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Ch.09 Kinney 9e SM Final.doc
Ch.09_Kinney_9e_SM_Final.doc
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Ch.09 Kinney 9e SM Final.doc-CHAPTER 9 BREAK-EVEN ...
Ch.09_Kinney_9e_SM_Final.doc-CHAPTER 9 BREAK-EVEN POINT AND COST-VOLUME-PROFIT
Ch.09 Kinney 9e SM Final.doc-CHAPTE...
Ch.09_Kinney_9e_SM_Final.doc-CHAPTER 9 BREAK-EVEN POINT AND COST-VOLUME-PROFIT
Page 21
Chapter 9
281
42.
Ducks
Ducklings
Sales
$ 24.00
$12.00
Variable costs
(12.00
)
(8.00
)
Contribution margin
$ 12.00
$
4.00
Mix
× 1
× 5
Total contribution margin
$ 12.00
$20.00
The average contribution margin ratio is $32 ÷ $84 = 38.1% (rounded)
b.
Break-even point = $288,000 ÷ $32 = 9,000 bags per year or 750 bags a month
Ducks: 750 × 1 = 750 per month
Ducklings: 750 × 5 = 3,750 per month
c.
Target profit is $96,000 × 12 = $1,152,000
($288,000 + $1,152,000) ÷ $32 = 45,000 bags per year or 3,750 bags a month.
Ducks: 3,750 × 1 = 3,750 per month
Ducklings: 3,750 × 5 = 18,750 per month
d.
Ducks
Ducklings
Sales
$ 24.00
$12.00
Variable costs
(12.00
)
(8.00
)
Contribution margin
$ 12.00
$
4.00
Mix
× 1
× 9
Total contribution margin
$ 12.00
$36.00
Target profit after tax is $31,680.
Pre-tax profit is $31,680 ÷ (1
0.40) = $52,800 monthly or $633,600 per year.
Break-even = ($633,600 + $288,000) ÷ $48 = 19,200 bags per year, or 1,600
per month
Units
Revenue
Ducks (19,200 × $24)
19,200
$
460,800
Ducklings (19,200 × 9 × $12)
172,800
2,073,600
Total
$2,534,400
e.
[$288,000 + ($8,500 × 12)] ÷ [$12 + ($8 × 5)]
($288,000 + $102,000) ÷ $52 = 7,500
Yes, the company would want to make the change because the break-even
point is reduced from 9,000 mix units to 7,500 mix units.
43.
a. and b.
Total variable costs:
Reindeer
Snowmen
Flamingos
Variable product cost
$12.00
$15.00
$25.00
Variable selling expenses
6.00
4.50
8.00
Variable administrative exp.
3.00
5.50
6.00
Total
$21.00
$25.00
$39.00
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly
accessible website, in whole or in part.
Page 22
282
Chapter 9
Reindeer
Snowmen
Flamingos
Sales
$ 40.00
$ 35.00
$ 60.00
Variable costs
(21.00
)
(25.00
)
(39.00
)
Contribution margin
$ 19.00
$ 10.00
$ 21.00
Mix
× 1
× 2
× 4
Total contribution margin
$ 19.00
$ 20.00
$ 84.00
Contribution margin per “bag” = $19 + 20 + $84 = $123
Break-even point in units = ($420,000 + $150,000 + $80,178) ÷ $123
= 5,286 “bags”
Units Sold
Revenues
Reindeer (5,286 × $40.00)
5,286
$
211,440
Snowmen (5,286 × 2 × $35.00)
10,572
370,020
Flamingos (5,286 × 4 × $60.00)
21,144
1,268,640
Total
$1,850,100
c.
Units = ($650,178 + $250,428) ÷ $123 = 7,322 bags
Units Sold
Revenues
Reindeer (7,322 × $40.00)
7,322
$
292,880
Snowmen (7,322 × 2 × $35.00)
14,644
512,540
Flamingos (7,322 × 4 × $60.00)
29,288
1,757,280
Total
$2,562,700
d.
Pre-tax profit = $155,718 ÷ (1
0.40) = $259,530
Break-even in units = ($650,178 + $259,530) ÷ $123 = 7,396 bags
Units Sold
Revenues
Reindeer (7,396 × $40.00)
7,396
$
295,840
Snowmen (7,396 × 2 × $35.00)
14,792
517,720
Flamingos (7,396 × 4 × $60.00)
29,584
1,775,040
Total
$2,588,600
e.
MS bags = 7,396 bags
5,286 bags = 2,110 bags
MS $ = 2,110 × [$40 + ($35 × 2) + ($60 × 4)] = $738,500
MS % = 2,110 ÷ 7,396 = 28.5%
44.
a. and b.
Total variable costs:
Oak
Hickory
Cherry
Direct material
$10.40
$6.50
$17.60
Direct labor
3.60
0.80
12.80
Variable overhead
2.00
0.30
3.50
Variable selling
1.00
0.50
4.00
Variable administrative
0.40
0.20
0.60
Total
$17.40
$8.30
$38.50
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly
accessible website, in whole or in part.
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