|
|
|
Ch.09 Kinney 9e SM Final.doc
Ch.09_Kinney_9e_SM_Final.doc
Showing 27-28 out of 31
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 27
Chapter 9
287
Income Statements
2013
2014
Sales
$ 600,000
$ 840,000
Less variable expense
a
(180,000
)
(252,000
)
Contribution margin
b
$ 420,000
$ 588,000
Less fixed expenses
(300,000
)
(300,000
)
Net income before tax
c
$ 120,000
$ 288,000
Tax expense
(48,000
)
(115,200
)
Net income
$
72,000
$ 172,800
a
Variable expense = Sales less contribution margin
2013 = $600,000
$420,000 = $180,000
2014 = $840,000
$588,000 = $252,000
b
Contribution margin = Net income before tax + Fixed costs
2013 = $120,000 + $300,000 = $420,000
2014 = $288,000 + $300,000 = $588,000
c
Net income before tax =
2013 = $ 72,000 ÷ (1
0.40) = $120,000
2014 = $172,800 ÷ (1
0.40) = $288,000
b.
Break-even
sales
2013
2014
Olson
$60,000 ÷ ($180,000 ÷ $600,000)
$200,000
$60,000 ÷ ($288,000 ÷ $960,000)
$200,000
Miami
$300,000 ÷ ($420,000 ÷ $600,000)
428,572
$300,000 ÷ ($588,000 ÷ $840,000)
428,572
c.
Olson
Profit before taxes = 0.12(of investment); tax rate = 40%
= 0.12($1,200,000) = $144,000
Profit after taxes
= $144,000 ÷ (1
0.4) = $240,000
($60,000 + $240,000) ÷ 0.30 = $1,000,000
Miami
Profit before taxes = 0.12(of investment); tax rate = 40%
= 0.12($1,200,000) = $144,000
Profit after taxes
= $144,000 ÷ (1
0.4) = $240,000
($300,000 + $240,000) ÷ 0.70 = $771,429
d.
Margin of safety = Actual sales – Break-even sales
Olson
2013
$600,000
$200,000 = $400,000
2014
$960,000
$200,000 = $760,000
Miami
2013
$600,000
$428,572 = $171,428
2014
$840,000
$428,572 = $411,428
Operating leverage = Contribution margin ÷ Profit before tax
© 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 28
288
Chapter 9
Olson
2013
$180,000 ÷ $120,000 = 1.50
2014
$288,000 ÷ $228,000 = 1.26
Miami
2013
$420,000 ÷ $120,000 = 3.50
2014
$588,000 ÷ $288,000 = 2.04
e.
Olson
Miami
Contribution margin
$ 288,000
$ 588,000
Increase (1.15 × CM)
$ 331,200
$ 676,200
Less fixed costs
(60,000
)
(300,000
)
Net income before taxes
$ 271,200
$ 376,200
Taxes (40%)
(108,480
)
(150,480
)
Net income
$ 162,720
$ 225,720
f.
Olson
Miami
Contribution margin
$288,000
$ 588,000
Decrease (0.80 × CM)
$230,400
$ 470,400
Less fixed costs
(60,000
)
(300,000
)
Net income before taxes
$170,400
$ 170,400
Taxes (40%)
(68,160
)
(68,160
)
Net income
$102,240
$ 102,240
g.
Olson
49.
a.
Dayton Company
Income Statement (Variable Costing)
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly
accessible website, in whole or in part.
Miami
Ace your assessments! Get Better Grades
Browse thousands of Study Materials & Solutions from your Favorite Schools
University of Mississippi
University_of_Mississippi
School:
Cost_Accounting
Course:
Great resource for chem class. Had all the past labs and assignments
Leland P.
Santa Clara University
Introducing Study Plan
Using AI Tools to Help you understand and remember your course concepts better and faster than any other resource.
Find the best videos to learn every concept in that course from Youtube and Tiktok without searching.
Save All Relavent Videos & Materials and access anytime and anywhere
Prepare Smart and Guarantee better grades
Know more
Students also viewed documents
lab 18.docx
lab_18.docx
Course
Course
3
Module5QuizSTA2023.d...
Module5QuizSTA2023.docx.docx
Course
Course
10
Week 7 Test Math302....
Week_7_Test_Math302.docx.docx
Course
Course
30
Chapter 1 Assigment ...
Chapter_1_Assigment_Questions.docx.docx
Course
Course
5
Week 4 tests.docx.do...
Week_4_tests.docx.docx
Course
Course
23
Week 6 tests.docx.do...
Week_6_tests.docx.docx
Course
Course
106
