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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 3
Chapter 9
263
EXERCISES
8.
a.
Ingredients
$
56,000
Labor
26,000
Variable overhead
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
Variable selling & admin.
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
Manufacturing overhead
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
Selling and administrative
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
Selling and administrative
90,000
(270,000
)
Contribution margin
$ 180,000
Less fixed expenses
Manufacturing overhead
$112,500
Selling and administrative
100,000
(212,500
)
Net loss
$
(32,500
)
© 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 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.
© 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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