|
|
|
Ch.09 Kinney 9e SM Final.doc
Ch.09_Kinney_9e_SM_Final.doc
Showing 19-20 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 19
Chapter 9
279
Hotel bookings ($14,000 × 0.20)
2,800
$ 8,500
Costs:
Advertising
$2,200
Rent
1,800
Utilities
500
Other
4,400
(8,900
)
Net loss
(400
)
b.
Increase in revenue ($9,000 × 0.40 × 0.10)
$
360
Increase in cost
(1,200
)
Increase in profit
$
(840
)
No, Weatherby should not incur the $1,200 of advertising expense because it
would cause profit to drop by $840.
c.
Increase in revenues:
Game ticket ($8,000 × 0.08)
$
640
Airline ticket ($1,500 × 0.10)
150
Hotel booking ($6,000 × 0.20)
1,200
$ 1,990
Increase in costs:
Rusty’s commission ($1,990 × 0.50)
$
995
Rusty’s wage
400
(1,395
)
Increase in profits
$
595
Yes, Weatherby should hire Rusty because it would increase his profits by $595.
d.
Increase in revenues:
Airline tickets ($13,000 × 0.10)
$ 1,300
Increase in costs:
Rusty’s commission ($1,300 × 0.50)
$650
Increase in fixed costs
600
(1,250
)
Increase (decrease)
$
50
Because there was at least a slight increase in profits, Weatherby did make a
good decision.
40.
a.
Total 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.
Page 20
280
Chapter 9
c.
The break-even chart would probably be more helpful. The point could be
made that the club has only 20 members in excess of the break-even level of
100 members. Additional information should be provided indicating the
contribution margin and contribution margin ratio. Armed with the chart and
the additional information, a very good point could be made for a membership
recruiting project.
41.
a.
Total sales price per bag:
Commercial ($5,600 × 1)
$5,600
Residential ($1,800 × 3)
5,400
$11,000
Total variable costs per bag:
Commercial ($3,800 × 1)
$3,800
Residential ($1,000 × 3)
3,000
(6,800
)
Total contribution margin
$
4,200
Break-even point in units = $8,400,000 ÷ $4,200 = 2,000 bags
Commercial: 2,000 × 1 = 2,000 mowers
Residential: 2,000 × 3 = 6,000 mowers
b.
($8,400,000 + $1,260,000) ÷ $4,200 = 2,300 bags
Commercial: 2,300 × 1 = 2,300 mowers
Residential: 2,300 × 3 = 6,900 mowers
c.
Pre-tax equivalent of $1,008,000 after-tax = $1,008,000 ÷ (1
0.40) =
$1,680,000
($8,400,000 + $1,680,000) ÷ $4,200 = 2,400 bags
Commercial: 2,400 × 1 = 2,400 mowers
Residential: 2,400 × 3 = 7,200 mowers
d.
Let X = number of bags that must be sold to produce pre-tax earnings
equaling 12 percent of sales revenue, then:
$4,200X
$8,400,000
= 0.12($11,000X)
X = 2,917 bags (rounded)
Commercial: 2,917 × 1 = 2,917 mowers
Residential: 2,917 × 3 = 8,751 mowers
e.
Convert the after-tax return to a pre-tax rate of return:
0.08 ÷ (1
0.40) = 13% (rounded)
$4,200X
$8,400,000
= 0.13($11,000X)
X
= 3,032 bags (rounded)
Commercial: 3,032 × 1 = 3,032 mowers
Residential: 3,032 × 3 = 9,096 mowers
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly
accessible website, in whole or in part.
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
