixed costs of...

Q: For nearly 20 years, Specialized Coatings has provided painting and galvanizing

For nearly 20 years, Specialized Coatings has provided painting and galvanizing services for manufacturers in its region. Manufacturers of various metal products have relied on the quality and quick t...

Q: In a recent report, the Del Monte Foods Company reported three

In a recent report, the Del Monte Foods Company reported three separate operating segments: consumer products (which includes a variety of canned foods including tuna, fruit, and vegetables); pet prod...

Q: The external financial statements published by publicly traded companies are based on

The external financial statements published by publicly traded companies are based on absorption cost accounting. As a consequence, it is very difficult to gain an understanding of the relative compos...

Q: Peine Candle Supply makes candles. The sales mix (as a

Peine Candle Supply makes candles. The sales mix (as a percentage of total dollar sales) of its three product lines is birthday candles 30%, standard tapered candles 50%, and large scented candles 20%...

Q: Mozena Corporation has collected the following information after its first year of

Mozena Corporation has collected the following information after its first year of sales. Sales were $1,500,000 on 100,000 units; selling expenses $250,000 (40% variable and 60% fixed); direct materia...

Q: Kaiser Industries carries no inventories. Its product is manufactured only when

Kaiser Industries carries no inventories. Its product is manufactured only when a customer’s order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31, 2...

Q: Lorge Corporation has collected the following information after its first year of

Lorge Corporation has collected the following information after its first year of sales. Sales were $1,500,000 on 100,000 units; selling expenses $250,000 (40% variable and 60% fixed); direct material...

Q: Tanek Industries manufactures and sells three different models of wet-dry

Tanek Industries manufactures and sells three different models of wet-dry shop vacuum cleaners. Although the shop vacs vary in terms of quality and features, all are good sellers. Tanek is currently o...

Q: : The Hillside Inn is a restaurant in Flagstaff, Arizona.

The Hillside Inn is a restaurant in Flagstaff, Arizona. It specializes in southwestern style meals in a moderate price range. Phil Weld, the manager of Hillside, has determined that during the last 2...

Q: The following CVP income statements are available for Viejo Company and Nuevo

The following CVP income statements are available for Viejo Company and Nuevo Company. Instructions: (a) Compute the break-even point in dollars and the margin of safety ratio for each company. (b)...

Q: Isaac Corporation has collected the following information after its first year of

Isaac Corporation has collected the following information after its first year of sales. Sales were $1,800,000 on 100,000 units; selling expenses $400,000 (30% variable and 70% fixed); direct material...

Q: Mega Electronix carries no inventories. Its product is manufactured only when

Mega Electronix carries no inventories. Its product is manufactured only when a customer’s order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31, 201...

Q: Huber Corporation has collected the following information after its first year of

Huber Corporation has collected the following information after its first year of sales. Sales were $1,000,000 on 40,000 units; selling expenses $200,000 (30% variable and 70% fixed); direct materials...

Q: Keppel Corporation manufactures and sells three different models of exterior doors.

Keppel Corporation manufactures and sells three different models of exterior doors. Although the doors vary in terms of quality and features, all are good sellers. Keppel is currently operating at ful...

Q: The Eatery is a restaurant in DeKalb, Illinois. It specializes

The Eatery is a restaurant in DeKalb, Illinois. It specializes in deluxe sandwiches in a moderate price range. Michael Raye, the manager of The Eatery, has determined that during the last 2 years the...

Q: The following variable costing income statements are available for Lyte Company and

The following variable costing income statements are available for Lyte Company and Darke Company. Instructions: (a) Compute the break-even point in dollars and the margin of safety ratio for each c...

Q: Presented on the next page are variable costing income statements for Logan

Presented on the next page are variable costing income statements for Logan Company and Morgan Company. They are in the same industry, with the same net incomes, but different cost structures. Compu...

Q: Faune Furniture Co. consists of two divisions, Bedroom Division and

Faune Furniture Co. consists of two divisions, Bedroom Division and Dining Room Division. The results of operations for the most recent quarter are: (a) Determine the company’s sal...

Q: Ger Corporation manufactures two products with the following characteristics.

Ger Corporation manufactures two products with the following characteristics. If Ger’s machine hours are limited to 2,000 per month, determine which product it should produce.

Q: Presto Company makes radios that sell for $30 each. For

Presto Company makes radios that sell for $30 each. For the coming year, management expects fixed costs to total $220,000 and variable costs to be $18 per unit. (a) Compute the break-even point in dol...

Q: Queensland Company reports the following operating results for the month of April

Queensland Company reports the following operating results for the month of April. Management is considering the following course of action to increase net income: Reduce the selling price by 4%, wi...

Q: Eye Spy Corporation manufactures and sells three different types of binoculars.

Eye Spy Corporation manufactures and sells three different types of binoculars. They are referred to as Good, Better, and Best binoculars. Grinding and polishing time is limited. More time is required...

Q: Determine the missing amounts. /

Determine the missing amounts.

Q: For Flynn Company, variable costs are 70% of sales,

For Flynn Company, variable costs are 70% of sales, and fixed costs are $195,000. Management’s net income goal is $75,000. Compute the required sales in dollars needed to achieve management’s target n...

Q: Determine the missing amounts. /

Determine the missing amounts.

Q: Rice Company has a unit selling price of $520, variable

Rice Company has a unit selling price of $520, variable costs per unit of $286, and fixed costs of $163,800. Compute the break-even point in units using (a) the mathematical equation and (b) contribut...

Q: In Briggs Company, data concerning two products are contribution margin per

In Briggs Company, data concerning two products are contribution margin per unit—Product A $12, Product B $15; machine hours required for one unit—Product A 2, Product B 3. Compute the contribution ma...

Q: Sam’s Shingle Corporation is considering the purchase of a new automated shingle

Sam’s Shingle Corporation is considering the purchase of a new automated shingle-cutting machine. The new machine will reduce variable labor costs but will increase depreciation expense. Contribution...

Q: Dilts Company has a unit selling price of $400, variable

Dilts Company has a unit selling price of $400, variable costs per unit of $250, and fixed costs of $210,000. Compute the break-even point in units using (a) the mathematical equation and (b) contribu...

Q: How is the contribution margin per unit of limited resource computed?

How is the contribution margin per unit of limited resource computed?

Q: Performance Company sells two types of performance tires. The lower-

Performance Company sells two types of performance tires. The lower-priced model is guaranteed for only 50,000 miles; the higher-priced model is guaranteed for 150,000 miles. The unit contribution mar...

Q: Amanda Inc. sold 10,000 units and recorded sales of

Amanda Inc. sold 10,000 units and recorded sales of $400,000 for the first month of 2014. In making the sales, the company incurred the following costs and expenses. (a) Prepare a CVP income stateme...

Q: Your roommate asks for your help on the following questions about CVP

Your roommate asks for your help on the following questions about CVP analysis formulas. (a) How can the mathematical equation for break-even sales show both sales units and sales dollars? (b) How do...

Q: Faye Dunn defines contribution margin as the amount of profit available to

Faye Dunn defines contribution margin as the amount of profit available to cover operating expenses. Is there any truth in this definition? Discuss.

Q: Marshall Company’s GWhiz calculator sells for $40. Variable costs per

Marshall Company’s GWhiz calculator sells for $40. Variable costs per unit are estimated to be $26. What are the contribution margin per unit and the contribution margin ratio?

Q: Total fixed costs are $26,000 for Daz Inc.

Total fixed costs are $26,000 for Daz Inc. It has a contribution margin per unit of $15, and a contribution margin ratio of 25%. Compute the break-even sales in dollars.

Q: In the month of March, Style Salon services 560 clients at

In the month of March, Style Salon services 560 clients at an average price of $120. During the month, fixed costs were $21,024 and variable costs were 60% of sales. Instructions: (a) Determine the c...

Q: Kare Kars provides shuttle service between four hotels near a medical center

Kare Kars provides shuttle service between four hotels near a medical center and an international airport. Kare Kars uses two 10-passenger vans to offer 12 round trips per day. A recent monthâ&#...

Q: In 2013, Manhoff Company had a break-even point of

In 2013, Manhoff Company had a break-even point of $350,000 based on a selling price of $5 per unit and fixed costs of $112,000. In 2014, the selling price and the variable costs per unit did not chan...

Q: Cannes Company has the following information available for September 2014.

Cannes Company has the following information available for September 2014. Unit selling price of video game consoles ……………………………$ 400 Unit variable costs ……………………………………………………………..$ 275 Total fixed co...

Q: Oak Bucket Co., a manufacturer of wood buckets, had the

Oak Bucket Co., a manufacturer of wood buckets, had the following data for 2013: Sales …………………………………..2,600 units Sales price …………………………$40 per unit Variable costs …………………….$16 per unit Fixed costs …...

Q: Personal Electronix sells iPads and iPods. The business is divided into

Personal Electronix sells iPads and iPods. The business is divided into two divisions along product lines. CVP income statements for a recent quarter’s activity are presented below....

Q: Spencer Company manufactures and sells three products. Relevant per unit data

Spencer Company manufactures and sells three products. Relevant per unit data concerning each product are given below. Instructions: (a) Compute the contribution margin per unit of the limited resou...

Q: Dalton Inc. produces and sells three products. Unit data concerning

Dalton Inc. produces and sells three products. Unit data concerning each product is shown below. The company has 2,000 hours of labor available to build inventory in anticipation of the company&acir...

Q: Billings Company manufactures and sells two products. Relevant per unit data

Billings Company manufactures and sells two products. Relevant per unit data concerning each product follow. Instructions: (a) Compute the contribution margin per machine hour for each product. (b)...

Q: The CVP income statements shown below are available for Armstrong Company and

The CVP income statements shown below are available for Armstrong Company and Contador Company. Instructions: (a) Compute the degree of operating leverage for each company and interpret your results...

Q: Arquitectos Interiores of Juarez, Mexico, is contemplating a major change

Arquitectos Interiores of Juarez, Mexico, is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled draftsmen. Alfonso Jiminez, Arquitectos&aci...

Q: An investment banker is analyzing two companies that specialize in the production

An investment banker is analyzing two companies that specialize in the production and sale of candied yams. Traditional Yams uses a labor-intensive approach, and Auto-Yams uses a mechanized system. CV...

Q: In the month of June, Jose Hebert’s Beauty Salon gave 4

In the month of June, Jose Hebert’s Beauty Salon gave 4,000 haircuts, shampoos, and permanents at an average price of $30. During the month, fixed costs were $16,800 and variable costs were 75% of sal...

Q: Comfi Airways, Inc., a small two-plane passenger airline

Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Comfi...

Q: Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws.

Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws. Its sales mix and contribution margin per unit are as follows. Yard Tools has fixed costs of $4,200,000. Instructions: Compute the...

Q: Qwik Repairs has over 200 auto-maintenance service outlets nationwide.

Qwik Repairs has over 200 auto-maintenance service outlets nationwide. It provides primarily two lines of service: oil changes and brake repair. Oil change–related services represent 70% of its sales...

Q: Palmer Golf Accessories sells golf shoes, gloves, and a laser

Palmer Golf Accessories sells golf shoes, gloves, and a laser-guided range-finder that measures distance. Shown below are unit cost and sales data. Fixed costs are $630,000 Instructions: (a) Comput...

Q: Larissa Company has a unit selling price of $250, variable

Larissa Company has a unit selling price of $250, variable costs per unit of $170, and fixed costs of $140,000. Compute the break-even point in units using (a) the mathematical equation and (b) cont...

Q: Deitz Inc. has three divisions which are operated as profit centers

Deitz Inc. has three divisions which are operated as profit centers. Actual operating data for the divisions listed alphabetically are as follows. Instructions: (a) Compute the missing amounts. Show...

Q: The West Division of Nieto Company reported the following data for the

The West Division of Nieto Company reported the following data for the current year. Sales …………………………………..$3,000,000 Variable costs ………………………..1,980,000 Controllable fixed costs ……………600,000 Average...

Q: Presented below is selected information for three regional divisions of Medina Company

Presented below is selected information for three regional divisions of Medina Company. Instructions: (a) Compute the return on investment for each division. (b) Compute the residual income for each...

Q: Presented below is selected financial information for two divisions of Yono Brewing

Presented below is selected financial information for two divisions of Yono Brewing. Instructions: Supply the missing information for the lettered items.

Q: Green Pastures is a 400-acre farm on the outskirts of

Green Pastures is a 400-acre farm on the outskirts of the Kentucky Bluegrass, specializing in the boarding of broodmares and their foals. A recent economic downturn in the thoroughbred industry has le...

Q: Data for the investment centers for Kaspar Company are given in BE22

Data for the investment centers for Kaspar Company are given in BE22-9. The centers expect the following changes in the next year: (I) increase sales 15%; (II) decrease costs $400,000; (III) decrea...

Q: Suppan Company manufactures a variety of tools and industrial equipment. The

Suppan Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for t...

Q: Panda Corporation has four operating divisions. During the first quarter of

Panda Corporation has four operating divisions. During the first quarter of 2014, the company reported aggregate income from operations of $129,000 and the divisional results shown below. Analysis r...

Q: The service division of Raney Industries reported the following results for 2013

The service division of Raney Industries reported the following results for 2013. Sales ………………………………………………………$500,000 Variable costs ……………………………………………300,000 Controllable fixed costs ………………………………. 75...

Q: Cawley Company makes three models of tasers. Information on the three

Cawley Company makes three models of tasers. Information on the three products is given below. Fixed expenses consist of $300,000 of common costs allocated to the three products based on relative sa...

Q: Texas-Q Company produces and sells barbeque grills. Texas-

Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects...

Q: Suppose that Larimer Company sells a product for $24. Unit

Suppose that Larimer Company sells a product for $24. Unit costs are as follows: Direct materials …………………………………………………………$4.98 Direct labor …………………………………………………………………..2.10 Variable factory overhead ……...

Q: Basu Company produces two types of sleds for playing in the snow

Basu Company produces two types of sleds for playing in the snow: basic sled and aerosled. The projected income for the coming year, segmented by product line, follows: The selling prices are $30 fo...

Q: Candyland Inc. produces a particularly rich praline fudge. Each 10

Candyland Inc. produces a particularly rich praline fudge. Each 10-ounce box sells for $5.60. Variable unit costs are as follows: Pecans ………………………………………..$0.70 Sugar ……………………………………………0.35 Butter …………...

Q: FunTime Company produces three lines of greeting cards: scented, musical

FunTime Company produces three lines of greeting cards: scented, musical, and regular. Segmented income statements for the past year are as follows: Kathy Bunker, president of FunTime, is concerne...

Q: Suppose that Kicker had the following sales and cost experience (in

Suppose that Kicker had the following sales and cost experience (in thousands of dollars) for May of the current year and for May of the prior year: In May of the prior year, Kicker started an int...

Q: AudioMart is a retailer of radios, stereos, and televisions.

AudioMart is a retailer of radios, stereos, and televisions. The store carries two portable sound systems that have radios, tape players, and speakers. System A, of slightly higher quality than System...

Q: Refer to the information for Hickory Company above. Hickory’s management is

Refer to the information for Hickory Company above. Hickory’s management is deciding whether to keep or drop the parquet product line. Hickory’s parquet flooring pr...

Q: Chillmax Company plans to sell 3,500 pairs of shoes at

Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling...

Q: Suppose that Chillmax Company now sells both pairs of shoes and fabric

Suppose that Chillmax Company now sells both pairs of shoes and fabric carryalls. The pairs of shoes are priced at $60 and have variable costs of $21 each. The carryalls are priced at $36 and have var...

Q: Refer to the information for Mullett Marina above. Mullett’s management is

Refer to the information for Mullett Marina above. Mullett’s management is deciding whether to keep or drop the Boat Maintenance service line. Mullett’s Boat Mainte...

Q: Refer to the information for Mullett Marina above. Relevant fixed costs

Refer to the information for Mullett Marina above. Relevant fixed costs associated with this line include 60% of Boat Maintenance’s garage/warehouse rent and 50% of Boat Maintenance&...

Q: Refer to the information for Relax Spas above. Assume that there

Refer to the information for Relax Spas above. Assume that there are no other constraints. Required: 1. What is the contribution margin per hour of masseuse time for each type of massage? 2. What is...

Q: Refer to the information for Relax Spas above. Assume that a

Refer to the information for Relax Spas above. Assume that a maximum of 8,000 massages of each type can be sold. Required: 1. What is the contribution margin per hour of masseuse time for each type o...

Q: Chillmax Company plans to sell 3,500 pairs of shoes at

Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals $78,...

Q: The controller of Ashton Company prepared the following projected income statement:

The controller of Ashton Company prepared the following projected income statement: Sales ……………………………………………………..$88,000 Total variable cost ……………………………………23,760 Contribution margin ………………………………$64,24...

Q: Information on four independent companies follows. Calculate the correct amount for

Information on four independent companies follows. Calculate the correct amount for each question mark. (Note: Round unit dollar amounts and ratios to two decimal places; round break-even units to the...

Q: Refer to the information for Cherry Blossom Products on the previous page

Refer to the information for Cherry Blossom Products on the previous page. Suppose that in the coming year, the company plans to produce an extra-thick yoga mat for sale to health clubs. The company e...

Q: Chillmax Company plans to sell 3,500 pairs of shoes at

Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals $78,...

Q: Chillmax Company now sells both pairs of shoes and carryalls. Next

Chillmax Company now sells both pairs of shoes and carryalls. Next year, Chillmax expects to produce total revenue of $210,000 and incur total variable cost of $81,375. Total fixed cost is expected to...

Q: Chillmax Company plans to sell 3,500 pairs of casual shoes

Chillmax Company plans to sell 3,500 pairs of casual shoes at $60 each in the coming year. Product costs include: Direct materials per pair …………………………………..$12 Direct labor per pair ……………………………………………4...

Q: Chillmax Company plans to sell 3,500 pairs of shoes at

Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling...

Q: Chillmax Company plans to sell 3,500 pairs of shoes at

Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling...

Q: Valencia Products is a decentralized organization that evaluates divisional management

Valencia Products is a decentralized organization that evaluates divisional management based on measures of divisional contribution margin. Consumer Audio (CA) Division and Auto Electronics (AE) Divis...

Q: Cherry Blossom Products Inc. produces and sells yoga-training products: how-to

Cherry Blossom Products Inc. produces and sells yoga-training products: how-to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Cherry Blossom Products sold 13,500 DVDs an...

Q: Texas-Q Company produces and sells barbeque grills. Texas-Q sells three

Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects...

Q: Suppose that Kicker had the following sales and cost experience

Suppose that Kicker had the following sales and cost experience (in thousands of dollars) for May of the current year and for May of the prior year:In May of the prior year, Kicker started an intensiv...

Q: Top Cap Co. is evaluating the purchase of another sewing

Top Cap Co. is evaluating the purchase of another sewing machine that will be used to manufacture sport caps. The invoice price of the machine is $208,000. In addition, delivery and installation costs...

Q: Shown here is an income statement in the traditional format

Shown here is an income statement in the traditional format for a firm with a sales volume of 20,000 units:Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: High Flight Toys manufactures frisbees. The following information is available

High Flight Toys manufactures frisbees. The following information is available for 2010, the company’s first year in business when it produced 300,000 units. Revenue of $480,000 was...

Q: Gutierrez Company has four operating divisions. During the first quarter

Gutierrez Company has four operating divisions. During the first quarter of 2014, the company reported aggregate income from operations of $213,000 and the following divisional results.Discontinuance...

Q: Jorge Company bottles and distributes B-Lite, a diet soft drink.

Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 75 cents per bottle. For the year 2014, manage...

Q: All Frute Company bottles and distributes Frute Ade, a fruit

All Frute Company bottles and distributes Frute Ade, a fruit drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 70 cents per bottle. For the year 2014, man...

Q: Tilda Manufacturing is a manufacturer of electronics components. Income data for

Tilda Manufacturing is a manufacturer of electronics components. Income data for one of the products (XT-107) for the month just ended are as follows: Tilda has capacity to produce 250,000 units eac...

Q: Marron, Inc. produces the basic fillings used in many popular

Marron, Inc. produces the basic fillings used in many popular frozen desserts and treats—vanilla and chocolate ice creams, puddings, meringues, and fudge. Marron uses standard costin...

Q: Sol Electronics, a fast-growing electronic device producer, uses

Sol Electronics, a fast-growing electronic device producer, uses a standard costing system, with standards set at the beginning of each year. In the second quarter of 2015, Sol faced two challenges: i...

Q: The Clarkson Company produces engine parts for car manufacturers. A new

The Clarkson Company produces engine parts for car manufacturers. A new accountant intern at Clarkson has accidentally deleted the calculations on the company’s variance analysis cal...

Q: CVP computations. Patel Manufacturing sold 200,000 units of its

CVP computations. Patel Manufacturing sold 200,000 units of its product for $30 per unit. Variable cost per unit is $25 and total fixed costs are $800,000. Required: 1.Calculate (a) contribution marg...

Q: (CMA, adapted) Marston Corporation manufactures pharmaceutical products that are

(CMA, adapted) Marston Corporation manufactures pharmaceutical products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The statement of comprehensiv...

Q: Stevie McQueen has run Lightning Car Detailing for the past 10 years

Stevie McQueen has run Lightning Car Detailing for the past 10 years. His static-budget and actual results for June 2015 are provided below. Stevie has one employee who has been with him for all 10 ye...

Q: A number of terms are listed below: contribution margin

A number of terms are listed below: contribution margin ………………………cost–volume–profit analysis capital intensive …………………………………………..operating leverage gross margin …………………………………………………………….sales mix cont...

Q: Beans Unlimited sells specialty coffees in 1-kilogram packages. Fixed

Beans Unlimited sells specialty coffees in 1-kilogram packages. Fixed costs are budgeted at $730,000 per year. For the upcoming year, revenues are forecasted to be $3,240,000 (selling price is $36 per...

Q: Saunders’ Electronics had the following results for the year just ended:

Saunders’ Electronics had the following results for the year just ended: Jeff Saunders, the owner of the store, is unhappy with the operating results. An analysis of other operat...

Q: Durdon Snowboards sells two models of snowboards: the Men’s Dominator and

Durdon Snowboards sells two models of snowboards: the Men’s Dominator and the Ladies’ Luxury. Information on the two models of snowboards follows: Durdonâ&...

Q: Ronowski Company has three product lines of belts, A, B

Ronowski Company has three product lines of belts, A, B, and C, with contribution margins of $3.60, $2.40, and $1.20 respectively. The president forecasts sales of 200,000 units in the coming period,...

Q: Brabham Enterprises manufactures tires for the Formula I motor racing circuit.

Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2015, it budgeted to manufacture and sell 3,000 tires at a variable cost of $74 per tire and total fixed costs...

Q: The Penguins play in the North American Ice Hockey League. The

The Penguins play in the North American Ice Hockey League. The Penguins play in the Downtown Arena (owned and managed by the City of Downtown), which has a capacity of 15,000 seats (5,000 lower-tier s...

Q: The Guangzhou Corporation (GC) sells two brands of wine glasses

The Guangzhou Corporation (GC) sells two brands of wine glasses, Plain and Chic. GC provides the following information for sales in the month of June 2015: Static-budget total contribution margin ………...

Q: Sandy Smith, managing director of the Calgary Consulting Group, is

Sandy Smith, managing director of the Calgary Consulting Group, is examining how overhead costs behave with changes in monthly professional labour-hours billed to clients. Assume the following histori...

Q: Dave Ladouceur owns a catering company that prepares banquets and parties for

Dave Ladouceur owns a catering company that prepares banquets and parties for both individual and business functions throughout the year. His business is seasonal, with a heavy schedule during the sum...

Q: Taylor Furniture produces and sells specialty mattresses. Production is a machine

Taylor Furniture produces and sells specialty mattresses. Production is a machine-intensive process. Taylor’s variable costs are direct material costs, variable machining costs, and...

Q: Headsmart, a three-year-old company, has been

Headsmart, a three-year-old company, has been producing and selling a single type of bicycle helmet. Headsmart uses standard costing. After reviewing the statements of comprehensive income for the fir...

Q: The Beach Comber is a take-out food store at a

The Beach Comber is a take-out food store at a popular beach resort. Susan Sexton, owner of the Beach Comber, is deciding how much refrigerator space to devote to four different drinks. Pertinent data...

Q: Della Simpson Inc. sells two popular brands of cookies, Della’s

Della Simpson Inc. sells two popular brands of cookies, Della’s Delight and Bonnie’s Bourbon. Della’s Delight goes through the Mixing and Baking D...

Q: Broadway Printers operates a printing press with a monthly capacity of 2

Broadway Printers operates a printing press with a monthly capacity of 2,000 machine-hours. Broadway has two main customers: Taylor Corporation and Kelly Corporation. Data on each customer for January...

Q: Air Pacific has leased a single jet aircraft that it operates between

Air Pacific has leased a single jet aircraft that it operates between Vancouver and the Fiji Islands. Only tourist-class seats are available on its planes. An analyst has collected the following infor...

Q: Blank Slate Inc. (BSI) produces tablet computers. BSI

Blank Slate Inc. (BSI) produces tablet computers. BSI markets three different handheld models. SlatePro is a souped-up version for the executive on the go; Slate is a consumer-oriented version; and Sl...

Q: Blank Slate’s senior vice-president of marketing prepared his budget at

Blank Slate’s senior vice-president of marketing prepared his budget at the beginning of the third quarter, assuming a 25% market share based on total sales. The total tablet market was estimated by F...

Q: Debbie’s Delight Inc. operates a chain of cookie stores. Budgeted

Debbie’s Delight Inc. operates a chain of cookie stores. Budgeted and actual operating data for its three Calgary stores for August 2015 are as follows: Debbie’s...

Q: The Sherriton Hotels chain embarked on a new customer loyalty program in

The Sherriton Hotels chain embarked on a new customer loyalty program in 2015. The 2015 year-end data have been collected, and it is now time for you to determine whether the loyalty program should be...

Q: Patterson Corporation has four operating divisions. During the first quarter of

Patterson Corporation has four operating divisions. During the first quarter of 2015, the company reported total income from operations of $55,000 and the following results for each division: Furthe...

Q: Body-Builders, Inc., produces two basic types of weightlifting

Body-Builders, Inc., produces two basic types of weightlifting equipment, Model 9 and Model 14. Pertinent data are as follows The weight-lifting craze is such that enough of either Model 9 or Model...

Q: Manitoba Dairy, maker of specialty cheeses, produces a soft cheese

Manitoba Dairy, maker of specialty cheeses, produces a soft cheese from the milk of Holstein cows raised on a special corn-based diet. One kilogram of soft cheese, which has a contribution margin of $...

Q: The Montreal Company is an electronics business with eight product lines.

The Montreal Company is an electronics business with eight product lines. Income data for one of the products (XT-107) for June 2015 are: Dorval Ltd., an instruments company, has a problem with its...

Q: The Ottawa Valley Instrument Company (OVIC) consists of the semiconductor

The Ottawa Valley Instrument Company (OVIC) consists of the semiconductor division and the process-control division, each of which operates as an independent profit centre. The semiconductor division...

Q: 1. Which is the opposite of incurring an expense?

1. Which is the opposite of incurring an expense? A. Incurring an opportunity cost B. Incurring a fixed cost C. Incurring a mixed cost D. Incurring a step cost 2. When they are calculated as a perce...

Q: 1. Which is the primary concern of financial accounting?

1. Which is the primary concern of financial accounting? A. Recording financial transactions B. Identification of tax payments C. Control of costs D. Financial management decision making  2. Which go...

Q: 1. Which is the formula that food service managers use to

1. Which is the formula that food service managers use to calculate their total revenue? A. Price x Number Sold = Total Revenue B. Price / Number Sold = Total Revenue C. Number of customers x Price...

Q: 1. Which is a factor used in the food cost %,

1. Which is a factor used in the food cost %, contribution margin, and goal value analysis methods of menu analysis? A. Popularity B. Food cost % C. Contribution margin D. Variable costs 2. When usi...

Q: Spencer Kars provides shuttle service between four hotels near a medical center

Spencer Kars provides shuttle service between four hotels near a medical center and an international airport. Spencer Kars uses two 10-passenger vans to offer 12 round trips per day. A recent month&ac...

Q: Felde Bucket Co., a manufacturer of rain barrels, had the

Felde Bucket Co., a manufacturer of rain barrels, had the following data for 2019: Sales …………………………… 2,500 units Sales price ………………… $40 per unit Variable costs ……………. $24 per unit Fixed costs ………………...

Q: In 2019, Manhoff Company had a break-even point of

In 2019, Manhoff Company had a break-even point of $350,000 based on a selling price of $5 per unit and fixed costs of $112,000. In 2020, the selling price and the variable costs per unit did not chan...

Q: Horatio Inc. has three divisions which are operated as profit centers

Horatio Inc. has three divisions which are operated as profit centers. Actual operating data for the divisions listed alphabetically are as follows. Instructions a. Compute the missing amounts. Show...

Q: Presented below is selected financial information for two divisions of Samberg Brewing

Presented below is selected financial information for two divisions of Samberg Brewing. Instructions Supply the missing information for the lettered items.

Q: For the year ending December 31, 2020, Cobb Company accumulates

For the year ending December 31, 2020, Cobb Company accumulates the following data for the Plastics Division which it operates as an investment center: contribution margin—$700,000 budget, $710,000 ac...

Q: The service division of Raney Industries reported the following results for 2020

The service division of Raney Industries reported the following results for 2020. Sales ………………………………. $500,000 Variable costs …………………… 300,000 Controllable fixed costs ……… 75,000 Average operating as...

Q: For Flynn Company, variable costs are 70% of sales,

For Flynn Company, variable costs are 70% of sales, and fixed costs are $195,000. Management’s net income goal is $75,000. Compute the required sales in dollars needed to achieve management’s target n...

Q: Total fixed costs are $26,000 for Daz Inc.

Total fixed costs are $26,000 for Daz Inc. It has a unit contribution margin of $15, and a contribution margin ratio of 25%. Compute the break-even sales in dollars.

Q: The South Division of Wiig Company reported the following data for the

The South Division of Wiig Company reported the following data for the current year. Sales ………………………………….. $3,000,000 Variable costs …………………….…. 1,950,000 Controllable fixed costs ………….… 600,000 Aver...

Q: The Ferrell Transportation Company uses a responsibility reporting system to measure the

The Ferrell Transportation Company uses a responsibility reporting system to measure the performance of its three investment centers: Planes, Taxis, and Limos. Segment performance is measured using a...

Q: Jorge Company bottles and distributes B-Lite, a diet soft

Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers. For the year 2020, management estimates the following revenues and...

Q: Viejol Corporation has collected the following information after its first year of

Viejol Corporation has collected the following information after its first year of sales. Sales were $1,600,000 on 100,000 units, selling expenses $250,000 (40% variable and 60% fixed), direct materia...

Q: Kaiser Industries carries no inventories. Its product is manufactured only when

Kaiser Industries carries no inventories. Its product is manufactured only when a customer’s order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31, 2...

Q: Green Pastures is a 400-acre farm on the outskirts of

Green Pastures is a 400-acre farm on the outskirts of the Kentucky Bluegrass, specializing in the boarding of broodmares and their foals. A recent economic downturn in the thoroughbred industry has ma...

Q: Brislin Company has four operating divisions. During the first quarter of

Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $213,000 and the following divisional results. Analysis revea...

Q: Optimus Company manufactures a variety of tools and industrial equipment. The

Optimus Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for...

Q: Sentinel Industries has manufactured prefabricated houses for over 20 years. The

Sentinel Industries has manufactured prefabricated houses for over 20 years. The houses are constructed in sections to be assembled on customers’ lots. Sentinel expanded into the pre...

Q: Calloway Cab Company determines its break-even strictly on the basis

Calloway Cab Company determines its break-even strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $450,000, but 5 percent of this value is represented by depr...

Q: Air Purifier Inc. computes its break-even point strictly on

Air Purifier Inc. computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $2,450,000, but 15 percent of this value is represented by...

Q: Boise Timber Co. computes its break-even point strictly on

Boise Timber Co. computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $6,500,000, but 10 percent of this value is represented by d...

Q: Boat Refit Inc. produces and sells custom parts for powerboats.

Boat Refit Inc. produces and sells custom parts for powerboats. The company uses a costing system based on actual costs. Selected accounting and production information for fiscal 2020 is as follows: C...

Q: Portland Optics, Inc., specializes in manufacturing lenses for large telescope

Portland Optics, Inc., specializes in manufacturing lenses for large telescope cameras used in space exploration. Since the specifications for the lenses are determined by the customer and vary consid...

Q: ComfortCraft manufactures swivel seats for customized vans. It currently manufactures 20

ComfortCraft manufactures swivel seats for customized vans. It currently manufactures 20,000 seats per year, which it sells for $680 per seat. It incurs variable costs of $340 per seat and fixed costs...

Q: Capital Corporation manufactures and sells three different types of binoculars. They

Capital Corporation manufactures and sells three different types of binoculars. They are referred to as Good, Better, and Best binoculars. Grinding and polishing time is limited. More time is required...

Q: Spencer Company manufactures and sells three products. Relevant per-

Spencer Company manufactures and sells three products. Relevant per-unit data for each product follow: Calculate the contribution margin and determine the products to be manufactured. Instructions a...

Q: Dalton Company manufactures and sells two products. Relevant per-unit

Dalton Company manufactures and sells two products. Relevant per-unit data concerning each product follow: Calculate the contribution margin and determine the products to be manufactured. Instructio...

Q: Metropole Inc. can produce three different products interchangeably on two machines

Metropole Inc. can produce three different products interchangeably on two machines. The accounting department provides the following information on these products: Calculate the contribution margin a...

Q: Clarington Company makes three models of phasers. Information on the

Clarington Company makes three models of phasers. Information on the three products is given below: Prepare incremental analysis for decision to eliminate a product line. Fixed expenses consist of $...

Q: Interdesign uses 1,000 units of the component IMC2 every month

Interdesign uses 1,000 units of the component IMC2 every month to manufacture one of its products. The unit costs incurred to manufacture the component are as follows: Calculate contribution margin an...

Q: Ribeiro Manufacturing Company has four operating divisions. During the first

Ribeiro Manufacturing Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $145,000 and the following divisional results: Ca...

Q: Straus Company operates a small factory in which it manufactures two products

Straus Company operates a small factory in which it manufactures two products: A and B. Production and sales results for this year were as follows: Calculate the contribution margin and prepare increm...

Q: The Kamloops Outdoors Corporation, which produces a highly successful line of

The Kamloops Outdoors Corporation, which produces a highly successful line of summer lotions and insect repellents and sells them to wholesalers, has decided to diversify in order to stabilize its sal...

Q: Manning Industries manufactures and sells three different models of wet-dry

Manning Industries manufactures and sells three different models of wet-dry shop vacuum cleaners. Although the shop vacs vary in terms of quality and features, all are good sellers. Manning is current...

Q: Tandy Teck manufactures an electronic component for a highend computer. The

Tandy Teck manufactures an electronic component for a highend computer. The company currently sells 50,000 units a year at a price of $280 per unit. These units are produced using a machine that was p...

Q: T&G Co. manufactures three types of computer desks.

T&G Co. manufactures three types of computer desks. The income statement for the three products and the whole company is shown below: Calculate contribution margin and prepare incremental analysis...

Q: In Lebeau Company, data for the contribution margin per unit and

In Lebeau Company, data for the contribution margin per unit and machine hours per unit for two products are as follows: product A, $10 and two hours; product B, $12 and three hours. Calculate the con...

Q: Montreal Seating Co., a manufacturer of chairs, had the following

Montreal Seating Co., a manufacturer of chairs, had the following data for 2020: Determine the contribution margin ratio, break-even point in dollars, and margin of safety. Sales ……………………. 2,800 unit...

Q: YUX Corporation sells a single product for $50. Its management

YUX Corporation sells a single product for $50. Its management estimates the following revenues and costs for the year 2020: Determine the contribution margin ratio, break-even point in dollars, margi...

Q: The cycle division of TravelFast Company has the following cost data per

The cycle division of TravelFast Company has the following cost data per unit for its most recent cycle, the Roadbuster: Determine minimum transfer price under different situations. The cycle divisi...

Q: Wordsmith is a publishing company with several different book lines. Each

Wordsmith is a publishing company with several different book lines. Each line has contracts with different authors. The company also owns a printing operation called Pronto Press. The book lines and...

Q: The Atlantic Company is a multidivisional company. Its managers have full

The Atlantic Company is a multidivisional company. Its managers have full responsibility for profits and complete autonomy to accept or reject transfers from other divisions. Division A produces a sub...

Q: Cosmic Sounds is a record company with different labels. Each label

Cosmic Sounds is a record company with different labels. Each label has contracts with various recording artists. It also owns a recording studio called Blast Off. The record labels and the recording...

Q: Poole Corporation has collected the following information after its first year of

Poole Corporation has collected the following information after its first year of sales. Net sales were $1.6 million on 100,000 units, selling expenses were $240,000 (40% variable and 60% fixed), dire...

Q: The Pacific Company is a multidivisional company. Its managers have full

The Pacific Company is a multidivisional company. Its managers have full responsibility for profits and complete autonomy to accept or reject transfers from other divisions. Division A produces a sub-...

Q: Kosinksi Manufacturing carries no inventories. Its product is manufactured only when

Kosinksi Manufacturing carries no inventories. Its product is manufactured only when a customer's order is received. It is then shipped immediately after it is made. For its fiscal year ended October...

Q: The following CVP income statements are available for Oldham Company and Newton

The following CVP income statements are available for Oldham Company and Newton Company: Calculate the break-even point, margin of safety, and the degree of operating leverage and evaluate its impact...

Q: Family Furniture Co. has two divisions: bedroom division and dining

Family Furniture Co. has two divisions: bedroom division and dining room division. The results of operations for the most recent quarter are as follows: Determine weighted-average contribution margin....

Q: Russell Corporation sells three different models of mosquito “zapper.” Model

Russell Corporation sells three different models of mosquito “zapper.” Model A12 sells for $50 and has variable costs of $40. Model B22 sells for $100 and has variable costs of $70. Model C124 sells f...

Q: Presto Candle Supply makes candles. The sales mix (as a

Presto Candle Supply makes candles. The sales mix (as a percentage of total dollar sales) of its three product lines is birthday candles 30%, standard tapered candles 50%, and large scented candles 20...

Q: Vince Company has a unit selling price of $250, variable

Vince Company has a unit selling price of $250, variable cost per unit of $160, and fixed costs of $135,000. Calculate break-even point in units. Instructions Calculate the break-even point in units...

Q: Queensland Company makes radios that sell for $30 each.

Queensland Company makes radios that sell for $30 each. For the coming year, management expects fixed costs to total $200,000 and variable costs to be $20 per unit. Calculate break-even point, margin...

Q: Naylor Manufacturing Inc. sold 8,000 units and recorded sales

Naylor Manufacturing Inc. sold 8,000 units and recorded sales of $400,000 for the first month of 2020. In making the sales, the company incurred the following costs and expenses. Prepare CVP income st...

Q: Cottonwood Company reports the following operating results for the month of April

Cottonwood Company reports the following operating results for the month of April. Calculate the break-even point and margin of safety under different alternatives. Management is considering the fol...

Q: Bergen Hospital is contemplating an investment in an automated surgical system.

Bergen Hospital is contemplating an investment in an automated surgical system. Its current process relies on a number of skilled physicians. The new equipment would employ a computer robotic system o...

Q: The Creekside Inn is a restaurant that specializes in southwestern style meals

The Creekside Inn is a restaurant that specializes in southwestern style meals in a moderate price range. Terry Ducasse, the manager of Creekside, has determined that during the past two years the sal...

Q: Panciuk Company has a unit selling price of $520, variable

Panciuk Company has a unit selling price of $520, variable costs per unit of $286, and fixed costs of $163,800. Calculate the break-even point in units using (a) the mathematical equation and (b) the...

Q: Trail King manufactures mountain bikes. Its sales mix and contribution margin

Trail King manufactures mountain bikes. Its sales mix and contribution margin information per unit are as follows: Calculate the break-even point in units for a company with more than one product. I...

Q: In 2019, Demuth Company had a break-even point of

In 2019, Demuth Company had a break-even point of $350,000 based on a selling price of $5 per unit and fixed costs of $112,000. In 2020, the selling price and the variable cost per unit did not change...

Q: In the month of June, New Day Spa served 560 clients

In the month of June, New Day Spa served 560 clients at an average price of $120. During the month, fixed costs were $21,024 and variable costs were 60% of sales. Calculate the contribution margin and...

Q: Friendly Airways Inc., a small two-plane passenger airline,

Friendly Airways Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. The planes seat 10 passengers each, and they fly commuters from Frie...

Q: Current Designs manufactures two different types of kayaks: rotomoulded kayaks

Current Designs manufactures two different types of kayaks: rotomoulded kayaks and composite kayaks. The following information is available for each product line. The company's fixed costs are $820,...

Q: Determine the missing amounts: Determine missing amounts for contribution margin

Determine the missing amounts: Determine missing amounts for contribution margin.

Q: An investment banker is analyzing two companies that specialize in the production

An investment banker is analyzing two companies that specialize in the production and sale of candied apples. Old-Fashioned Apples uses a labour-intensive approach, and Mech-Apple uses a mechanized sy...

Q: Grass King manufactures lawn mowers, weed trimmers, and chainsaws.

Grass King manufactures lawn mowers, weed trimmers, and chainsaws. Grass King has fixed costs of $4.2 million. Its sales mix and contribution margin per unit are as follows: Calculate the break-even p...

Q: Rapid Auto has 200 auto-maintenance service outlets nationwide. It

Rapid Auto has 200 auto-maintenance service outlets nationwide. It provides two main lines of service: oil changes and brake repair. Oil changes and related services represent 70% of its sales and pro...

Q: Part 1 The vice-president of sales and marketing,

Part 1 The vice-president of sales and marketing, Madison Tremblay, is trying to plan for the coming year in terms of production needs to meet the forecasted sales. The board of directors is very supp...

Q: Sanjay's Shingle Corporation is considering the purchase of a new automated shingle

Sanjay's Shingle Corporation is considering the purchase of a new automated shingle-cutting machine. The new machine will reduce variable labour costs but will increase depreciation expense. The contr...

Q: Veejay Golf Accessories sells golf shoes, gloves, and a laser

Veejay Golf Accessories sells golf shoes, gloves, and a laser guided range-finder that measures distance. Shown below are unit cost and sales data: Calculate the break-even point in units for a compan...

Q: Presented below are the CVP income statements for Finch Company and Sparrow

Presented below are the CVP income statements for Finch Company and Sparrow Company. They are in the same industry, with the same operating incomes, but different cost structures. Calculate break-even...

Q: Mega Electronix sells television sets and Blu-ray DVD players.

Mega Electronix sells television sets and Blu-ray DVD players. The business is divided into two divisions along product lines. A variable cost income statement for a recent quarter's activity is prese...

Q: The CVP income statements shown below are available for Billings Company and

The CVP income statements shown below are available for Billings Company and Bozeman Company. Calculate the degree of operating leverage and evaluate the impact of alternative cost structures on opera...

Q: GoGo Ltd. manufactures three models of children's swing sets: Standard

GoGo Ltd. manufactures three models of children's swing sets: Standard, Deluxe, and Super. The Standard set is made of steel, the Deluxe set is made of aluminum, and the Super set is made of a titaniu...

Q: For Biswell Company, variable costs are 70% of sales and

For Biswell Company, variable costs are 70% of sales and fixed costs are $195,000. Calculate the required sales in dollars that are needed to achieve management's target operating income of $75,000. (...

Q: Helmetsmart, a three year-old company, has been producing

Helmetsmart, a three year-old company, has been producing and selling a single type of bicycle helmet. Helmetsmart uses standard costing. After reviewing the income statements for the first three year...

Q: Terry Lawler, managing director of the Chicago Reviewers Group, is

Terry Lawler, managing director of the Chicago Reviewers Group, is examining how overhead costs behave with changes in monthly professional labor-hours billed to clients. Assume the following historic...

Q: The Seashore Stand is a take-out food store at a

The Seashore Stand is a take-out food store at a popular beach resort. Susan Sexton, owner of the Seashore Stand, is deciding how much refrigerator space to devote to four different drinks. Pertinent...

Q: The San Carlos Company is an electronics business with eight product lines

The San Carlos Company is an electronics business with eight product lines. Income data for one of the products (XT-107) for June 2011 are as follows: Abrams, Inc., an instruments company, has a pro...

Q: Colorado Mountains Dairy, maker of specialty cheeses, produces a soft

Colorado Mountains Dairy, maker of specialty cheeses, produces a soft cheese from the milk of Holstein cows raised on a special corn-based diet. One kilogram of soft cheese, which has a contribution m...

Q: The Detroit Penguins play in the American Ice Hockey League. The

The Detroit Penguins play in the American Ice Hockey League. The Penguins play in the Downtown Arena (owned and managed by the City of Detroit), which has a capacity of 15,000 seats (5,000 lower-tier...

Q: The Jinwa Corporation sells two brands of wine glasses: Plain and

The Jinwa Corporation sells two brands of wine glasses: Plain and Chic. Jinwa provides the following information for sales in the month of June 2011: All variances are to be computed in contribution...

Q: Speed Print manufactures and sells 18,000 high-technology printing

Speed Print manufactures and sells 18,000 high-technology printing presses each year. The variable and fixed costs of rework and repair are as follows: Speed Print’s current presse...

Q: Suppose Doral Corp.’s breakeven point is revenues of $1

Suppose Doral Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000. Required: 1. Compute the contribution margin percentage. 2. Compute the selling price if variable costs are...

Q: Data 1-2-3 is a top-selling electronic

Data 1-2-3 is a top-selling electronic spreadsheet product. Data is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously pu...

Q: Lurvey Men’s Clothing’s revenues and cost data for 2011 are as follows

Lurvey Men’s Clothing’s revenues and cost data for 2011 are as follows: Mr. Lurvey, the owner of the store, is unhappy with the operating results. An analysis of...

Q: Mirabella Cosmetics manufactures and sells a face cream to small ethnic stores

Mirabella Cosmetics manufactures and sells a face cream to small ethnic stores in the greater New York area. It presents the monthly operating income statement shown here to George Lopez, a potential...

Q: Garrett Manufacturing sold 410,000 units of its product for $

Garrett Manufacturing sold 410,000 units of its product for $68 per unit in 2011. Variable cost per unit is $60 and total fixed costs are $1,640,000. Required: 1. Calculate (a) contribution margin an...

Q: Marston Corporation manufactures pharmaceutical products that are sold through a network of

Marston Corporation manufactures pharmaceutical products that are sold through a network of external sales agents. The agents are paid a commission of 18% of revenues. Marston is considering replacing...

Q: Stevie McQueen has run Lightning Car Detailing for the past 10 years

Stevie McQueen has run Lightning Car Detailing for the past 10 years. His static budget and actual results for June 2011 are provided next. Stevie has one employee who has been with him for all 10 yea...

Q: Chicago Infonautics, Inc., produces handheld Windows CE™-compatible organizers

Chicago Infonautics, Inc., produces handheld Windows CEâ„¢-compatible organizers. Chicago Infonautics markets three different handheld models: Palm Pro is a souped-up version for the e...

Q: Chicago Infonautics’ senior vice president of marketing prepared his budget at the

Chicago Infonautics’ senior vice president of marketing prepared his budget at the beginning of the third quarter assuming a 25% market share based on total sales. The total handheld-organizer market...

Q: The Split Banana, Inc., operates a chain of Italian gelato

The Split Banana, Inc., operates a chain of Italian gelato stores. Although the Split Banana charges customers the same price for all flavors, production costs vary, depending on the type of ingredien...

Q: The California Instrument Company (CIC) consists of the semiconductor division

The California Instrument Company (CIC) consists of the semiconductor division and the process-control division, each of which operates as an independent profit center. The semiconductor division empl...

Q: Sol Electronics, a fast-growing electronic device producer, uses

Sol Electronics, a fast-growing electronic device producer, uses a standard costing system, with standards set at the beginning of each year. In the second quarter of 2011, Sol faced two challenges: I...

Q: The Thomas Corporation sells 300,000 V262 valves to the automobile

The Thomas Corporation sells 300,000 V262 valves to the automobile and truck industry. Thomas has a capacity of 110,000 machine-hours and can produce 3 valves per machine-hour. V262’s contribution mar...

Q: Fun Time Toys (FTT) produces dolls in two processes:

Fun Time Toys (FTT) produces dolls in two processes: molding and assembly. FTT is currently producing two models: Chatty Chelsey and Talking Tanya. Production in the molding department is limited by t...

Q: The Clarkson Company produces engine parts for car manufacturers. A new

The Clarkson Company produces engine parts for car manufacturers. A new accountant intern at Clarkson has accidentally deleted the calculations on the company’s variance analysis cal...

Q: Marron, Inc., produces the basic fillings used in many popular

Marron, Inc., produces the basic fillings used in many popular frozen desserts and treats—vanilla and chocolate ice creams, puddings, meringues, and fudge. Marron uses standard costi...

Q: Raddington Industries produces tool and die machinery for manufacturers. In 2010

Raddington Industries produces tool and die machinery for manufacturers. In 2010, the company acquired one of its suppliers of alloy steel plates, Reigis Steel Company. In order to manage the two sepa...

Q: Alosio Manufacturing Company manufactures a variety of tools and industrial equipment.

Alosio Manufacturing Company manufactures a variety of tools and industrial equipment. The company operates three divisions. Each division is an investment centre. Operating data for the home division...

Q: South division had the following results for the year just ended:

South division had the following results for the year just ended: Compare ROI and residual income with supporting calculations. South is considering a new product line that would involve the followi...

Q: Chudzik Manufacturing Company makes garden and lawn equipment. The company operates

Chudzik Manufacturing Company makes garden and lawn equipment. The company operates through three divisions. Each division is an investment centre. Operating data for the lawn mower division for the y...

Q: Haniwall Industries has manufactured prefabricated houses for over 20 years.

Haniwall Industries has manufactured prefabricated houses for over 20 years. Calculate ROI and residual income and discuss impact on manager performance. The houses are constructed in sections that ar...

Q: Colt Division had the following results for the year just ended:

Colt Division had the following results for the year just ended: Compare ROI and residual income with supporting calculations. Colt is considering a new product line that would involve the following...

Q: Longhead Manufacturing Limited has three divisions that are operated as profit centres

Longhead Manufacturing Limited has three divisions that are operated as profit centres. Actual operating data for the divisions are as follows: Calculate missing amounts in responsibility reports for...

Q: The green division of Campana Company reported the following data for the

The green division of Campana Company reported the following data for the current year: Calculate ROI for current year and for possible future changes. Sales …………………………………………………. $3,000,000 Variable...

Q: The Transcanadian Transportation Company uses a responsibility reporting system to measure the

The Transcanadian Transportation Company uses a responsibility reporting system to measure the performance of its three investment centres: planes, taxis, and limos. It measures segment performance us...

Q: Data for the investment centres for Stahl Company are given in BE11

Data for the investment centres for Stahl Company are given in BE11.9. The centres expect the following changes in the next year: Centre I a 15% increase in sales; Centre II a $200,000 decrease in cos...

Q: The service division of Retro Industries reported the following results for 2020

The service division of Retro Industries reported the following results for 2020. Calculate ROI and expected return on investments. Sales ……………………………….. $500,000 Variable costs ……………………. 300,000 Cont...

Q: Bon Jager Inc. manufactures and sells medical devices used in cardiovascular

Bon Jager Inc. manufactures and sells medical devices used in cardiovascular surgery. The sales team consists of two salespeople, Dean and Martin. A contribution margin report by salesperson was prepa...

Q: For a recent year, McDonald’s company-owned restaurants had the

For a recent year, McDonald’s company-owned restaurants had the following sales and expenses (in millions): Sales…………………………………………………………………..$18,169.3 Food and packaging……………………………………………..$ 6,129.7 Pa...

Q: A. Young Company budgets sales of $112,900,

A. Young Company budgets sales of $112,900,000, fixed costs of $25,000,000, and variable costs of $66,611,000. What is the contribution margin ratio for Young Company? B. If the contribution margin ra...

Q: Power Train Sports Inc. manufactures and sells two styles of All

Power Train Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVs), the Mountain Monster and Desert Dragon, from a single manufacturing facility. The manufacturing facility opera...

Q: Coast to Coast Surfboards Inc. manufactures and sells two styles of

Coast to Coast Surfboards Inc. manufactures and sells two styles of surfboards, Atlantic Wave and Pacific Pounder. These surfboards are sold in two regions, East Coast and West Coast. Information abou...

Q: Havasu Off-Road Inc. manufactures and sells a variety of

Havasu Off-Road Inc. manufactures and sells a variety of commercial vehicles in the Northeast and Southwest regions. There are two salespersons assigned to each territory. Higher commission rates go t...

Q: The marketing segment sales for Cater pillar, Inc., for a

The marketing segment sales for Cater pillar, Inc., for a year follow: In addition, assume the following information: A. Use the sales information and the additional assumed information to prepare...

Q: The operating revenues of the three largest business segments for T i

The operating revenues of the three largest business segments for T i me War ner , I nc. , for a recent year follow. Each segment includes a number of businesses, examples of which are indicated in pa...

Q: Select Audio Inc. sells electronic equipment. Management decided early in

Select Audio Inc. sells electronic equipment. Management decided early in the year to reduce the price of the speakers in order to increase sales volume. As a result, for the year ended December 31, t...

Q: Based on the data in Exercise 18 prepare a contribution margin analysis

Based on the data in Exercise 18 prepare a contribution margin analysis of the variable costs for Romero Products Inc. for the year ended December 31. Data from Exercise 18: The following data for R...

Q: The management of East Coast Railroad Company introduced in Exercise 20 improved

The management of East Coast Railroad Company introduced in Exercise 20 improved the profitability of the Atlanta/Baltimore route in May by reducing the price of a railcar from $600 to $500. This pric...

Q: East Coast Railroad Company transports commodities among three routes (city-

East Coast Railroad Company transports commodities among three routes (city-pairs): Atlanta/Baltimore, Baltimore/Pittsburgh, and Pittsburgh/Atlanta. Significant costs, their cost behavior, and activit...

Q: The actual and planned data for Underwater University for the Fall term

The actual and planned data for Underwater University for the Fall term were as follows: Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs...

Q: Charles Schwab Corporation is one of the more innovative brokerage and financial

Charles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as...

Q: How is the quantity factor for an increase or a decrease in

How is the quantity factor for an increase or a decrease in the amount of sales computed in using contribution margin analysis?

Q: Discuss the two factors affecting both sales and variable costs to which

Discuss the two factors affecting both sales and variable costs to which a change in contribution margin can be attributed.

Q: Cityscape Hotels has 200 rooms available in a major metropolitan city.

Cityscape Hotels has 200 rooms available in a major metropolitan city. The hotel is able to attract business customers during the weekdays and leisure customers during the weekend. However, the leisur...

Q: Valley Power Company uses natural gas to create steam to spin turbines

Valley Power Company uses natural gas to create steam to spin turbines to generate electricity. The costs of the power plant, including depreciation, taxes, and insurance, are fixed to generating elec...

Q: Atlantis Cruise Lines offers luxury, one-week cruise packages in

Atlantis Cruise Lines offers luxury, one-week cruise packages in the Greek Aegean Sea. The ship has a capacity for 1,200 people. Atlantis averages 1,000 passengers per cruise. The price per passenger...

Q: Auto Source, Inc. designs and manufactures tires for automobiles.

Auto Source, Inc. designs and manufactures tires for automobiles. The company’s strategy is to design products that incorporate the full environmental impact of the product over its...

Q: Howard Industries Inc., operating at full capacity, sold 64,

Howard Industries Inc., operating at full capacity, sold 64,000 units at a price of $45 per unit during the current year. Its income statement is as follows: The division of costs between variable a...

Q: Pachec Inc. employs seven salespersons to sell and distribute its product

Pachec Inc. employs seven salespersons to sell and distribute its product throughout the state. Data taken from reports received from the salespersons during the year ended June 30 are as follows: I...

Q: Lanning Company sells 160,000 units at $45 per unit

Lanning Company sells 160,000 units at $45 per unit. Variable costs are $27 per unit, and fixed costs are $975,000. Determine (A) the contribution margin ratio, (B) the unit contribution margin, and (...

Q: Hughes Company has fixed costs of $3,565,000

Hughes Company has fixed costs of $3,565,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products follow: The sales mix...

Q: Kimbrell Inc. manufactures three sizes of utility tables—small (

Kimbrell Inc. manufactures three sizes of utility tables—small (S), medium (M), and large (L). The income statement has consistently indicated a net loss for the M size, and manageme...

Q: The following information is for LaPlanche Industries Inc.: /

The following information is for LaPlanche Industries Inc.: Determine the contribution margin for (A) Product YY and (B) West Region.

Q: Hercules Steel Company produces three grades of steel: high, good

Hercules Steel Company produces three grades of steel: high, good, and regular grade. Each of these products (grades) has high demand in the market, and Hercules is able to sell as much as it can prod...

Q: Mathews Company manufactures only one product. For the year ended December

Mathews Company manufactures only one product. For the year ended December 31, the contribution margin decreased by $126,000 from the planned level of $540,000. The president of Mathews Company has ex...

Q: Darby Company, operating at full capacity, sold 500,000

Darby Company, operating at full capacity, sold 500,000 units at a price of $94 per unit during the current year. Its income statement is as follows: The division of costs between variable and fixed...

Q: Walthman Industries Inc. employs seven salespersons to sell and distribute its

Walthman Industries Inc. employs seven salespersons to sell and distribute its product throughout the state. Data taken from reports received from the salespersons during the year ended December 31 ar...

Q: Valdespin Company manufactures three sizes of camping tents—small (S

Valdespin Company manufactures three sizes of camping tents—small (S), medium (M), and large (L). The income statement has consistently indicated a net loss for the M size, and manag...

Q: Farr Industries Inc. manufactures only one product. For the year

Farr Industries Inc. manufactures only one product. For the year ended December 31, the contribution margin increased by $560,000 from the planned level of $5,200,000. The president of Farr Industries...

Q: Wilmington Chemical Company produces three products: ethylene, butane, and

Wilmington Chemical Company produces three products: ethylene, butane, and ester. Each of these products has high demand in the market, and Wilmington Chemical is able to sell as much as it can produc...

Q: 1. What does break-even analysis = estimate?

1. What does break-even analysis = estimate? a. The price where supply will equal demand b. The level of sales revenue that covers variable costs c. The level of sales revenue that covers fixed cos...

Q: What will happen to the break-even point if the contribution

What will happen to the break-even point if the contribution margin rises (falls)?

Q: Goode, Billings and Prosper plc manufactures two products, Razzle and

Goode, Billings and Prosper plc manufactures two products, Razzle and Dazzle. Unit selling prices and variable costs, and daily fixed costs are: Production of the two products is restricted by limit...

Q: Butterfield Ltd manufactures a single brand of dog food called ‘Lots

Butterfield Ltd manufactures a single brand of dog food called ‘Lots O Grissle’ (LOG). Sales have stabilized for several years at a level of £20 million per annum at current prices. This level is not...

Q: The Application of Linear Programming to Management Accounting Midland Airport Ltd

The Application of Linear Programming to Management Accounting Midland Airport Ltd LEARNING OBJECTIVES: After reading this case study and completing the questions you will be able to: â€&ce...

Q: Airport Complex was founded in Northern Europe in the early 1960s,

Airport Complex was founded in Northern Europe in the early 1960s, and at the time it primarily served as a domestic airport. During the 1980s, flights to foreign destinations became an ever more vita...

Q: Professor Anthony Atkinson, (University of Waterloo) and adapted by

Professor Anthony Atkinson, (University of Waterloo) and adapted by Professor John Shank (The Amos Tuck School of Business Administration Dartmouth College) This case is reprinted from Cases in Cost M...

Q: This case was originally set in the 1960s in rural Vermont.

This case was originally set in the 1960s in rural Vermont. The Majestic Lodge is an old but well-maintained property that has changed ownership several times over the years. It has no restaurant or b...

Q: This case study is taken from Ducker, J., Head,

This case study is taken from Ducker, J., Head, A., McDonnell, B., O'Brien, R. and Richardson, S. (1998), A Creative Approach to Management Accounting: Case Studies in Management Accounting and Contro...

Q: For a recent year, McDonald’s company-owned restaurants had the

For a recent year, McDonald’s company-owned restaurants had the following sales and expenses (in millions): Assume that the variable costs consist of food and packaging, payroll, a...

Q: Reyes Industries Inc. manufactures and sells a variety of commercial vehicles

Reyes Industries Inc. manufactures and sells a variety of commercial vehicles in the North east and South west regions. There are two salespersons assigned to each territory. Higher commission rates g...

Q: Genuine Spice Inc. began operations on January 1, 2016.

Genuine Spice Inc. began operations on January 1, 2016. The company produce eight- ounce bottles of hand and body lotion called Eternal Beauty. The lotion is sold wholesale in 12-bottle cases for $100...

Q: Trans Sport Company sells sporting goods to retailers in three different states

Trans Sport Company sells sporting goods to retailers in three different states—Florida, Georgia, and Tennessee. The following profit analysis by state was prepared by the company:...

Q: Jellnick Equipment Inc. manufactures and sells kitchen cooking products throughout the

Jellnick Equipment Inc. manufactures and sells kitchen cooking products throughout the state. The company employs four salespersons. The following contribution margin by salesperson analysis was prepa...

Q: a. Segar Company budgets sales of $3,200,

a. Segar Company budgets sales of $3,200,000, fixed costs of $700,000, and variable costs of $2,240,000. What is the contribution margin ratio for Segar Company? b. If the contribution margin ratio fo...

Q: Michigan Company sells 10,000 units at $100 per unit

Michigan Company sells 10,000 units at $100 per unit. Variable costs are $75 per unit, and fixed costs are $125,000. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and...

Q: Weidner Company sells 22,000 units at $30 per unit

Weidner Company sells 22,000 units at $30 per unit. Variable costs are $24 per unit, and fixed costs are $40,000. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and...

Q: BeeGee Company, operating at full capacity, sold 150,000

BeeGee Company, operating at full capacity, sold 150,000 units at a price of $116 per unit during the current year. Its income statement is as follows: The division of costs between variable and fix...

Q: Wide Open Industries Inc. has fixed costs of $475,

Wide Open Industries Inc. has fixed costs of $475,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products follow: The s...

Q: The following information is for Olivio Coaster Bikes Inc.:

The following information is for Olivio Coaster Bikes Inc.: Determine the contribution margin for (a) Red Dream and (b) North Region.

Q: Einhorn Company has fixed costs of $105,000. The

Einhorn Company has fixed costs of $105,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products follow: The sales mix f...

Q: Please use the following link for the data http://

Please use the following link for the data http://ww2.capsim.com/cgi-bin/CpCGIReports2011.exe?studentKey=1256929&simid=C59559&round=4&Report=CapCourier|AnnReport Investing $2,000,000 in TQM's Channe...

Q: Investing $2,000,000 in TQM's Channel Support Systems

Investing $2,000,000 in TQM's Channel Support Systems initiative will at a minimum increase demand for your products 3.0% in this and in all future rounds. (Refer to the TQM Initiative worksheet in th...

Q: The Spitfire Model Airplane Company has the following modified income statement ($

The Spitfire Model Airplane Company has the following modified income statement ($000) at 100,000 units of production. a. What are Spitfire's contribution margin and dollar breakeven point? b. Calcu...

Q: Over the past few years, the marketing department at Goldston &

Over the past few years, the marketing department at Goldston & Co has convinced the finance department to permit credit sales to increasingly marginal customers. Revenue has risen as a result, but b...

Q: Joe Davies is thinking about starting a company to produce carved wooden

Joe Davies is thinking about starting a company to produce carved wooden clocks. He loves making the clocks. He sees it as an opportunity to be his own boss, making a living doing what he likes best....

Q: Explain how to calculate a weighted average contribution margin per unit.

Explain how to calculate a weighted average contribution margin per unit.

Q: All-Day Lolly Company is a wholesale distributor of confectionery.

All-Day Lolly Company is a wholesale distributor of confectionery. The entity services grocery and convenience stores in the metropolitan area. Small but steady growth in sales has been achieved by th...

Q: Vines and Daughter manufactures and sells swimsuits for $40 each.

Vines and Daughter manufactures and sells swimsuits for $40 each. The estimated income statement for 2017 is as follows: Required (a) Calculate the contribution margin per swimsuit and the number of...

Q: Pamcar Industries sell IT equipment, specialising in printers and faxes.

Pamcar Industries sell IT equipment, specialising in printers and faxes. The following statement reflects the contribution margin of each activity, and overall profit levels: Required (a) Calculate t...

Q: Laraby Company produces a single product. It sold 25 000 units

Laraby Company produces a single product. It sold 25 000 units last year with the following results. In an attempt to improve its product, Laraby’s managers are conside...

Q: Bullen & Company makes and sells upmarket carry bags for laptop computers

Bullen & Company makes and sells upmarket carry bags for laptop computers. John Crane, controller, is responsible for preparing Bullen’s master budget and has assembled the follo...

Q: Consider the following information for Morgan’s Cheese and Butter Division.

Consider the following information for Morgan’s Cheese and Butter Division. Additional information: Required (a) Calculate the market size and market share variances. (b) Comment...

Q: The Software Development Company produces computer programs on DVDs for home computers

The Software Development Company produces computer programs on DVDs for home computers. This business is highly automated, causing fixed costs to be very high, but variable costs are minimal. The enti...

Q: Elder Services is a not-for-profit entity that has

Elder Services is a not-for-profit entity that has three departments in three separate locations, in addition to the headquarters. The entity provides services for elderly clients who are still living...

Q: Rightway Printers, a book printing shop, is operating at 95

Rightway Printers, a book printing shop, is operating at 95 per cent capacity. The entity has been offered a special order for book printing at $8.50 per book; the order requires 10 per cent of capaci...

Q: Jazzy Cases manufactures several different styles of jewellery cases. Management estimates

Jazzy Cases manufactures several different styles of jewellery cases. Management estimates that during the first quarter of this year the company will operate at about 80 per cent of normal capacity....

Q: Wild Bird Feeders produces deluxe bird feeders for distribution to catalogue companies

Wild Bird Feeders produces deluxe bird feeders for distribution to catalogue companies and wild bird stores. The company uses an absorption costing system for internal reporting purposes but is consid...

Q: The accountant for Moon Industries has taken unexpected leave and has not

The accountant for Moon Industries has taken unexpected leave and has not completed the end-ofperiod budget analysis. The following incomplete budget analysis was found on her desk. Additional infor...

Q: The following data represents the flexible budget for Mountain Mist Brewery,

The following data represents the flexible budget for Mountain Mist Brewery, a boutique brewery that manufactures and sells boutique ales. Overall, the increase in the final price of beer has contri...

Q: Deluxe Tours, a tour organiser, leased a cruise liner for

Deluxe Tours, a tour organiser, leased a cruise liner for a special round-the-world tour. The lease cost is $200 000. Two classes of passengers are booked on the tour: first class and economy class. T...

Q: The Palm Oil Company buys crude coconut and palm nut oil.

The Palm Oil Company buys crude coconut and palm nut oil. Refining this oil results in four products at the split-off point: soap grade, cooking grade, light moisturiser and heavy moisturiser. Light m...

Q: Mrs Meadows sells two popular brands of biscuits, Chip Dip and

Mrs Meadows sells two popular brands of biscuits, Chip Dip and Soft Chunk Chocolate Chip. Both biscuits go through the mixing and baking departments, but Chip Dip is also dipped in chocolate in the co...

Q: Emily developed an innovative computer game, called Home By Myself (

Emily developed an innovative computer game, called Home By Myself (HBM). It was so successful that she quickly followed up with two sequels: Home By Myself II (HBM2) and Home By Myself III (HBM3). Th...

Q: Wildlife Foods prepares wild birdseed mixes and sells them to local pet

Wildlife Foods prepares wild birdseed mixes and sells them to local pet stores, grocery stores, and wild bird stores. Two types of mixes have been most successful: Flight Fancy and Multigrain. Flight...

Q: The income statement information for Kallapur and Trombley Cotton Growers follows:

The income statement information for Kallapur and Trombley Cotton Growers follows: Required (a) Using the general decision rule, which product should the entity emphasise? Support your answer with c...

Q: Juices R Us sells bottles of freshly squeezed juice to small convenience

Juices R Us sells bottles of freshly squeezed juice to small convenience stores throughout Melbourne. Its latest statement of profit or loss for the last 12 months is as follows. Required (a) Calcula...

Q: Under what circumstances can calculating the contribution margin ratio to perform break

Under what circumstances can calculating the contribution margin ratio to perform break-even analysis be useful?

Q: McDonald Services offers three core accounting and bookkeeping services. After a

McDonald Services offers three core accounting and bookkeeping services. After a cost behavior study, the following profitability analysis has been prepared. The management of McDonald Services estim...

Q: Katy Davis has had a passion for cycling for years. She

Katy Davis has had a passion for cycling for years. She has decided to explore turning her passion into a business. She has spent the last few months exploring the industry and collecting information...

Q: Continuing the example in 10.59, the other option Katy

Continuing the example in 10.59, the other option Katy is exploring is to offer a wider product range including two other specialist bikes: adult mountain bikes and adult road bikes. From her investig...

Q: Barloo Company is a software producer and sales company. Currently,

Barloo Company is a software producer and sales company. Currently, it pays all sales staff on a fixed base salary. Recently, management have been considering switching sales staff across to an incent...

Q: When is it necessary to calculate the contribution margin per limiting factor

When is it necessary to calculate the contribution margin per limiting factor?

Q: Gotrack Company produces compasses for cross-country skiing. The production

Gotrack Company produces compasses for cross-country skiing. The production capacity is 45 000 compasses and the company is currently operating at 85 per cent capacity. Variable manufacturing costs ar...

Q: IT Equip sells IT equipment, specialising in printers and projectors.

IT Equip sells IT equipment, specialising in printers and projectors. The following statement reflects the contribution margin of each activity and overall profit levels. Required (a) Calculate the c...

Q: Flash Pty Ltd manufactures handheld egg-beaters. For the first

Flash Pty Ltd manufactures handheld egg-beaters. For the first eight months of 2020, the company reports the following operating results while operating at 80 per cent capacity. Sales (400 000 units)...

Q: Advantage Tennis Coaching (ATC) has been engaged to provide tennis

Advantage Tennis Coaching (ATC) has been engaged to provide tennis coaching services to students at a local private girls’ college. ATC has put forward a proposal to the University o...

Q: The following information has been extracted from the financial statements of Vivid

The following information has been extracted from the financial statements of Vivid, a social media company. Revenue is generated through advertising on the social media platform, where the number of...

Q: Lavender Plantations Pty Ltd manufactures and sells candles, soaps and detergents

Lavender Plantations Pty Ltd manufactures and sells candles, soaps and detergents, and distributes them to stores located in Australia and New Zealand. The normal selling price per carton of candles i...

Q: Coffee House sells specialist coffee drinks from a rented cart on the

Coffee House sells specialist coffee drinks from a rented cart on the beachside on the Sunshine Coast. Provided below is a summarised version of its statement of profit or loss for July 2019. The cos...

Q: Lavender Plantations Pty Ltd manufactures three lavender-based products, candles

Lavender Plantations Pty Ltd manufactures three lavender-based products, candles, soaps and detergents. On average 75 000 candles, 50 000 soaps and 125 000 detergents are sold. Next year, the company...

Q: Tartan Company is a single-product entity and provides the summary

Tartan Company is a single-product entity and provides the summary data shown below relating to its product for 2020. Selling price per unit……………………………………………………………….. $ 50 Variable manufacturing costs...

Q: Blade Runner produces regular scooters and motorised scooters. Blade Runner scooters

Blade Runner produces regular scooters and motorised scooters. Blade Runner scooters are considered the most reliable in the marketplace. Demand has been volatile, with huge increases in demand during...

Q: Refer to the information in exercise 16.23. The following

Refer to the information in exercise 16.23. The following cost reduction suggestions were made by the kaizen costing team. Direct materials — Suppliers agreed to cost reductions of...

Q: Mirror Industries laminating division, BrightShine, incurred the following costs and

Mirror Industries laminating division, BrightShine, incurred the following costs and expenses in the last period. During the period, BrightShine produced 300 000 units of industrial phot...

Q: The accountants at French Perfumery decided to increase the price of a

The accountants at French Perfumery decided to increase the price of a scent called Breezy by 10%, from $6 per bottle to $6.60. French’s accountants expect the 10 per cent price increase to reduce uni...

Q: The furniture division of International Woodworking purchases timber and makes tables,

The furniture division of International Woodworking purchases timber and makes tables, chairs, and other wood furniture. Most of the timber is purchased from the Port Angeles Mill, also a division of...

Q: Outdoor Luggage, Inc., makes high-end hard-sided

Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports equipment. Data concerning three of the company’s most popular models appear below. Required: 1. If we assume tha...

Q: Barlow Company manufactures three products—A, B, and C

Barlow Company manufactures three products—A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: The same raw material is used...

Q: The Walton Toy Company manufactures a line of dolls and a sewing

The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company’s products is increasing, and management requests assistance from you in determining an e...

Q: Come-Clean Corporation produces a variety of cleaning compounds and solutions

Come-Clean Corporation produces a variety of cleaning compounds and solutions for both industrial and household use. While most of its products are processed independently, a few are related, such as...

Q: TufStuff, Inc., sells a wide range of drums, bins

TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry. One of the company’s products is a heavy-duty corrosion-resista...

Q: Maria Chavez owns a catering company that serves food and beverages at

Maria Chavez owns a catering company that serves food and beverages at parties and business functions. Chavez’s business is seasonal, with a heavy schedule during the summer months a...

Q: This Excel worksheet form is to be used to recreate Exhibit 1

This Excel worksheet form is to be used to recreate Exhibit 1–7. The workbook, and instructions on how to complete the file, can be found in Connect. Required: 1. Check your workshe...

Q: Endless Mountain Company manufactures a single product that is popular with outdoor

Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the Unite...

Q: Hixson Company manufactures and sells one product for $34 per unit

Hixson Company manufactures and sells one product for $34 per unit. The company maintains no beginning or ending inventories and its relevant range of production is 20,000 units to 30,000 units. When...

Q: The Alpine House, Inc. is a large retailer of snow

The Alpine House, Inc. is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: ……………………………………………………………….Amount Sales …………………………………………………………...

Q: Use the following information. McCall sells a gold-plated souvenir

Use the following information. McCall sells a gold-plated souvenir mug; McCall expects to sell 1,600 units for $45 each to earn a $25 contribution margin per unit. Janice McCall, president, expects th...

Q: Use the following information. McCall sells a gold-plated souvenir

Use the following information. McCall sells a gold-plated souvenir mug; McCall expects to sell 1,600 units for $45 each to earn a $25 contribution margin per unit. Janice McCall, president, expects th...

Q: Use the following information. McCall sells a gold-plated souvenir

Use the following information. McCall sells a gold-plated souvenir mug; McCall expects to sell 1,600 units for $45 each to earn a $25 contribution margin per unit. Janice McCall, president, expects th...

Q: Meargia Plastics is evaluating its plastic bottles division. The accounting manager

Meargia Plastics is evaluating its plastic bottles division. The accounting manager has come up with the following data for the year: contribution margin of $500,000, controllable fixed costs of $200,...

Q: Williams Inc. produces a single product, a part used in

Williams Inc. produces a single product, a part used in the manufacture of automobile transmissions. Known for its quality and performance, the part is sold to luxury auto manufacturers around the wor...

Q: The following information is available for Brownstone Products /

The following information is available for Brownstone Products Required: 1. What was the master budget variance for July, rounded to the nearest whole dollar? Was this variance favorable or unfavora...

Q: RTI Company’s master budget calls for production and sale of 18,

RTI Company’s master budget calls for production and sale of 18,000 units for $81,000, variable costs of $30,600, and fixed costs of $20,000. During the most recent period, the company incurred $32,00...

Q: The Greensboro Performing Arts Center (GPAC) has a total capacity

The Greensboro Performing Arts Center (GPAC) has a total capacity of 7,500 seats: 2,000 center seats, 2,500 side seats, and 3,000 balcony seats. The budgeted and actual tickets sold for a Broadway mus...

Q: Pack-and-Go, a new competitor to FedEx and

Pack-and-Go, a new competitor to FedEx and UPS, does intra-city package deliveries in seven major metropolitan areas. The performance of Pack-and-Go is measured by management as (1) delivery time (re...

Q: Questar Electronics, a producer of a wide range of consumer products

Questar Electronics, a producer of a wide range of consumer products, is facing increasing competitive pressures from foreign producers. In response, Questar is reexamining its overall management cont...

Q: Smith Company can produce two types of carpet cleaners, Brighter and

Smith Company can produce two types of carpet cleaners, Brighter and Cleaner. Data on these two products are as follows: The number of machine hours to produce one unit of Brighter is 1, while the n...

Q: Sandalwood Company produces various lines of high-end carpeting in its

Sandalwood Company produces various lines of high-end carpeting in its Asheville, North Carolina, plant. This question pertains to two different grades of carpet in its Symphony line: commercial and r...

Q: Doughton Bearings produces ball bearings for industrial equipment. In evaluating their

Doughton Bearings produces ball bearings for industrial equipment. In evaluating their financial data from the previous year, the accounting manager has determined that their unit sales price is $25 p...

Q: Most businesses sell several products at varying prices. The products often

Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit and the breakeven point depend on the proportions in which the pr...

Q: Horton Manufacturing Inc (HMI) is suffering from the effects of

Horton Manufacturing Inc (HMI) is suffering from the effects of increased local and global competition for its main product, a lawn mower that is sold in discount stores throughout the United States....

Q: GoGo Juice is a combination gas station and convenience store located at

GoGo Juice is a combination gas station and convenience store located at a busy intersection. Recently a national chain opened a similar store only a block away; consequently sales have decreased for...

Q: Computer Graphics (CG) is a small manufacturer of electronic products

Computer Graphics (CG) is a small manufacturer of electronic products for computers with graphics capabilities. The company has succeeded by being very innovative in product design. As a spin-off of a...

Q: Felton Paper produces paper for textbooks. Felton plans to produce 500

Felton Paper produces paper for textbooks. Felton plans to produce 500,000 cases of paper next quarter to sell at a price of $100 per case. The variable cost per case, including both manufacturing and...

Q: Hartford Publishing Company (HPC) specializes in international business news publications

Hartford Publishing Company (HPC) specializes in international business news publications. Its principal product is HPC-Monthly, which is mailed to subscribers the first week of each month. A weekly v...

Q: SolarFlex is a small but very innovative manufacturer of cutting-edge

SolarFlex is a small but very innovative manufacturer of cutting-edge solar panels. A significant portion of the company’s success is due to technologically superior product design....

Q: As a newly hired management accountant, you have been asked to

As a newly hired management accountant, you have been asked to prepare a profit plan for the company for which you work. As part of this task, you’ve been asked to do some what-if analyses. Following...

Q: Martens Inc. manufactures a variety of electronic products. It specializes

Martens Inc. manufactures a variety of electronic products. It specializes in commercial and residential products with moderate-to-large electric motors such as pumps and fans. Martens is now looking...

Q: Hillside Furniture Company makes outdoor furniture from recycled products, including plastics

Hillside Furniture Company makes outdoor furniture from recycled products, including plastics and wood by-products. Its three furniture products are gliders, chairs with footstools, and tables. The pr...

Q: Creighton Corporation produces a variety of consumer electronic products. Unit selling

Creighton Corporation produces a variety of consumer electronic products. Unit selling prices and costs for three models of one of its product lines are as follows: Variable overhead is charged to p...

Q: Let us revisit the Windbreakers Inc. situation from the chapter.

Let us revisit the Windbreakers Inc. situation from the chapter. Information from Exhibit 11.16B is reproduced below and shows the results after Gale was dropped and the avoidable marketing expenses w...

Q: Humbolt Electric manufactures electronic subcomponents that be sold at the end of

Humbolt Electric manufactures electronic subcomponents that be sold at the end of Process #1 or processed further, in Process #2, and then sold. Currently, the entire output of Process #1 can be sold...

Q: High Point Furniture Company (HPF) manufactures very high-quality

High Point Furniture Company (HPF) manufactures very high-quality furniture for sale directly to exclusive hotels, interior designers, and select retail outlets throughout the world. HPFâ€&...

Q: “I’m not looking forward to breaking the news,” groaned Charlie

“I’m not looking forward to breaking the news,” groaned Charlie Wettle, the controller of Meyer Paint Company. He and Don Smith, state liaison for...

Q: Scott Power produces batteries. Scott has determined its contribution margin to

Scott Power produces batteries. Scott has determined its contribution margin to be $8 per battery and their contribution margin ratio to be 0.4. What is the effect on operating profit from the sale of...

Q: Jay Banning, CEO and a major stockholder of Banning Inc.,

Jay Banning, CEO and a major stockholder of Banning Inc., was unhappy with its operating results for the past year. The company manufactures two environmentally friendly, industrial-caliber cleaning m...

Q: TransPacific Airlines (TPA) budgeted 80 million passenger miles, or

TransPacific Airlines (TPA) budgeted 80 million passenger miles, or 5 percent of the total market for the year just completed, at a contribution margin of 40 cents per mile. The budgeted average price...

Q: Diane’s Designs is a small business run out of its owner’s house

Diane’s Designs is a small business run out of its owner’s house. For the past 6 months, the company has been selling two products, a welcome sign and a birdhouse....

Q: Lightening Bulk Company is a moving company specializing in transporting large items

Lightening Bulk Company is a moving company specializing in transporting large items worldwide. The firm has an 85% on-time delivery rate. Thirteen percent of the items are misplaced and the remaining...

Q: Drago Company produces a line of brass-based products, one

Drago Company produces a line of brass-based products, one of which is a flow control valve (for regulating the flow of water). The production of this valve requires the use of specialized equipment b...

Q: Ajax Consolidated has several divisions; however, only two of its

Ajax Consolidated has several divisions; however, only two of its divisions transfer products to other divisions. The mining division refines toldine, which it transfers to the metals division, where...

Q: Durant Co. manufactures glass bottles for dairy products. The contribution

Durant Co. manufactures glass bottles for dairy products. The contribution margin is $0.10 per bottle. Durant just received notification that one of its orders for 100,000 bottles contained misprinted...

Q: ElecPlus Batteries has two different products, AAA and AA batteries.

ElecPlus Batteries has two different products, AAA and AA batteries. The AA batteries have a contribution margin of $1 per package, and the AAA batteries have a contribution margin of $2 per package....

Q: Jamison Health Care is trying to decide if it should eliminate its

Jamison Health Care is trying to decide if it should eliminate its orthopedic care division. Last year, the orthopedic division had a total contribution margin of $100,000 and allocated overhead costs...

Q: For a firm facing a marginal income tax rate of 34%,

For a firm facing a marginal income tax rate of 34%, what is the after-tax cash flow effect of (a) a $1,000 increase in contribution margin during the year and (b) a $500 increase in cash operating...

Q: What is the contribution margin ratio and how is it used?

What is the contribution margin ratio and how is it used?

Q: Duo Company manufactures two products, Uno and Dos. Contribution margin

Duo Company manufactures two products, Uno and Dos. Contribution margin data follow. Duo company’s production process uses highly skilled labor, which is in short supply. The same em...

Q: Refer to the data given in the exercise 14-41 for

Refer to the data given in the exercise 14-41 for Duo Company. Assume that the direct-labor rate is $24 per hour, and 10,000 labor hours are available per year. In addition, the company has a short su...

Q: Tim’s Bicycle Shop sells 21-speed bicycles. For purposes of

Tim’s Bicycle Shop sells 21-speed bicycles. For purposes of a cost-volume-profit analysis, the shop owner has divided sales into two categories, as follows: Three-quarters of the sho...

Q: Houston-based Advanced Electronics manufactures audio speakers for desktop computers.

Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 42,000 speaker sets: Managem...

Q: Dayton Lighting Company had operating income for the first 10 months of

Dayton Lighting Company had operating income for the first 10 months of the current year of $200,000. One hundred thousand units were manufactured during this period (the same as the planned productio...

Q: Cortez Enterprises has two divisions: Birmingham and Tampa. Birmingham currently

Cortez Enterprises has two divisions: Birmingham and Tampa. Birmingham currently sells a diode reducer to manufacturers of aircraft navigation systems for $775 per unit. Variable costs amount to $500,...

Q: Provo Consolidated Resources Company (PCRC) has several divisions. However

Provo Consolidated Resources Company (PCRC) has several divisions. However, only two divisions transfer products to other divisions. The Mining Division refines toldine, which is then transferred to t...

Q: Johnson and Gomez, Inc., is a small firm involved in

Johnson and Gomez, Inc., is a small firm involved in the production and sale of electronic business products. The company is well known for its attention to quality and innovation. During the past 15...

Q: Deru Chocolate Company manufactures two popular candy bars, the Venus bar

Deru Chocolate Company manufactures two popular candy bars, the Venus bar and the Comet bar. Both candy bars go through a mixing operation where the various ingredients are combined, and the Coating D...

Q: Meals for Professionals, Inc., offers monthly service plans providing prepared

Meals for Professionals, Inc., offers monthly service plans providing prepared meals that are delivered to the customers’ homes. The target market for these meal plans includes doubl...

Q: Aunt Molly’s Old Fashioned Cookies bakes cookies for retail stores. The

Aunt Molly’s Old Fashioned Cookies bakes cookies for retail stores. The company’s best-selling cookie is chocolate nut supreme, which is marketed as a gourmet cooki...

Q: Bo Vonderweidt, the production manager for Sportway Corporation, had requested

Bo Vonderweidt, the production manager for Sportway Corporation, had requested to have lunch with the company president. Vonderweidt wanted to put forward his suggestion to add a new product line. As...

Q: Zylar Industries is a manufacturer of standard and custom-designed bottling

Zylar Industries is a manufacturer of standard and custom-designed bottling equipment. Early in December 20x0, Lyan Company asked Zylar to quote a price for a custom-designed bottling machine to be de...

Q: Tipton One-Stop Decorating sells paint and paint supplies, carpet

Tipton One-Stop Decorating sells paint and paint supplies, carpet, and wallpaper at a single-store location in suburban Des Moines. Although the company has been very profitable over the years, manage...

Q: Riverside Inc. makes one model of wooden canoe. Partial information

Riverside Inc. makes one model of wooden canoe. Partial information for it follows: Required: 1. Complete the preceding table. 2. Identify three costs that would be classified as fixed costs and three...

Q: Starcups Coffee Company is launching a new sustainability initiative that would reward

Starcups Coffee Company is launching a new sustainability initiative that would reward customers for purchasing a reusable cup. During the cup promotion, customers would pay an extra $1.00 for the reu...

Q: Refer to the information presented in E5–17 for Riverside.

Refer to the information presented in E5–17 for Riverside. Each of the following scenarios is a variation of Riverside’s original data. Required: Prepare Riverside&...

Q: Joyce Murphy runs a courier service in downtown Seattle. She charges

Joyce Murphy runs a courier service in downtown Seattle. She charges clients $0.50 per mile driven. Joyce has determined that if she drives 3,300 miles in a month, her total operating cost is $875. If...

Q: Bethany Link delivers parts for several local auto parts stores. She

Bethany Link delivers parts for several local auto parts stores. She charges clients $0.75 per mile driven. She has determined that if she drives 2,100 miles in a month, her average operating cost is...

Q: Your friend, Manuel Rodriguez, has been working as a staff

Your friend, Manuel Rodriguez, has been working as a staff accountant for Williams Company, a small local manufacturing company. His job responsibilities to date have entailed several aspects of finan...

Q: Refer to the information for Morning Dove Company in E5–4

Refer to the information for Morning Dove Company in E5–4. Suppose it sells each birdbath for $25. Required: 1. Calculate the unit contribution margin and contribution margin ratio f...

Q: Morning Dove Company’s owner, Sylvester, believes that he can sell

Morning Dove Company’s owner, Sylvester, believes that he can sell 2,000 birdbaths during the month of April and has predicted a net operating income of $6,820 as shown in the follow...

Q: Last month, Laredo Company sold 450 units for $25 each

Last month, Laredo Company sold 450 units for $25 each. During the month, fixed costs were $2,520 and variable costs were $9 per unit. Required: 1. Determine the unit contribution margin and contribut...

Q: Refer to the information regarding Dana’s Ribbon World in E6–11

Refer to the information regarding Dana’s Ribbon World in E6–11. Required: 1. Suppose Dana’s would like to generate a profit of $800. Determine ho...

Q: Tommy’s Tile Service is planning on purchasing new tile cleaning equipment that

Tommy’s Tile Service is planning on purchasing new tile cleaning equipment that will improve their ability to remove tough stains from ceramic tiles. The company’s contribution margin is 30 percent an...

Q: Biscayne’s Rent-A-Ride rents two models of automobiles:

Biscayne’s Rent-A-Ride rents two models of automobiles: the standard and the deluxe. Information follows: Biscayne’s total fixed cost is $18,500 per month. Required...

Q: Tiago makes three models of camera lens. Its product mix and

Tiago makes three models of camera lens. Its product mix and contribution margin per unit follow: Required: 1. Determine the weighted-average contribution margin per unit. 2. Determine the number of u...

Q: Refer to the information in E6–20 for Tiago. Suppose

Refer to the information in E6–20 for Tiago. Suppose the product mix has shifted to 40/30/30. Required: 1. Determine the new weighted-average contribution margin per unit. 2. Determi...

Q: Juniper Corp. makes three models of insulated thermos. Juniper has

Juniper Corp. makes three models of insulated thermos. Juniper has $400,000 in total revenue and total variable costs of $240,000. Its sales mix is given below: Required: 1. Calculate the (overall) we...

Q: Refer to the information in E6–22 for Juniper Corp.

Refer to the information in E6–22 for Juniper Corp. Suppose Juniper has improved its manufacturing process and expects total variable costs to decrease by 20 percent. The company exp...

Q: Erin Shelton, Inc., wants to earn a target profit of

Erin Shelton, Inc., wants to earn a target profit of $800,000 this year. The company’s fixed costs are expected to be $1,000,000 and its variable costs are expected to be 60 percent of sales. Erin She...

Q: Sandy Bank, Inc., makes one model of wooden canoe.

Sandy Bank, Inc., makes one model of wooden canoe. Partial information for it follows: Required: 1. Complete the preceding table. 2. Suppose Sandy Bank sells its canoes for $550 each. Calculate the co...

Q: Match the definitions with the most appropriate term. Terms may be

Match the definitions with the most appropriate term. Terms may be used once, more than once, or not at all. Description: 1. Buffer zone that identifies how much sales can drop before the business suf...

Q: Anderson Publishing has two divisions: Book Publishing & Magazine Publishing.

Anderson Publishing has two divisions: Book Publishing & Magazine Publishing. The Magazine division has been losing money for the last 5 years and Anderson is considering eliminating that division...

Q: Ironwood Company manufactures a variety of sunglasses. Production information for its

Ironwood Company manufactures a variety of sunglasses. Production information for its most popular line, the Clear Vista (CV), follows: Suppose that Ironwood has been approached about producing a spec...

Q: Refer to the Tan-O-Rama regression output given in

Refer to the Tan-O-Rama regression output given in M5–11. Suppose that the company charges $6 per tanning session. Calculate the unit contribution margin and contribution margin rati...

Q: Refer to the data for Handy’s Hats in M5–13.

Refer to the data for Handy’s Hats in M5–13. Suppose that Handy’s expects to sell 4,000 hats during the month of September and that each hat sells...

Q: Following is relevant information for Snowdon Sandwich Shop, a small business

Following is relevant information for Snowdon Sandwich Shop, a small business that serves sandwiches: During the month of June, Snowdon sold 600 sandwiches. Using the preceding information, prepare it...

Q: Red Hawk Enterprises sells handmade clocks. Its variable cost per clock

Red Hawk Enterprises sells handmade clocks. Its variable cost per clock is $8, and each clock sells for $18. Calculate Red Hawk’s unit contribution margin and contribution margin ratio. Suppose Red Ha...

Q: Determine whether each the following statements describes variable costing (VC),

Determine whether each the following statements describes variable costing (VC), full absorption costing (FA), or both (B): 1. Measures gross margin as the difference between sales revenue and cost of...

Q: Match each of the terms by inserting the appropriate definition letter in

Match each of the terms by inserting the appropriate definition letter in the space provided. Not all definitions will be used. 1. Break-even point 2. Break-even analysis 3. Cost-volume-profit analysi...

Q: Seascape Company has two products: Product A has a contribution margin

Seascape Company has two products: Product A has a contribution margin per unit of $4 and Product B has a contribution margin of $6 per unit. Calculate the weighted-average unit contribution margin if...

Q: Edgewater Enterprises manufactures two products. Information follows: /

Edgewater Enterprises manufactures two products. Information follows: Calculate Edgewater’s weighted-average contribution margin per unit.

Q: Information for Pueblo Company follows: / Determine Pueblo’s (

Information for Pueblo Company follows: Determine Pueblo’s (overall) weighted-average contribution margin ratio.

Q: Juniper Enterprises sells handmade clocks. Its variable cost per clock is

Juniper Enterprises sells handmade clocks. Its variable cost per clock is $6, and each clock sells for $24. Calculate Juniper’s contribution margin per unit and contribution margin ratio. If the compa...

Q: Refer to the information presented in M6–3. How many

Refer to the information presented in M6–3. How many units must Juniper sell to earn a profit of at least $5,400? Data from M6-3: Juniper Enterprises sells handmade clocks. Its variable cost per cloc...

Q: Refer to the information presented in M6–3. Suppose that

Refer to the information presented in M6–3. Suppose that Juniper raises its price by 20 percent, but costs do not change. What is its new break-even point? Data from M6-3: Juniper Enterprises sells h...

Q: Refer to the information presented in M6–3. Suppose that

Refer to the information presented in M6–3. Suppose that Juniper’s variable costs decrease by $0.50. What is the new break-even point? Data from M6-3: Juniper Enterprises sells handmade clocks. Its v...

Q: Refer to the information presented in M6–3. Suppose that

Refer to the information presented in M6–3. Suppose that Juniper’s fixed costs increase to $7,200. What is the new break-even point? Data from M6-3: Juniper Enterprises sells handmade clocks. Its var...

Q: Anne Sugar makes large ceramic pots for use in outdoor landscaping.

Anne Sugar makes large ceramic pots for use in outdoor landscaping. She currently has two models, one square and the other round. Because of the size of Anne’s creations, only one po...

Q: Refer to the information presented in M7–11. Suppose that

Refer to the information presented in M7–11. Suppose that Anne has developed a rectangular, medium-size ceramic pot. It requires four hours of kiln time; however, two medium-size pot...

Q: Refer to your solutions for Leslie’s Sporting Goods in PA5–2

Refer to your solutions for Leslie’s Sporting Goods in PA5–2. Required: 1. Consider the pattern of Leslie’s activity and costs throughout the year...

Q: Presidio, Inc., produces one model of mountain bike. Partial

Presidio, Inc., produces one model of mountain bike. Partial information for the company follows: Required: 1. Complete Presidio’s cost data table. 2. Calculate Presidioâ€...

Q: Hermosa, Inc., produces one model of mountain bike. Partial

Hermosa, Inc., produces one model of mountain bike. Partial information for the company follows: Required: 1. Complete the table. 2. Calculate Hermosa’s contribution margin ratio an...

Q: Russell Preston delivers parts for several local auto parts stores. He

Russell Preston delivers parts for several local auto parts stores. He charges clients $0.75 per mile driven. Russell has determined that if he drives 3,000 miles in a month, his average operating cos...

Q: Hawk Homes, Inc., makes one type of birdhouse that it

Hawk Homes, Inc., makes one type of birdhouse that it sells for $30 each. Its variable cost is $15 per house, and its fixed costs total $13,840 per year. Hawk currently has the capacity to produce up...

Q: Ramada Company produces one golf cart model. A partially complete table

Ramada Company produces one golf cart model. A partially complete table of company costs follows: Required: 1. Complete the table. 2. Ramada sells its carts for $1,200 each. Prepare a contribution mar...

Q: Lindstrom Company produces two fountain pen models. Information about its products

Lindstrom Company produces two fountain pen models. Information about its products follows: Lindstrom’s fixed costs total $78,500. Required: 1. Determine Lindstrom’...

Q: Pin Cushion Company produces two models of sewing basket. Information about

Pin Cushion Company produces two models of sewing basket. Information about Pin Cushion’s products is given below: Pin Cushion’s fixed costs total $35,200. Required...

Q: Hoodys for Good manufactures and sells hooded sweatshirts. The company locates

Hoodys for Good manufactures and sells hooded sweatshirts. The company locates its manufacturing facilities in areas with high unemployment rates and provides on-site day care and education for its em...

Q: Refer to your solutions for Sigrid’s Custom Graphics in PB5–2

Refer to your solutions for Sigrid’s Custom Graphics in PB5–2. Required: 1. Consider the pattern of the company’s activity and costs throughout th...

Q: Vestibule produces one model of ski vest. Partial information for the

Vestibule produces one model of ski vest. Partial information for the company follows: Required: 1. Complete Vestibule’s cost data table. 2. Calculate Vestibule’s c...

Q: Franklin, Inc., produces one model of seat cover. Partial

Franklin, Inc., produces one model of seat cover. Partial information for the company follows: Required: 1. Complete the table. 2. Calculate Franklin’s contribution margin ratio and...

Q: Regina Star delivers flowers for several local flower stores. She charges

Regina Star delivers flowers for several local flower stores. She charges clients $0.85 per mile driven. Regina has determined that if she drives 1,200 miles in a month, her average operating cost is...

Q: Ivy Kay, Inc., makes one type of doggie sweater that

Ivy Kay, Inc., makes one type of doggie sweater that it sells for $25 each. Its variable cost is $12.50 per sweater and its fixed costs total $8,600 per year. Ivy Kay currently has the capacity to pro...

Q: King Peak Company produces one security door model. A partially complete

King Peak Company produces one security door model. A partially complete table of its costs follows: Required: 1. Complete the table. 2. King Peak sells its doors for $200 each. Prepare a contribution...

Q: Joan Company produces two backpack models. Information about its products follows

Joan Company produces two backpack models. Information about its products follows Joan’s fixed costs total $51,700. Required: 1. Determine Joan’s weighted-average u...

Q: Sapphire Company produces two models of electric lawnmower. Information about Sapphire’s

Sapphire Company produces two models of electric lawnmower. Information about Sapphire’s products is given below: Sapphire’s fixed costs total $104,625. Required: 1...

Q: Backpacks for Good manufactures and sells backpacks for educational and recreational uses

Backpacks for Good manufactures and sells backpacks for educational and recreational uses. The company locates its manufacturing facilities in areas with high unemployment rates and provides on-site d...

Q: Go to www.YouTube.com and search for How It’s

Go to www.YouTube.com and search for How It’s Made, a television show produced by the Discovery Channel that shows how thousands of products and services are created. Find a product that interests you...

Q: Go to www.YouTube.com and search for How It’s

Go to www.YouTube.com and search for How It’s Made, a television show produced by the Discovery Channel that shows how thousands of products and services are created. Find a product that you have purc...

Q: Suppose you have decided to start a small business selling snacks from

Suppose you have decided to start a small business selling snacks from vending machines. You have secured a location for one candy vending machine in a local bookstore. Rental for the space will cost...

Q: Pink Jeep Tours offers off-road tours to individuals and groups

Pink Jeep Tours offers off-road tours to individuals and groups visiting the Southwestern U.S. hotspots of Sedona, Arizona, and Las Vegas, Nevada. Take a tour of the company’s website at www.pinkjeep....

Q: Explain how to calculate total contribution margin, contribution margin per unit

Explain how to calculate total contribution margin, contribution margin per unit, and contribution margin ratio. What is the meaning of each?

Q: When activity level increases, explain what happens to: a

When activity level increases, explain what happens to: a. Contribution margin per unit. b. Contribution margin ratio. c. Total contribution margin. d. Total fixed cost. e. Profit.

Q: Why is a contribution margin income statement more useful to managerial decision

Why is a contribution margin income statement more useful to managerial decision makers than the income statement intended for external users?

Q: How is weighted-average unit contribution margin calculated?

How is weighted-average unit contribution margin calculated?

Q: What will happen to a company’s break-even point if the

What will happen to a company’s break-even point if the product mix shifts to favor a product with a lower contribution margin per unit?

Q: How do you use the weighted-average contribution margin ratio in

How do you use the weighted-average contribution margin ratio in cost-volume-profit analysis?

Q: Why is the weighted-average contribution margin ratio approach commonly used

Why is the weighted-average contribution margin ratio approach commonly used in practice?

Q: Explain the difference between unit contribution margin and contribution margin ratio.

Explain the difference between unit contribution margin and contribution margin ratio.

Q: Why do decisions involve a constrained resource focus on contribution margin instead

Why do decisions involve a constrained resource focus on contribution margin instead of profit margin?

Q: Match each of the terms by inserting the appropriate definition letter in

Match each of the terms by inserting the appropriate definition letter in the space provided. Not all definitions will be used. 1. Contribution margin 2. Contribution margin income statement 3. Contri...

Q: Consider Mountain Dental’s cost equation results obtained in E5–7 using

Consider Mountain Dental’s cost equation results obtained in E5–7 using the high-low method. Required: 1. Determine Mountain Dental’s unit contrib...

Q: Consider Mountain Dental’s cost equation results obtained in E5–9 using

Consider Mountain Dental’s cost equation results obtained in E5–9 using least-squares regression. Required: 1. Determine Mountain Dental’s unit co...

Q: Consider Camp Rainbow’s cost equation results obtained in E5–14 using

Consider Camp Rainbow’s cost equation results obtained in E5–14 using least-squares regression. Suppose that Rainbow is contemplating staying open one additional we...

Q: Refer to the information pertaining to Endless Mountain Company that is provided

Refer to the information pertaining to Endless Mountain Company that is provided in Integration Exercise 11. In addition to the budget schedules that you prepared in Integration Exercise 11, insert tw...

Q: Charles Schwab Corporation (SCHW) is one of the more innovative

Charles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segme...

Q: Diamond & Turf Inc. is considering an investment in one of

Diamond & Turf Inc. is considering an investment in one of two machines. The sewing machine will increase productivity from sewing 150 baseballs per hour to sewing 290 per hour. The contribution m...

Q: For a recent year, McDonald’s (MCD) company-owned

For a recent year, McDonald’s (MCD) company-owned restaurants had the following sales and expenses (in millions): Assume that the variable costs consist of food and packaging, payro...

Q: a. Young Company budgets sales of $112,900,

a. Young Company budgets sales of $112,900,000, fixed costs of $25,000,000, and variable costs of $66,611,000. What is the contribution margin ratio for Young Company? b. If the contribution margin ra...

Q: Galaxy Sports Inc. manufactures and sells two styles of All Terrain

Galaxy Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVs), the Conquistador and Hurricane, from a single manufacturing facility. The manufacturing facility operates at 100% o...

Q: The operating revenues of the three largest business segments for Time Warner

The operating revenues of the three largest business segments for Time Warner, Inc. (TWX), for a recent year follow. Each segment includes a number of businesses, examples of which are indicated in pa...

Q: Portmann Company, operating at full capacity, sold 1,000

Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its income statement is as follows: The division of costs between variable and...

Q: Pachec Inc. employs seven salespersons to sell and distribute its product

Pachec Inc. employs seven salespersons to sell and distribute its product throughout the state. Data taken from reports received from the salespersons during the year ended June 30 are as follows: In...

Q: Kimbrell Inc. manufactures three sizes of utility tables—small (

Kimbrell Inc. manufactures three sizes of utility tables—small (S), medium (M), and large (L). The income statement has consistently indicated a net loss for the M size, and manageme...

Q: Pacific Airways provides air travel services between Los Angeles and Seattle.

Pacific Airways provides air travel services between Los Angeles and Seattle. Cost information per flight is as follows: Each flight has a capacity of 150 seats, with an average of 125 seats sold per...

Q: Bon Jager Inc. manufactures and sells medical devices used in cardiovascular

Bon Jager Inc. manufactures and sells medical devices used in cardiovascular surgery. The sales team consists of two salespeople, Dean and Martin. A contribution margin report by salesperson was prepa...

Q: Waite Company sells 250,000 units at $120 per unit

Waite Company sells 250,000 units at $120 per unit. Variable costs are $78 per unit, and fixed costs are $8,175,000. Determine (a) The contribution margin ratio, (b) The unit contribution margin, and...

Q: Conley Company has fixed costs of $17,802,000

Conley Company has fixed costs of $17,802,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company’s two products follow: The sales mix...

Q: Raab, Shoemaker and Mayer (2007) developed a workable ABC

Raab, Shoemaker and Mayer (2007) developed a workable ABC model for a restaurant operation in the USA that enabled previously undistributed indirect operating expenses to be traced to individual me...

Q: Colombe-Déménagements SA is a removals company that transports household goods

Colombe-Déménagements SA is a removals company that transports household goods from one Belgian city to another. It measures service quality in terms of (a) time required to...

Q: Sloan Moving Ltd transports household goods from one city to another within

Sloan Moving Ltd transports household goods from one city to another within the UK. It measures quality of service in terms of (1) time required to transport goods, (2) on-time delivery (within 2 days...

Q: Pierre Corneille, managing director of Marre-Quise Consultants SA,

Pierre Corneille, managing director of Marre-Quise Consultants SA, is examining how overhead costs behave with variations in monthly professional labour-hours billed to clients. Assume the following h...

Q: Monteagudo-Playa SA is a take-away food store at

Monteagudo-Playa SA is a take-away food store at a popular beach resort. Consuelo Herreros, owner of Monteagudo-Playa, is deciding how much refrigerator space to devote to four different drinks. Perti...

Q: Koala Ltd has only two divisions: A and B. The

Koala Ltd has only two divisions: A and B. The following data apply to Division A. Required 1. Prepare a segment report for Division A that differentiates between the performance of the manager and t...

Q: Define contribution margin, gross margin, and contribution margin percentage,

Define contribution margin, gross margin, and contribution margin percentage, variable-cost percentage and margin of safety.

Q: Braganza manufactures and sells 20 000 copiers each year. The variable

Braganza manufactures and sells 20 000 copiers each year. The variable and fixed costs of reworking and repairing copiers are as follows: Braganza’s engineers are currently working t...

Q: Carmody Ltd sells 300 000 V262 valves to the car and truck

Carmody Ltd sells 300 000 V262 valves to the car and truck industry. Carmody has a capacity of 110 000 machine-hours and can produce three valves per machine-hour. V262’s contributi...

Q: A Self-supporting Legacy or a Burdensome White Elephant?

A Self-supporting Legacy or a Burdensome White Elephant? In the run-up to the 2010 World Cup, South Africa built new stadia according to a blueprint devised by world football’s organizing body, FIFA....

Q: Airport Complex was founded in Northern Europe in the early 1960s,

Airport Complex was founded in Northern Europe in the early 1960s, and at the time it primarily served as a domestic airport. During the 1980s, flights to foreign destinations became an ever more vit...

Q: Eye Symmetry’s founder Max Stewart makes surfboards in different lengths. He

Eye Symmetry’s founder Max Stewart makes surfboards in different lengths. He must decide on the best sales mix. Assume Max has a capacity of 240 hours of direct labor time available...

Q: Colt Company produces two skateboard models. Machine time per unit for

Colt Company produces two skateboard models. Machine time per unit for Hero is two hours and for Flip is one hour. The machine’s capacity is 1,600 hours per year. Colt can sell up to...

Q: Chip Company produces three products, Kin, Ike, and Bix

Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 4 pounds of the material, Ike uses 3 pounds of the material, and Bix uses 6 pounds of the...

Q: Sunn Co. manufactures a single product that sells for $180

Sunn Co. manufactures a single product that sells for $180 per unit and whose variable costs are $135 per unit. The company’s annual fixed costs are $562,500. 1. Prepare a contribution margin income s...

Q: Sunn Co. manufactures a single product that sells for $180

Sunn Co. manufactures a single product that sells for $180 per unit and whose variable costs are $135 per unit. The company’s annual fixed costs are $562,500. The sales manager predicts that next year...

Q: Harrison Co. expects to sell 200,000 units of its

Harrison Co. expects to sell 200,000 units of its product next year, which would generate total sales of $17,000,000. Management predicts that income for next year will be $1,250,000 and that the cont...

Q: Refer to the information in Exercise 21-11. The marketing

Refer to the information in Exercise 21-11. The marketing manager believes that increasing advertising costs by $81,000 will increase the company’s sales volume to 11,000 units. Prepare a contribution...

Q: Refer to the information in Exercise 21-11. If the

Refer to the information in Exercise 21-11. If the company raises its selling price to $240 per unit, compute its (1) contribution margin per unit, (2) contribution margin ratio, (3) break-even point...

Q: Refer to the information in Exercise 21-11. The company

Refer to the information in Exercise 21-11. The company is considering buying a new machine that will increase its fixed costs by $40,500 per year and decrease its variable costs by $9 per unit. Prepa...

Q: A manufacturer’s contribution margin income statement for the year follows. Prepare

A manufacturer’s contribution margin income statement for the year follows. Prepare contribution margin income statements for each of the three separate cases below. 1. The 10,000 un...

Q: A jeans maker is designing a new line of jeans called Slams

A jeans maker is designing a new line of jeans called Slams. Slams will sell for $205 per unit and cost $164 per unit in variable costs to make. Fixed costs total $60,000. 1. Compute the contribution...

Q: Compute the missing amounts a through j for the contribution margin income

Compute the missing amounts a through j for the contribution margin income statements below.

Q: Sunn Co. manufactures a single product that sells for $180

Sunn Co. manufactures a single product that sells for $180 per unit and whose variable costs are $135 per unit. The company’s annual fixed costs are $562,500. Compute (a) contribution margin per unit,...

Q: JART manufactures and sells underwater markers. Its contribution margin income statement

JART manufactures and sells underwater markers. Its contribution margin income statement follows. A potential customer offers to buy 50,000 units for $3.20 each. These sales would not affect the compa...

Q: FURY produces and sells skateboards. Its contribution margin income statement follows

FURY produces and sells skateboards. Its contribution margin income statement follows. A potential customer offers to buy 10,000 units for $42.00 each. These sales would not affect the companyâ&...

Q: Edge Company produces two models of its product with the same machine

Edge Company produces two models of its product with the same machine. The machine has a capacity of 176 hours per month. The following information is available. Required 1. Determine the contribution...

Q: Ace produces and sells energy drinks. Its contribution margin income statement

Ace produces and sells energy drinks. Its contribution margin income statement follows. A potential customer offers to buy 50,000 units for $3.00 each. These sales would not affect the companyâ&...

Q: MAX produces and sells power adapters. Its contribution margin income statement

MAX produces and sells power adapters. Its contribution margin income statement follows. A potential customer offers to buy 10,000 units for $5.80 each. These sales would not affect the companyâ...

Q: Stam Co. produces and sells two products, BB and TT

Stam Co. produces and sells two products, BB and TT. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company...

Q: Connor Company sold 30,000 units of its only product for

Connor Company sold 30,000 units of its only product for $28 per unit this year. Manufacturing and selling the product required $225,000 of fixed costs. Its per unit variable costs follow. For the nex...

Q: Hip-Hop Co. manufactures and markets several products. Management

Hip-Hop Co. manufactures and markets several products. Management is considering the future of one product, electronic keyboards, that has not been as profitable as planned. Because this product is ma...

Q: Milano Co. manufactures backpacks in two sizes, small and large

Milano Co. manufactures backpacks in two sizes, small and large. The company has total fixed costs of $520,000 per year. Additional data follow. The company is considering buying new equipment that wo...

Q: The following costs result from the production and sale of 1,

The following costs result from the production and sale of 1,000 drum sets manufactured by Tight Drums Company for the year ended December 31. The drum sets sell for $500 each. Required 1. Prepare a...

Q: Astro Co. sold 20,000 units of its only product

Astro Co. sold 20,000 units of its only product and reported income of $25,000 for the current year. During a planning session for next year’s activities, the production manager note...

Q: Henna Co. produces and sells two products, Carvings and Mementos

Henna Co. produces and sells two products, Carvings and Mementos. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year...

Q: Burchard Company sold 40,000 units of its only product for

Burchard Company sold 40,000 units of its only product for $25 per unit this year. Manufacturing and selling the product required $525,000 of fixed costs. Its per unit variable costs follow. For the n...

Q: Patriot Co. manufactures flags in two sizes, small and large

Patriot Co. manufactures flags in two sizes, small and large. The company has total fixed costs of $240,000 per year. Additional data follow. The company is considering buying new equipment that would...

Q: The following costs result from the production and sale of 12,

The following costs result from the production and sale of 12,000 LEGO sets manufactured by LEGO Company for the year ended December 31. The LEGO sets sell for $20 each. Required 1. Prepare a contrib...

Q: Rivera Co. sold 20,000 units of its only product

Rivera Co. sold 20,000 units of its only product and reported income of $20,000 for the current year. During a planning session for next year’s activities, the production manager not...

Q: Estela Company produces skateboards and scooters. Their per unit selling prices

Estela Company produces skateboards and scooters. Their per unit selling prices and variable costs follow. Skateboards require 2 machine hours per unit. Scooters require 3 machine hours per unit. For...

Q: Surf Company can sell all of the two surfboard models it produces

Surf Company can sell all of the two surfboard models it produces, but it has only 400 direct labor hours available. The Glide model requires 2 direct labor hours per unit. The Ultra model requires 4...

Q: Identify two ways in which a contribution margin income statement differs in

Identify two ways in which a contribution margin income statement differs in format from a traditional income statement.

Q: A manufacturer’s contribution margin income statement for the year follows. Prepare

A manufacturer’s contribution margin income statement for the year follows. Prepare a contribution margin income statement if the number of units sold (a) increases by 200 units and...

Q: US-Mobile manufactures and sells two products, tablet computers (

US-Mobile manufactures and sells two products, tablet computers (60% of sales) and smart phones (40% of sales). Fixed costs are $500,000, and the weighted-average contribution margin per unit is $125....

Q: Compute the contribution margin ratio and fixed costs using the following data

Compute the contribution margin ratio and fixed costs using the following data.

Q: Viva sells its waterproof phone case for $90 per unit.

Viva sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per unit. Determine the (1) contribution margin per unit and (2) break-even point in units...

Q: Viva sells its waterproof phone case for $90 per unit.

Viva sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per unit. Determine the (1) contribution margin ratio and (2) break-even point in dollars....

Q: This serial problem began in Chapter 1 and continues through most of

This serial problem began in Chapter 1 and continues through most of the book. If previous chapter segments were not completed, the serial problem can begin at this point. SP 25 Santana Rey sees that...

Q: Green Thumb operates a chain of lawn fertilizer stores. Although the

Green Thumb operates a chain of lawn fertilizer stores. Although the fertilizer is sold under the Green Thumb label, it is purchased from an independent manufacturer. Sue Smith, president of Green Thu...

Q: Ed Winslow is considering investing in a sandwich machine operation involving 50

Ed Winslow is considering investing in a sandwich machine operation involving 50 sandwich machines located in various locations throughout the city. The machine manufacturer reports that similar sandw...

Q: Assume a store’s Clothing Department has a lower contribution margin ratio but

Assume a store’s Clothing Department has a lower contribution margin ratio but a higher responsibility margin ratio than its Sporting Goods Department. If $15,000 in advertising is expected to increas...

Q: ordahl’s grocery store has a small bakery that sells a variety of

ordahl’s grocery store has a small bakery that sells a variety of baked goods. Sales from the bakery average less than 5 percent of the store’s total revenue and is considered a cost center. As a mean...

Q: The contribution margin ratio of the Parts Department of Buffalo Valley Repair

The contribution margin ratio of the Parts Department of Buffalo Valley Repair is 40 percent. Traceable fixed costs of the Parts Department average $80,000 per year, and the department’s projected rev...

Q: Electro Systems manufactures relays and currently sells 200,000 units annually

Electro Systems manufactures relays and currently sells 200,000 units annually to producers of electronic equipment. Mac Scott, president of the company, anticipates a 20 percent increase in the cost...

Q: Applying the high-low method, Bemidji Wilderness Resort estimates the

Applying the high-low method, Bemidji Wilderness Resort estimates the total costs of providing guide services to be $9,000 per month, plus 25 percent of guide service revenue. a. What is the contribut...

Q: New Berlin Corporation has annual fixed costs of $800,000

New Berlin Corporation has annual fixed costs of $800,000, variable costs of $48 per unit, and a contribution margin ratio of 40 percent. Compute the following. a. Unit sales price and unit contribut...

Q: Dominic’s Deli recently calculated its annual break-even sales revenue to

Dominic’s Deli recently calculated its annual break-even sales revenue to be $210,000. For each dollar of sales revenue, $0.30 goes to cover variable costs. Compute the following. a. The contribution...

Q: Ferrule Furriers has a contribution margin ratio of 80 percent and must

Ferrule Furriers has a contribution margin ratio of 80 percent and must sell 12,000 stoles at a unit price of $400 to break even. a. Compute total fixed costs. b. Compute variable cost per unit. c. De...

Q: Chaps & Saddles, a retailer of tack and Western apparel,

Chaps & Saddles, a retailer of tack and Western apparel, earns an average contribution margin of 30 percent on its sales volume. Recently, the advertising manager of a local country radio station offe...

Q: A local gym has 20 stationary bicycles that are available for classes

A local gym has 20 stationary bicycles that are available for classes a combined total of 840 hours per week. The bicycles are used in two different exercise programs. A cycling class lasts one hour a...

Q: Define (a) contribution margin, (b) contribution margin

Define (a) contribution margin, (b) contribution margin ratio, and (c) average contribution margin ratio.

Q: Explain how the unit contribution margin can be used to determine the

Explain how the unit contribution margin can be used to determine the unit sales required to break even.

Q: Guns Company produces three video games: Android, Bio-Mutant

Guns Company produces three video games: Android, Bio-Mutant, and Cyclops. Cost and revenue data pertaining to each product are as follows At the present time, demand for each of the companyâ&#...

Q: The following are nine technical accounting terms introduced or emphasized in this

The following are nine technical accounting terms introduced or emphasized in this chapter. Each of the following statements may (or may not) describe one of these technical terms. For each statement...

Q: Consider Exhibit 22–5, which shows the responsibility margins for

Consider Exhibit 22–5, which shows the responsibility margins for the sales department and repairs department profit centers at the 42nd Street store of NuTech Electronics. Assume th...

Q: Rainbow Paints operates a chain of retail paint stores. Although the

Rainbow Paints operates a chain of retail paint stores. Although the paint is sold under the Rainbow label, it is purchased from an independent paint manufacturer. Guy Walker, president of Rainbow Pai...

Q: Guthrie Generators manufactures a solenoid that it uses in several of its

Guthrie Generators manufactures a solenoid that it uses in several of its products. Management is considering whether to continue manufacturing the solenoids or to buy them from an outside source. The...

Q: Parsons Plumbing & Heating manufactures thermostats that it uses in several of

Parsons Plumbing & Heating manufactures thermostats that it uses in several of its products. Management is considering whether to continue manufacturing the thermostats or to buy them from an outs...

Q: We have made the point that managers often attempt to maximize the

We have made the point that managers often attempt to maximize the contribution margin per unit of a particular resource that limits output capacity. The following are five familiar types of businesse...

Q: Superior Instruments produces two models of instruments. Information for each model

Superior Instruments produces two models of instruments. Information for each model is as follows. The demand for either product is sufficient to keep the plant operating at full capacity (15,000mac...

Q: Why is the contribution margin an important concept for incremental decision making

Why is the contribution margin an important concept for incremental decision making?

Q: The following information relates to the only product sold by Mastrolia Manufacturing

The following information relates to the only product sold by Mastrolia Manufacturing. a. Compute the contribution margin ratio and the dollar sales volume required to break even. b. Assuming that th...

Q: Insightful Instruments produces two models of binoculars. Information for each model

Insightful Instruments produces two models of binoculars. Information for each model is as follows. Total manufacturing overhead amounts to $180,000 per month, one-third of which is fixed. The dema...

Q: Nicholls Provisions has been asked to submit a bid on supplying tents

Nicholls Provisions has been asked to submit a bid on supplying tents to the Boy Scouts of America. The company’s current cost structure per cent is as follows. a. Assume that there...

Q: Water World sells three products: ski vests, slalom skis,

Water World sells three products: ski vests, slalom skis, and ski ropes. Information related to each product line is provided as follows. The company’s annual fixed costs are approx...

Q: Beverley Products, has two divisions—Residential Products and Commercial Products

Beverley Products, has two divisions—Residential Products and Commercial Products. Cost and revenue data for each division for the current month are as follows. In addition, fixed c...

Q: Hernandez Enterprises has two divisions—Retail and Wholesale. Cost and

Hernandez Enterprises has two divisions—Retail and Wholesale. Cost and revenue data for each division for the current month are as follows. In addition, fixed costs that are common...

Q: Determine the following: a. The unit contribution margin.

Determine the following: a. The unit contribution margin. b. The number of units that must be sold each month to break even. c. The number of units that must be sold to earn an operating income of $7,...

Q: Moor-n-More operates a boat mooring service in the

Moor-n-More operates a boat mooring service in the downtown harbor with 80 docking spaces. The business is open 3,000 hours per year. The mooring charge per boat is $5 per hour; the average boater doc...

Q: For each of the six independent situations that follow, compute the

For each of the six independent situations that follow, compute the missing amounts. a. Using contribution margin per unit: b. Using the contribution margin ratio:

Q: MURDER TO GO! writes and manufactures murder mystery parlor games that

MURDER TO GO! writes and manufactures murder mystery parlor games that it sells to retail stores. The following is per-unit information relating to the manufacture and sale of this product. Determine...

Q: Arrow Products typically earns a contribution margin ratio of 25 percent and

Arrow Products typically earns a contribution margin ratio of 25 percent and has current fixed costs of $80,000. Arrow’s general manager is considering spending an additional $20,000 to do one of the...

Q: Glassware Company is organized into two divisions—etched glass and clear

Glassware Company is organized into two divisions—etched glass and clear glass. During August, sales for the etched division totaled $7,500,000, and its contribution margin ratio averaged 38 percent....

Q: Ivy Blooms sells wreaths and leis. The following is selected per

Ivy Blooms sells wreaths and leis. The following is selected per-unit information for these two products. Fixed costs and expenses amount to $97,500 per month. The company generates total sales of $3...

Q: Easy Writer manufactures an erasable ballpoint pen, which sells for $

Easy Writer manufactures an erasable ballpoint pen, which sells for $1.75 per unit. Management recently finished analyzing the results of the company’s operations for the current month. At a break-eve...

Q: James Lighting manufactures switches that it uses in several of its products

James Lighting manufactures switches that it uses in several of its products. Management is considering whether to continue manufacturing the switches or to buy them from an outside source. The follow...

Q: Giant Chef Equipment Company is organized into two divisions—commercial sales

Giant Chef Equipment Company is organized into two divisions—commercial sales and home products. During June, sales for the commercial sales division totaled $1,500,000, and its contribution margin ra...

Q: Eastrise Corporation has two divisions—the motor division and the mower

Eastrise Corporation has two divisions—the motor division and the mower division. The motor division supplies the motors used by the mower division. The mower division produces approximately 10,000 mo...

Q: Tots-To-Go, Inc., has two divisions—

Tots-To-Go, Inc., has two divisions—the seat division and the stroller division. The seat division supplies the seat frames used by the stroller division to make its strollers. The stroller division p...

Q: What is the relationship between contribution margin and responsibility .margin?

What is the relationship between contribution margin and responsibility .margin? Explain how each of these measurements is useful in making management

Q: Blaster Corporation manufactures hiking boots. For the coming year, the

Blaster Corporation manufactures hiking boots. For the coming year, the company has budgeted the following costs for the production and sale of 30,000 pairs of boots. Instructions: a. Compute the sa...

Q: Ionic Charge is a newly organized manufacturing business that plans to manufacture

Ionic Charge is a newly organized manufacturing business that plans to manufacture and sell 60,000 units per year of a new product. The following estimates have been made of the companyâ€&#...

Q: Stop-n-Shop operates a downtown parking lot containing 800

Stop-n-Shop operates a downtown parking lot containing 800 parking spaces. The lot is open 2,500 hours per year. The parking charge per car is 50 cents per hour; the average customer parks two hours....

Q: Precision Systems manufactures CD burners and currently sells 18,500 units

Precision Systems manufactures CD burners and currently sells 18,500 units annually to producers of laptop computers. Jay Wilson, president of the company, anticipates a 15 percent increase in the cos...

Q: Raquel Swimwear sells lines of adult and youth swimming suits. The

Raquel Swimwear sells lines of adult and youth swimming suits. The following is per-unit information for these two product lines. Fixed costs and expenses amount to $117,000 per month. The company cu...

Q: Simon Tough is considering investing in a vending machine operation involving 20

Simon Tough is considering investing in a vending machine operation involving 20 vending machines located in various plants around the city. The machine manufacturer reports that similar vending machi...

Q: Fox Run Outfitters manufactures lightweight frames that it uses in several of

Fox Run Outfitters manufactures lightweight frames that it uses in several of its backpack products. Management is considering whether to continue manufacturing the frames or to buy them from an outsi...

Q: Nate Inc. is a newly organized manufacturing business that plans to

Nate Inc. is a newly organized manufacturing business that plans to manufacture and sell 40,000 units per year of a new product. The following estimates have been made of the company’...

Q: Estimate the value of a loyal customer of a loyal Volvo automobile

Estimate the value of a loyal customer of a loyal Volvo automobile owner? Assume the contribution margin is 0.32, the purchase price is $70,000, the repurchase frequency is every four years, and the c...

Q: What is the average value of a loyal customer (VLC)

What is the average value of a loyal customer (VLC) in a target market segment if the average purchase price is $70 per visit, the frequency of repurchase is every month, the contribution margin is 20...

Q: What is a grocery store’s contribution margin (CM) if the

What is a grocery store’s contribution margin (CM) if the average purchase price is $86.55 per visit, the customer defection rate is 0.10, the VLC is $1,800, and 52 purchases are made per year? Use a...

Q: Use the Excel template VLC to estimate the value of a loyal

Use the Excel template VLC to estimate the value of a loyal customer for a loyal Craftsman tool buyer? Assume the contribution margin is 0.25, the purchase price is $300 for a certain set of tools, an...

Q: A retail store sells a popular cosmetic called Devine and the store

A retail store sells a popular cosmetic called Devine and the store manager was given $100,000 by the corporate office to improve store performance any way she thinks best. The “bas...

Q: The manager at Raphael's Four-Star Italian Restaurant wants to set

The manager at Raphael's Four-Star Italian Restaurant wants to set the price of their premiere entrée. He estimates a loyal customer is worth $1,000. Based on survey data, the customer defection rate...

Q: Use the Excel template VLC to find the average value of a

Use the Excel template VLC to find the average value of a loyal customer (VLC) in a target market segment if the average purchase price is $75 per visit, the frequency of repurchase is six times per y...

Q: Super-Tees Company plans to sell 12,000 T-

Super-Tees Company plans to sell 12,000 T-shirts at $16 each in the coming year. Product costs include: Direct materials per T-shirt $5.75 Direct labor per T-shirt $1.25 Variable overhead per T-shirt...

Q: Jay-Zee Company makes an in-car navigation system.

Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 16,000 units at a price of $320 each. Product costs include: Direct materials $68 Direct labor $40 Variable overhea...

Q: Health-Temp Company is a placement agency for temporary nurses.

Health-Temp Company is a placement agency for temporary nurses. It serves hospitals and clinics throughout the metropolitan area. Health-Temp Company believes it will place temporary nurses for a tota...

Q: Ioannis Inc., produces and sells two types of countertop ovens—

Ioannis Inc., produces and sells two types of countertop ovens—the toaster oven and the convection oven. Budgeted and actual data for the two models are shown below. Budgeted Amounts...

Q: Refer to Brief Exercise 18-6. Required:

Refer to Brief Exercise 18-6. Required: 1. Calculate the budgeted average unit contribution margin. (Round unit contribution margin to the nearest cent.) 2. Calculate the contribution margin volume va...

Q: Wetzel Company produces two types of machine parts: Part A and

Wetzel Company produces two types of machine parts: Part A and Part B, with unit contribution margins of $450 and $840 respectively. Assume initially that Wetzel can sell all that is produced of eithe...

Q: Ming Company reported the following sales and quality costs for the past

Ming Company reported the following sales and quality costs for the past four years. Assume that all quality costs are variable and that all changes in the quality cost ratios are due to a quality imp...

Q: Schylar Pharmaceuticals, Inc., plans to sell 130,000 units

Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of $22 each in the coming year. Total variable costs equal $1,086,800. Total fixed costs equal $8,000,000....

Q: Reagan, Inc., has developed a chew-proof dog bed

Reagan, Inc., has developed a chew-proof dog bed—the Tuff-Pup. Fixed costs are $204,400 per year. The average price for the Tuff-Pup is $36, and the average variable cost is $22 per unit. Currently, R...

Q: Sports-Reps, Inc., represents professional athletes and movie and

Sports-Reps, Inc., represents professional athletes and movie and television stars. The agency had revenue of $12,345,000 last year, with total variable costs of $5,678,700 and fixed costs of $2,192,4...

Q: Nail Glow, Inc., produces novelty nail polishes. Each bottle

Nail Glow, Inc., produces novelty nail polishes. Each bottle sells for $5.90. Variable unit costs are as follows: Acrylic base $0.86 Pigments 0.57 Other ingredients 0.43 Bottle, packing material $1.15...

Q: Cheetah Company manufactures custom-designed skins (covers) for iPods

Cheetah Company manufactures custom-designed skins (covers) for iPods® and other portable electronic devices. Variable costs are $9.20 per custom skin, the price is $19, and fixed costs are $104,860....

Q: Patz Company makes three types of stainless steel frying pans. Each

Patz Company makes three types of stainless steel frying pans. Each of the three types of pans requires the use of a special machine that has total operating capacity of 273,000 hours per year. Inform...

Q: Laghari Company makes and sells high-quality glare filters for microcomputer

Laghari Company makes and sells high-quality glare filters for microcomputer monitors. John Tanaka, controller, is responsible for preparing Laghari’s master budget and has assembled...

Q: Ardmore, Inc., manufactures heating and air conditioning units in its

Ardmore, Inc., manufactures heating and air conditioning units in its six divisions. One division, the Components Division, produces electronic components that can be used by the other five. All the c...

Q: Gaston Company manufactures furniture. One of its product lines is an

Gaston Company manufactures furniture. One of its product lines is an economy-line kitchen table. During the last year, Gaston produced and sold 100,000 units for $100 per unit. Sales of the table are...

Q: Nealon Company runs a driving range and golf shop. The budgeted

Nealon Company runs a driving range and golf shop. The budgeted income statement for the coming year is as follows. Required: 1. What is Nealon’s variable cost ratio? Its contributio...

Q: Rahm Company produces a single product. The projected income statement for

Rahm Company produces a single product. The projected income statement for the coming year, based on sales of 160,000 units, is as follows: Sales $2,000,000 Less: Variable costs 1,400,000 Contribution...

Q: Katayama Company produces a variety of products. One division makes neoprene

Katayama Company produces a variety of products. One division makes neoprene wetsuits. The division’s projected income statement for the coming year is as follows: Sales (65,000 units) $15,600,000 Les...

Q: Mahan Consulting is a service organization that specializes in the design,

Mahan Consulting is a service organization that specializes in the design, installation, and servicing of mechanical, hydraulic, and pneumatic systems. For example, some manufacturing firms, with mach...

Q: Quencher Beverage is a large regional retail establishment. Quencher recently decided

Quencher Beverage is a large regional retail establishment. Quencher recently decided to start selling one of its most popular products—Coca-Cola 10-packs—at a loss (i.e., a loss leader) in order to e...

Q: San Mateo Optics, Inc., specializes in manufacturing lenses for large

San Mateo Optics, Inc., specializes in manufacturing lenses for large telescopes and cameras used in space exploration. As the specifications for the lenses are determined by the customer and vary con...

Q: Haysbert Company provides management services for apartments and rental units. In

Haysbert Company provides management services for apartments and rental units. In general, Haysbert packages its services into two groups: basic and complete. The basic package includes advertising va...

Q: Sulert, Inc., produces and sells gel-filled ice packs

Sulert, Inc., produces and sells gel-filled ice packs. Sulert’s performance report for April follows: Required: 1. Calculate the contribution margin variance and the contribution mar...

Q: Gasconia Company produces three models of a product. Actual results from

Gasconia Company produces three models of a product. Actual results from last year are as follows: Gasconia had budgeted the following amounts: Required: 1. Calculate the contribution margin variance....

Q: Pittsburgh-Walsh Company (PWC) is a manufacturing company whose

Pittsburgh-Walsh Company (PWC) is a manufacturing company whose product line consists of lighting fixtures and electronic timing devices. The Lighting Fixtures Division assembles units for the upscale...

Q: Patz Company produces two industrial cleansers that use the same liquid chemical

Patz Company produces two industrial cleansers that use the same liquid chemical input: Regular Strength and Heavy Duty. Regular Strength uses two quarts of the chemical for every unit produced, and H...

Q: Desayuno Products, Inc., produces cornf lakes and branf lakes.

Desayuno Products, Inc., produces cornf lakes and branf lakes. The manufacturing process is highly mechanized; both products are produced by the same machinery by using different settings. For the com...

Q: Pratt Company produces two replacement parts for a popular line of Blu

Pratt Company produces two replacement parts for a popular line of Blu-ray disc players: Part A and Part B. Part A is made up of two components, one manufactured internally and one purchased from exte...

Q: Bountiful Manufacturing produces two types of bike frames (Frame X and

Bountiful Manufacturing produces two types of bike frames (Frame X and Frame Y). Frame X passes through four processes: cutting, welding, polishing, and painting. Frame Y uses three of the same proces...

Q: Use the same transaction data for Magnificent Modems, Inc.

Use the same transaction data for Magnificent Modems, Inc. Required 1. Use the following partially completed form to prepare an income statement using the contribution margin format. Sales revenue $60...

Q: Siwa Company makes and sells a decorative ceramic statue. Each statue

Siwa Company makes and sells a decorative ceramic statue. Each statue costs $50 to manufacture and sells for $75. Siwa spends $3 to ship the statue to customers and pays salespersons a $2 commission f...

Q: The following income statement was drawn from the records of Joel Company

The following income statement was drawn from the records of Joel Company, a merchandising firm. JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 Required 1. Reconstruct the income...

Q: The following income statement applies to Kawai Company for the current year

The following income statement applies to Kawai Company for the current year. Required 1. Use the contribution margin approach to calculate the magnitude of operating leverage. 2. Use the operating le...

Q: Cobb Company currently produces and sells 9,000 units annually of

Cobb Company currently produces and sells 9,000 units annually of a product that has a variable cost of $20 per unit and annual fixed costs of $195,000. The company currently earns a $228,000 annual p...

Q: Riku Company manufactures two products. The budgeted per-unit contribution

Riku Company manufactures two products. The budgeted per-unit contribution margin for each product follows. Riku expects to incur annual fixed costs of $540,000. The relative sales mix of the products...

Q: The Blanket Company (TBC) manufactures two types of blankets.

The Blanket Company (TBC) manufactures two types of blankets. One is made of nylon. The other is made of wool. The budgeted per-unit contribution margin for each product follows. TBC expects to incur...

Q: Chang Corporation sells products for $120 each that have variable costs

Chang Corporation sells products for $120 each that have variable costs of $80 per unit. Chang’s annual fixed cost is $720,000. Required Use the per-unit contribution margin approach to determine the...

Q: Santiago Company incurs annual fixed costs of $66,000.

Santiago Company incurs annual fixed costs of $66,000. Variable costs for Santiago’s product are $34 per unit, and the sales price is $50 per unit. Santiago desires to earn an annual profit of $34,000...

Q: Information concerning a product produced by Hansen Company appears as follows.

Information concerning a product produced by Hansen Company appears as follows. Sales price per unit $ 180 Variable cost per unit $100 Total annual fixed manufacturing and operating costs $720,000 Req...

Q: Hensely Company, which produces and sells a small digital clock,

Hensely Company, which produces and sells a small digital clock, bases its pricing strategy on a 25 percent markup on total cost. Based on annual production costs for 25,000 units of product, computat...

Q: Nagano Company, a merchandising firm, reported the following operating results

Nagano Company, a merchandising firm, reported the following operating results. Required 1. Reconstruct the income statement using the contribution margin format. 2. Calculate the magnitude of operati...

Q: The following budgeted income statement applies to Johnson Company. /

The following budgeted income statement applies to Johnson Company. Required 1. Use the contribution margin approach to calculate the magnitude of operating leverage. 2. Use the operating leverage mea...

Q: Arnold Company currently produces and sells 10,000 units of a

Arnold Company currently produces and sells 10,000 units of a telephone per year that has a variable cost of $10 per unit and a fixed cost of $500,000. The company currently earns a $200,000 annual pr...

Q: Oxford Company makes two products. The budgeted per-unit contribution

Oxford Company makes two products. The budgeted per-unit contribution margin for each product follows. Oxford expects to incur fixed costs of $390,000. The relative sales mix of the products is 75 per...

Q: Colorado Sports (CS) manufactures two types of tents. One

Colorado Sports (CS) manufactures two types of tents. One is made of plastic. The other is made of gortex. The budgeted per-unit contribution margin for each product follows: CS expects to incur annu...

Q: Halsey Corporation manufactures products that have variable costs of $60 per

Halsey Corporation manufactures products that have variable costs of $60 per unit. Its fixed cost amounts to $360,000. It sells the products for $90 each. Required Use the per-unit contribution margin...

Q: Martinez Company incurs annual fixed costs of $300,000.

Martinez Company incurs annual fixed costs of $300,000. Variable costs for Martinez’s product are $42 per unit, and the sales price is $70 per unit. Martinez desires to earn a profit of $120,000. Requ...

Q: Information concerning a product produced by Finn Company appears as follows.

Information concerning a product produced by Finn Company appears as follows. Sales price per unit $ 180 Variable cost per unit $ 120 Total fixed manufacturing and operating costs $780,000 Required De...

Q: Maccoa Soft, a division of Zayer Software Company, produces and

Maccoa Soft, a division of Zayer Software Company, produces and distributes an automated payroll software system. A contribution margin format income statement for Maccoa Soft for the past year follow...

Q: Refer to Problem 6-32A. Required 1.

Refer to Problem 6-32A. Required 1. Prepare a spreadsheet to solve Requirements a, b, and c in Problem 6-32A. 2. While constructing formulas for Requirement a of Problem 6-32A, include a formula to ca...

Q: Benton Company produces and sells a food processor that it prices at

Benton Company produces and sells a food processor that it prices at a 32 percent markup on total cost. Based on data pertaining to producing and selling 50,000 food processors, Benton computes the sa...

Q: Imboden Manufacturing Company established the following standard price and cost data.

Imboden Manufacturing Company established the following standard price and cost data. Sales price $  15 per unit Variable manufacturing cost $ 7 per unit Fixed manufacturing cost $32,500 total Fixed s...

Q: Arnold Vimka is a venture capitalist facing two alternative investment opportunities.

Arnold Vimka is a venture capitalist facing two alternative investment opportunities. He intends to invest $800,000 in a startup firm. He is nervous, however, about future economic volatility. He asks...

Q: Thornton Computer Services, Inc., has been in business for six

Thornton Computer Services, Inc., has been in business for six months. The following are basic operating data for that period. Table Summary: A table shows 2 columns. Column 1 has entries. Column 2 ha...

Q: Ritchie Manufacturing Company makes a product that it sells for $150

Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs of $60 per unit. Variable selling expenses are $18 per unit, annual fixed...

Q: Massey Company reported the following data regarding the product it sells.

Massey Company reported the following data regarding the product it sells. Sales price $25 Contribution margin ratio 40% Fixed costs $810,000 Required Use the contribution margin ratio approach and...

Q: Bauer Manufacturing Company reported the following data regarding a product it manufactures

Bauer Manufacturing Company reported the following data regarding a product it manufactures and sells. The sales price is $100. Variable costs Manufacturing $30 per unit Selling 12 per unit Fixed cost...

Q: Reid Company is considering the production of a new product. The

Reid Company is considering the production of a new product. The expected variable cost is $27 per unit. Annual fixed costs are expected to be $810,000. The anticipated sales price is $72 each. Requir...

Q: Trevino Company makes and sells products with variable costs of $24

Trevino Company makes and sells products with variable costs of $24 each. Trevino incurs annual fixed costs of $315,000. The current sales price is $87. Required The following requirements are interde...

Q: Vaughn Corporation sells hammocks; variable costs are $75 each,

Vaughn Corporation sells hammocks; variable costs are $75 each, and the hammocks are sold for $125 each. Vaughn incurs $240,000 of fixed operating expenses annually. Required 1. Determine the sales vo...

Q: Kidd Company produces two products. Budgeted annual income statements for the

Kidd Company produces two products. Budgeted annual income statements for the two products are provided as follows. Table Summary: A table has 4 columns. Column 1 has entries. Column 2 has power. Colu...

Q: June Wade has invested in two startup companies. At the end

June Wade has invested in two startup companies. At the end of the first year, she asks you to evaluate their operating performance. The following operating data apply to the first year. Required 1. U...

Q: Kane Legal Services provides legal advice to clients. The following data

Kane Legal Services provides legal advice to clients. The following data apply to the first six months of operation. Required 1. What is the average service revenue per hour for the six-month time per...

Q: Vezinov Company manufactures portable heaters and sells them for $200 each

Vezinov Company manufactures portable heaters and sells them for $200 each. According to the company’s records, the variable costs, including direct labor and direct materials, are $80. Factory deprec...

Q: Kilner Company reported the following data regarding the one product it sells

Kilner Company reported the following data regarding the one product it sells. Sales price $40 Contribution margin ratio 30% Fixed costs $540,000 per year Required Use the contribution margin ratio ap...

Q: Stackhouse Company manufactures and sells its own brand of digital cameras.

Stackhouse Company manufactures and sells its own brand of digital cameras. It sells each camera for $250. The company’s accountant prepared the following data. Manufacturing costs Variable $90 per un...

Q: Executive officers of Norman Company are assessing the profitability of a potential

Executive officers of Norman Company are assessing the profitability of a potential new product. They expect that the variable cost of making the product will be $60 per unit and fixed manufacturing c...

Q: O’Hara Company makes a product that it sells for $200.

O’Hara Company makes a product that it sells for $200. O’Hara incurs annual fixed costs of $250,000 and variable costs of $160 per unit. Required The following requirements are interdependent. For exa...

Q: Milton Company sells tennis racquets; variable costs for each are $

Milton Company sells tennis racquets; variable costs for each are $45, and each is sold for $135. Milton incurs $540,000 of fixed operating expenses annually. Required 1. Determine the sales volume in...

Q: Executive officers of Roth Company have prepared the annual budgets for its

Executive officers of Roth Company have prepared the annual budgets for its two products, Washer and Dryer, as follows. Table Summary: A table has 4 columns. Column 1 has entries. Column 2 has washer....

Q: How does a contribution margin income statement differ from the income statement

How does a contribution margin income statement differ from the income statement used in financial reporting?

Q: In what three ways can the contribution margin be useful in cost

In what three ways can the contribution margin be useful in cost-volume-profit analysis?

Q: What is the equation method for determining the break-even point

What is the equation method for determining the break-even point? Explain how the results of this method differ from those of the contribution margin approach.

Q: Belleterre Tiles makes tiles for flooring and other applications. The CFO

Belleterre Tiles makes tiles for flooring and other applications. The CFO of the company provides you with the following information for the period October through December, the companyâ€&#...

Q: Ferry Electronics produces a wide variety of video and audio systems for

Ferry Electronics produces a wide variety of video and audio systems for home entertainment. One of the Ferry plants (Lakeview) produces home theatre systems. The plant produces three models, Silver,...

Q: Loretto Audio produced and sold 750 units of the company’s signature (

Loretto Audio produced and sold 750 units of the company’s signature (and only) product in November. You have collected the following information from the accounting records: Require...

Q: Hazlett & Family is organized into two geographic markets: Northern and

Hazlett & Family is organized into two geographic markets: Northern and Southern. The company makes an off-road vehicle for recreation and agricultural use. The vehicle is sold in three models, de...

Q: Elmo Security Consultants (ESC) offers a standardized review of data

Elmo Security Consultants (ESC) offers a standardized review of data security for small business owners. The following data apply to the provision of these reviews: Required Give the amount for each o...

Q: Lillibridge & Friends, Inc. provides you with the following data

Lillibridge & Friends, Inc. provides you with the following data for its single product: Required Give the amounts for each of the following: a. Prime cost per unit. b. Contribution margin per uni...

Q: The cost structure of Dennis’s Retail Mart is dominated by variable costs

The cost structure of Dennis’s Retail Mart is dominated by variable costs with a contribution margin ratio of .30 and fixed costs of $60,000. Every dollar of sales contributes 30 cents toward fixed co...

Q: Couzen’s Company’s cost structure is dominated by variable costs with a contribution

Couzen’s Company’s cost structure is dominated by variable costs with a contribution margin ratio of .25 and fixed costs of $450,000. Every dollar of sales contributes 25 cents toward fixed costs and...

Q: Accounting records for The Ralston Company show the following for the most

Accounting records for The Ralston Company show the following for the most recent fiscal year: Required Prepare: a. A gross margin income statement. b. A contribution margin income statement.

Q: Refer to Exercise 2-56. Required Prepare:

Refer to Exercise 2-56. Required Prepare: a. A gross margin income statement. b. A contribution margin income statement. Exercise 2-56:

Q: The following information is available for Alcoy Partners for the year just

The following information is available for Alcoy Partners for the year just ended: Required Select the answer for each of the following costs. a. Variable cost per unit. 1. $12 2. $18 3. $21 4. $25 b....

Q: Gregorie Tool & Die reports the following information for the quarter:

Gregorie Tool & Die reports the following information for the quarter: Required Select the answer for each of the following costs. a. Variable cost per unit. 1. $30 2. $35 3. $42 4. $45 b. Variabl...

Q: Waterman’s WaterWorld Tourist Park has collected the following data for operations for

Waterman’s WaterWorld Tourist Park has collected the following data for operations for the year: Required a. What is the average selling price for a ticket? b. What is the average va...

Q: The manager of Gratiot Flooring estimates operating costs for the year will

The manager of Gratiot Flooring estimates operating costs for the year will include $540,000 in fixed costs. Required a. Find the break-even point in sales dollars with a contribution margin ratio of...

Q: Tracey Packaged Snax reports the following information for November: /

Tracey Packaged Snax reports the following information for November: Required Prepare: a. A gross margin income statement. b. A contribution margin income statement.

Q: How does a value income statement differ from a gross margin income

How does a value income statement differ from a gross margin income statement? From a contribution margin income statement?

Q: Talon Services offers standardized job counseling services. The company is planning

Talon Services offers standardized job counseling services. The company is planning a new service line targeted to active seniors who are retiring and looking forward to a new career. The service will...

Q: What are the advantages of the contribution margin format based on variable

What are the advantages of the contribution margin format based on variable costing compared to the traditional format based on full absorption costing?

Q: Lamphere Lawn Care provides lawn and gardening services. The price of

Lamphere Lawn Care provides lawn and gardening services. The price of the service is fixed at a flat rate for each service, and most costs of providing the service are the same, given the similarity i...

Q: Fargo Industries manufactures and sells snowmobiles. The company has eight business

Fargo Industries manufactures and sells snowmobiles. The company has eight business units strategically located near the major markets, each with a sales force and two to four manufacturing plants. Th...

Q: Refer to the data in Exercise 13-51. Recent economic

Refer to the data in Exercise 13-51. Recent economic events in the local area have led the owner of Lamphere Lawncare to revise some estimates in budgeting the operating income for the following year....

Q: Dakota Security Systems (DSS) is a decentralized organization that evaluates

Dakota Security Systems (DSS) is a decentralized organization that evaluates divisional management based on measures of divisional contribution margin. Residential Division and Commercial Division bot...

Q: The following are the actual results for Bentler Associates for the most

The following are the actual results for Bentler Associates for the most recent period: The company planned to produce and sell 72,000 units for $12.50 each. At that volume, the contribution margin wo...

Q: La Salle Outfitters organizes wilderness tours. For the most recent touring

La Salle Outfitters organizes wilderness tours. For the most recent touring season, the industry volume variance showed La Salle sold 336 more tours than expected, but the market share variance result...

Q: Appoline Juices budgeted sales of 87,000 units of Grape,

Appoline Juices budgeted sales of 87,000 units of Grape, assuming that the company would have 30 percent of 290,000 units sold in a particular market. The actual results were 78,000 units sold by Appo...

Q: Logan Passport Services budgeted sales of 8,000 units of its

Logan Passport Services budgeted sales of 8,000 units of its Basic Visa Service (BVS). This was based on its estimated 5 percent share of this service in the relevant regional market. Actual sales of...

Q: Gerisch Consolidated sold 21,150 units of its only product last

Gerisch Consolidated sold 21,150 units of its only product last period. It had budgeted sales of 24,300 units based on an expected market share of 25 percent. The sales activity variance for the perio...

Q: Solutions Inc. has three departments: printing, supplies, and

Solutions Inc. has three departments: printing, supplies, and cards. Certain information about the revenues and expenses of the departments for the year ending December 31, 20X1, is given below. Indir...

Q: 1. Is the identification of purchases returns and allowances by department

1. Is the identification of purchases returns and allowances by department valuable to managerial control? Explain. 2. If one department consistently has a comparatively large amount of cash short in...

Q: 1. The vice president of the manufacturing company for which you

1. The vice president of the manufacturing company for which you are the accountant has suggested to the president that all prices should be established on the basis of direct costing. Respond to this...

Q: How is contribution margin computed?

How is contribution margin computed?

Q: Home Gifts has three sales departments: dishes, clothing, and

Home Gifts has three sales departments: dishes, clothing, and paper products. The store’s condensed income statement for the year ended December 31, 20X1, is shown below: The proprietor asked the audi...

Q: Data related to the income and expenses of the TNCO Inc.

Data related to the income and expenses of the TNCO Inc. year ending December 31, 20X1, follow: Allocated indirect expenses Outside department $44,500 Inside department 35,500 Interest income $400 Gro...

Q: The Lawn Shop sells plants, fertilizers, and other garden products

The Lawn Shop sells plants, fertilizers, and other garden products. The store has three departments: plants, chemicals, and tools. Certain information about the revenues and expenses of the department...

Q: Smart Safety, a 3-year- old company, has

Smart Safety, a 3-year- old company, has been producing and selling a single type of bicycle helmet. Smart Safety uses standard costing. After reviewing the income statements for the first 3 years, St...

Q: Prepare an income statement under throughput costing for the year ended December

Prepare an income statement under throughput costing for the year ended December 31, 2020 for Stenback Company. 2. Reconcile the difference between the contribution margin and the throughput margin fo...

Q: Terry Lawler, managing director of the Little Rock Reviewers Company,

Terry Lawler, managing director of the Little Rock Reviewers Company, is examining how overhead costs behave with changes in monthly professional labor-hours billed to clients. Assume the following hi...

Q: Isochlorine is produced in a chemical process that is very threatening to

Isochlorine is produced in a chemical process that is very threatening to the environment. As a result of this, the government has limited the yearly production. Company Soleil uses isochlorine to pro...

Q: KidsTravel produces car seats for children from newborn to two years old

KidsTravel produces car seats for children from newborn to two years old. KidsTravel’s only problem with its car seats was stitching in the straps. The problem can usually be detected and repaired dur...

Q: iProtect produces covers for all makes and models of iPads. iProtect

iProtect produces covers for all makes and models of iPads. iProtect sells 1,500,000 units each year at a price of $30 per unit and a contribution margin of 35%. A survey of iProtect’...

Q: Pressing Matters manufactures and sells 18,000 high-technology printing

Pressing Matters manufactures and sells 18,000 high-technology printing presses each year. The variable and fixed costs of rework and repair are as follows: Pressing Matters’ current...

Q: Chocfix produces hot cocoa mix. The company has two divisions,

Chocfix produces hot cocoa mix. The company has two divisions, each operating as a profit center. The transportation division purchases raw cocoa in the Ivory Coast and transports it to the mixing div...

Q: Which of the following statement about contribution margin and gross margin is

Which of the following statement about contribution margin and gross margin is correct. a. Contribution margin indicates why the operating income changes as the number of units sold changes. b. Contri...

Q: The Matrix Company has three product lines of belts—A,

The Matrix Company has three product lines of belts—A, B, and C—with contribution margins of $7, $5, and $4, respectively. The president foresees sales of 400,000 units in the coming period, consistin...

Q: Blackthorns Ltd produces a single product, which has a selling price

Blackthorns Ltd produces a single product, which has a selling price of £10 per unit and a variable cost of production of £4 per unit. The fixed costs of production are £55,000. In addition, the compa...

Q: The Garden Club is preparing for its annual meeting in which a

The Garden Club is preparing for its annual meeting in which a magic show will be shown to its contributing members only. Last year, out of 1,500 members, only 600 contributed for the magic show. Tick...

Q: Wellington Vents Ltd operates and services snack vending machines located in restaurants

Wellington Vents Ltd operates and services snack vending machines located in restaurants, metro stations, canteens, etc. The machines are rented from the manufacturer. In addition, the company must re...

Q: Yahama Medical Centre operates a medical surgery in Japan that specializes in

Yahama Medical Centre operates a medical surgery in Japan that specializes in the diagnosis and treatment of hay fever allergies. The firm’s budget for next year is as follows: Requi...

Q: AgroPharm Corporation manufactures pharmaceutical products that are sold through a network of

AgroPharm Corporation manufactures pharmaceutical products that are sold through a network of external sales agents. The agents are paid a commission of 18% of revenues. AgroPharm is considering repla...

Q: Consider the following details of the income statement of Fountain Pen Ltd

Consider the following details of the income statement of Fountain Pen Ltd, a Swedish company that produces special pens, for the last year: An analysis of Fountain Pen Ltd’s costs r...

Q: Roma Skincare manufactures and sells a face cream to small specialty stores

Roma Skincare manufactures and sells a face cream to small specialty stores in Victoria, Australia. It presents the monthly operating income statement shown here to Jacob Scott, a potential investor i...

Q: Simplex Inc. sells its product at $80 per unit with

Simplex Inc. sells its product at $80 per unit with a contribution margin of 40%. During 2016, Simplex sold 540,000 units of its product; its total fixed costs are $2,100,000. Required 1. Calculate t...

Q: The Beta Company started business on January 1, 2020. Beta

The Beta Company started business on January 1, 2020. Beta manufactures a specialty honey soda, which it sells directly to state-owned distributors in Abu Dhabi. Honey soda is produced and sold in six...

Q: Jersey Acres Dairy, maker of specialty cheeses, produces a soft

Jersey Acres Dairy, maker of specialty cheeses, produces a soft cheese from the milk of Friesian cows raised on a special corn-based diet. One kilogram of soft cheese, which has a contribution margin...

Q: Talking Toys (TT) produces dolls in two processes: molding

Talking Toys (TT) produces dolls in two processes: molding and assembly. TT is currently producing two models: Chatty Chelsey and Talking Tanya. Production in the molding department is limited by the...

Q: Northampton plc, a British-based company, makes superbikes for

Northampton plc, a British-based company, makes superbikes for the U.S. and British markets. For the current year, it estimates fixed costs of £10 million. Its variable costs are £3,000 per motorcycle...

Q: Space Infonautics, Inc., produces handheld Windows CE™-compatible organizers

Space Infonautics, Inc., produces handheld Windows CEâ„¢-compatible organizers. Space Infonautics markets three different handheld models: MobilePro is a souped-up version for the exec...

Q: Ariba Corporation reaches its breakeven point at $3,200,

Ariba Corporation reaches its breakeven point at $3,200,000 of revenues. At present, it is selling 105,000 units and its variable costs are $30. Fixed manufacturing costs, administrative costs, and ma...

Q: Space Infonautics’ senior vice president of marketing prepared his budget at the

Space Infonautics’ senior vice president of marketing prepared his budget at the beginning of the third quarter assuming a 25% market share based on total sales. Star Research estimated that the total...

Q: The Robin’s Basket operates a chain of Italian gelato stores. Although

The Robin’s Basket operates a chain of Italian gelato stores. Although the Robin’s Basket charges customers the same price for all flavors, production costs vary, d...

Q: The Brady Corporation sells 375,000 V262 valves to the automobile

The Brady Corporation sells 375,000 V262 valves to the automobile and truck industry. Brady has a capacity of 210,000 machine-hours and can produce two valves per machine-hour. V262’s contribution mar...

Q: American Electronics manufactures 200,000 55-inch 4K TVs each

American Electronics manufactures 200,000 55-inch 4K TVs each year. The variable and fixed costs of rework and repair for the TVs are as follows: American Electronics’ 55-inch 4K TVs...

Q: Outmark Corporation manufactures computer processors for leading com- puter makers.

Outmark Corporation manufactures computer processors for leading com- puter makers. Joe Agent is the management accountant for one of Outmark’s largest manufacturing plants. His bonu...

Q: The Belkin Company has three product lines of coffee mugs—A

The Belkin Company has three product lines of coffee mugs—A, B, and C—with contribution margins of $7, $5, and $4, respectively. The president foresees sales of 240,000 units in the coming period, con...

Q: Differentiate between contribution margin and contribution margin ratio.

Differentiate between contribution margin and contribution margin ratio.

Q: Abeka Bakery Company had opening inventory of 14,800 units and

Abeka Bakery Company had opening inventory of 14,800 units and closing inventory of 17,500 units. Profits based on marginal costing were £315,250 while overhead absorption rate was £5.20 unit. What is...

Q: O’Reilly Inc. makes and sells many consumer products. The firm’s

O’Reilly Inc. makes and sells many consumer products. The firm’s average contribution margin ratio is 25%. Management is considering adding a new product that will require an additional $18,000 per mo...

Q: D&R Corp. has annual revenues of $375,

D&R Corp. has annual revenues of $375,000, an average contribution margin ratio of 32%, and fixed expenses of $150,000. Required: a. Management is considering adding a new product to the company’s pro...

Q: The management of Rocko’s Pizzeria is considering a special promotion for the

The management of Rocko’s Pizzeria is considering a special promotion for the last two weeks of May, which is normally a relatively low-demand period. The special promotion would involve selling two m...

Q: The president of Eaglesway Inc. attended a seminar about the contribution

The president of Eaglesway Inc. attended a seminar about the contribution margin model and returned to her company full of enthusiasm about it. She requested that last year’s traditi...

Q: Vogel Co. produces three models of heating and air conditioning thermostat

Vogel Co. produces three models of heating and air conditioning thermostat components. The following table summarizes data about each model: Required: a. Criticize the preceding presentation. On what...

Q: Product X has a contribution margin of $150 per unit and

Product X has a contribution margin of $150 per unit and requires three hours of machine time. Product Y requires four hours of machine time and provides $200 of contribution margin per unit. Required...

Q: Eastern Imports Inc. sold 12,000 units in August.

Eastern Imports Inc. sold 12,000 units in August. Per unit selling price and variable expense were $30 and $15, respectively. Fixed expense incurred for August totaled $120,000. Required: Prepare the...

Q: Current operating income for Bay Area Cycles Co. is $74

Current operating income for Bay Area Cycles Co. is $74,000. Selling price per unit is $120, the contribution margin ratio is 30%, and fixed expense is $250,000. Required: Calculate Bay Area Cycle’s p...

Q: Refer to the current information for Bay Area Cycle Co. in

Refer to the current information for Bay Area Cycle Co. in Mini-Exercise 12.4. Required: Calculate Bay Area Cycle’s breakeven point in units and total sales dollars. Calculate Bay Area Cycle’s margin...

Q: Assume MIX Inc. has sales volume of $1,000

Assume MIX Inc. has sales volume of $1,000,000 for two products with May sales and contribution margin ratios as follows: Product A: Sales $400,000; Contribution Margin Ratio 30% Product B: Sales $6...

Q: Assume MIX Inc. has sales volume of $1,000

Assume MIX Inc. has sales volume of $1,000,000 for two products with June sales and contribution margin ratios as follows: Product A: Sales $500,000; Contribution Margin Ratio 30% Product B: Sales $50...

Q: ABC Company operates two divisions with the following sales and expense information

ABC Company operates two divisions with the following sales and expense information for the month of May: Division 1: sales, $240,000; contribution margin ratio, 50%; direct fixed expenses, $48,000. D...

Q: Lakeside Inc. produces Product A and Product B that require special

Lakeside Inc. produces Product A and Product B that require special machining time. Machine time capacity is 10,000 machine hours per month. Lakeside estimates April demand for each product and provid...

Q: HighTech Inc. and OldTime Co. compete within the same industry

HighTech Inc. and OldTime Co. compete within the same industry and had the following operating results in 2022: Required: a. Calculate the breakeven point for each firm in terms of revenue. b. What ob...

Q: Shown here is an income statement in the traditional format for a

Shown here is an income statement in the traditional format for a firm with a sales volume of 10,000 units. Cost formulas also are shown: Required: a. Prepare an income statement in the contribution m...

Q: Shown here is an income statement in the traditional format for a

Shown here is an income statement in the traditional format for a firm with a sales volume of 18,000 units: Required: a. Prepare an income statement in the contribution margin format b. Calculate the...

Q: Presented here is the income statement for Big Sky Inc. for

Presented here is the income statement for Big Sky Inc. for the month of February: Based on an analysis of cost behavior patterns, it has been determined that the company’s contribut...

Q: Presented here is the income statement for Fairchild Co. for March

Presented here is the income statement for Fairchild Co. for March: Based on an analysis of cost behavior patterns, it has been determined that the company’s contribution margin rati...

Q: HighTide Canvas Co. currently makes and sells two model sizes of

HighTide Canvas Co. currently makes and sells two model sizes of a boat cover. Data applicable to the current operation are summarized in the following columns labeled Current Operation. Management is...

Q: Muscle Beach Inc. makes three models of high-performance weight

Muscle Beach Inc. makes three models of high-performance weight-training benches. Current operating data are summarized here: Required: a. Calculate the contribution margin ratio of each product. b. C...

Q: Austin Inc. produces small-scale replicas of vintage automobiles for

Austin Inc. produces small-scale replicas of vintage automobiles for collectors and museums. Finished products are built on a 1/20 scale of originals. The firm’s income statement sho...

Q: TopCap Co. is evaluating the purchase of another sewing machine that

TopCap Co. is evaluating the purchase of another sewing machine that will be used to manufacture sport caps. The invoice price of the machine is $98,000. In addition, delivery and installation costs w...

Q: Assume you are a sales representative for Sweet Tooth Candy Company.

Assume you are a sales representative for Sweet Tooth Candy Company. One of your customers is interested in buying some candy that will be given to the members of a high school Student Government Asso...

Q: Tommy Appleton is in charge of arranging the “social hour”

Tommy Appleton is in charge of arranging the “social hour” period and dinner for the monthly meetings of the local chapter of the Management Accountants Association. Tommy is negotiating with a new re...