Ch.09 Kinney 9e SM Final.doc-CHAPTER 9 B...
Ch.09_Kinney_9e_SM_Final.doc-CHAPTER 9 BREAK-EVEN POINT AND COST-VOLUME-PROFIT
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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 3
Chapter 9
263
EXERCISES
8.
a.
Ingredients
\$
56,000
Labor
26,000
48,000
Total variable cost
\$ 130,000
Divided by units
÷ 104,000
Variable production cost per unit
\$1.25
b.
Variable cost of goods sold = 98,000 × \$1.25
= \$122,500
c.
and d.
Dollars
Percent
Contribution margin ratio is:
Sales (98,000 × \$3.10)
\$ 303,800
100
Less variable costs
Cost of goods sold
\$122,500
10,000
(132,500
)
44
Contribution margin and ratio
\$ 171,300
56
Contribution margin per unit = \$171,300 ÷ 98,000 = \$1.75 per bottle (rounded)
9.
a.
Direct material
\$ 150,000
Direct labor
100,000
75,000
Total variable production cost
\$ 325,000
Divided by units produced
÷ 325,000
Variable production cost per cap
\$1.00
b.
Contribution margin per unit:
Revenue
\$450,000
Less variable costs
Cost of goods sold (180,000 × \$1.00)
\$180,000
90,000
270,000
Contribution margin
\$180,000
Divided by units sold
÷180,000
Contribution margin per unit
\$1.00
c.
Top Disc
Income Statement
For 2013
Sales revenue
\$ 450,000
Less variable costs
Cost of goods sold (180,000 × \$1.00)
\$180,000
90,000
(270,000
)
Contribution margin
\$ 180,000
Less fixed expenses
\$112,500
100,000
(212,500
)
Net loss
\$
(32,500
)
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##### Page 4
264
Chapter 9
10.
a.
Total revenue rises by \$25 + \$21 = \$46
b.
Total costs rise by the amount of variable costs, \$21
c.
Total pre-tax profit rises at the rate of the CM per unit, \$25
11.
a.
Break-even in units = \$90,000 ÷ (\$70
\$40) = 3,000 units
b.
In dollars break-even = 3,000 × \$70 = \$210,000
12.
a.
Break-even point in rings = \$345,000 ÷ (\$600
\$300) = 1,150
b.
Break-even point in sales dollars = 1,150 × \$600 = \$690,000
c.
Break-even point \$345,000 ÷ (\$600
\$306) = 1,174 rings
(rounded)
d.
Break-even point would be \$339,000 ÷ (\$600
\$300) = 1,130
rings
13.
a.
The break-even point is the point at which total revenue equals total cost.
Fixed costs ÷ Contribution margin = Break-even point
\$52,200 ÷ (\$8
\$3.50) = \$52,200 ÷ \$4.50 = 11,600 units or \$92,800 in revenue
b.
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