7-3A - Multi-product CVPAwesome Axes sells electric guitars. The company sells three models of guitar: Enthusiast, Jammer and Pro.Information relating to next year's budget for the three models follows:EnthusiastJammerProExpected sales (units)60035050Sales price$200$500$3,000Variable cost$120$200$800The company has annual fixed costs of $200,000 and a tax rate of 25%.Required:a.) Compute the company's expected profit (net income) for the upcoming fiscal period.b.) Compute the company's sales mix.c.) Assuming a consistent sales mix, how many units of each product type must the company sell to break even?d.) Assuming a consistent sales mix, if the company wishes to earn net income of $300,000, how many units of each product type must be sold?e.) Compute the margin of safety in both dollar and percentage terms. 7-3A-Multi-product CVPAwesome Axes sells electric guitars. The company sells three models of guitar: Enthusiast,Jammer and Pro.Information relating to next year's budget for the three models follows:Expected sales (units)Sales priceVariable costEnthusiastJammerPro60035050$200$500$3,000$120$200$800The company has annual fixed costs of $200,000 and a tax rate of 25%.Required:a.) Compute the company's expected profit (net income) for the upcoming fiscal period.b.) Compute the company's sales mix.c.) Assuming a consistent sales mix, how many units of each product type must the companysell to break even?d.) Assuming a consistent sales mix, if the company wishes to earn net income of $300,000,how many units of each product type must be sold?e.) Compute the margin of safety in both dollar and percentage terms.

"Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

- 7-3A Multi-product CVP Awesome Axes sells electric guitars. The company sells three models of guitar: Enthusiast, Jammer and Pro. Information relating to next year's budget for the three models follows: Expected sales (units) Sales price Variable cost Enthusiast Jammer Pro 600 350 50 $200 $500 $3,000 $120 $200 $800 The company has annual fixed costs of $200,000 and a tax rate of 25%. Required: a.) Compute the company's expected profit (net income) for the upcoming fiscal period. b.) Compute the company's sales mix.

- 7-3A Multi-product CVP Awesome Axes sells electric guitars. The company sells three models of guitar: Enthusiast, Jammer and Pro. Information relating to next year's budget for the three models follows: Expected sales (units) Sales price Variable cost Enthusiast Jammer Pro 600 350 50 $200 $500 $3,000 $120 $200 $800 The company has annual fixed costs of $200,000 and a tax rate of 25%. Required: a.) Compute the company's expected profit (net income) for the upcoming fiscal period. b.) Compute the company's sales mix.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 6CE: Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following...

See similar textbooks

Similar questions

Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following manufacturing costs: For the coming year, Play-Disc expects to make 300,000 plastic discs, and to sell 285,000 of them. Budgeted beginning inventory in units is 16,000 with unit cost of 4.75. (There are no beginning or ending inventories of work in process.) Required: 1. Prepare an ending finished goods inventory budget for Play-Disc for the coming year. 2. What if sales increased to 290,000 discs? How would that affect the ending finished goods inventory budget? Calculate the value of budgeted ending finished goods inventory.
ABC Corporation makes products Alpha and Beta. Both products make use of the same equipment. The following was provided to you with regard to these products in preparation for its budget for next year. Peso per unit data Alpha Alpha Beta Beta At 10,000 units At 12,500 units At 5,000 units At 8,000 units Selling price 100 100 250 250 Less: Costs 70 62 230 170 Profit 30 38 20 80 Alpha Beta Expected market demand next year 10,000 units 6,000 units Required Machine hours per unit 2 3 Total available machine hours 20,000 What is the contribution margin of Alpha if ABC was able to optimize the use of the machine hours? How many units of Beta should be produced to maximize profits?
7-3A - Multi-product CVPAwesome Axes sells electric guitars. The company sells three models of guitar: Enthusiast, Jammer and Pro.Information relating to next year's budget for the three models follows: EnthusiastJammerProExpected sales (units)60035050Sales price$200$500$3,000Variable cost$120$200$800The company has annual fixed costs of $200,000 and a tax rate of 25%.Required:a.) Compute the company's expected profit (net income) for the upcoming fiscal period.b.) Compute the company's sales mix.c.) Assuming a consistent sales mix, how many units of each product type must the company sell to break even?d.) Assuming a consistent sales mix, if the company wishes to earn net income of $300,000, how many units of each product type must be sold?e.) Compute the margin of safety in both dollar and percentage terms.
B. Explain THREE limiting assumptions of cost volume profit. C. Roose manufactures a product called Wye. The owners of Roose are preparing the budgets for the three months ending December 2020. Expected sales in units are shown below. October 2020 November 2020 December 2020 January 2021 Units of Wye 5,700 units 6,080 units 6,384 units 4,788 units One completed Wye contains 3.40 kg of material, costing RM 9.30 per kg. Inventory as at 1 Oct 2020 Inventory decision Finished product (units) of Wye 1,425 units Closing inventory in any month should represent 25% of the next month’s expected sales Material (kg) 25,000 kg This is to be reduced at a constant rate to 16, 000 kg by the end of December 2020 Required: Prepare for each of the months October to December 2020, the Production Budget for finished products Wye. Prepare, for each of the months October to December 2020, the Materials Purchases Budget.
question A company manufactures a single product. Budget and Standard cost details for next year include: Selling Price per unit R24.00 Variable Production cost per unit R8.60 Fixed production costs R650 000 Fixed selling and distribution costs R230 400 Sales commission 5% of the selling price Sales 90 000 units Required he marketing manager has suggested that the selling price per unit can be increased to R25.00.If the sales commission is increased to 8% percent of selling price and a further R10 000 is spent on advertising Calculate the revised breakeven point based on the marketing managers suggestion
Q7 Duo, Incorporated, carries two products and has the following year-end income statement (000s omitted): Product AR-10 Product ZR-7 Budget Actual Budget Actual Units 2,600 3,600 7,200 6,700 Sales $ $ 13,000 $ 9,720 $ 14,400 $ 14,070 Variable costs 2,860 3,600 7,200 7,040 Fixed Costs 1,800 1,900 2,400 2,400 Total Costs $ 4,660 $ 5,500 $ 9,600 $ 9,440 Operating income $ 8,340 $ 4,220 $ 4,800 $ 4,630 The net effect of AR-10's sales volume variance on profit is: Multiple Choice $2,880 favorable. $1,950 favorable. $3,900 favorable. $3,150 favorable. $2,220 favorable.
Muhanga Corporation sells three products: R, S, and T. Budgeted information for the upcoming accounting period follows. Product Sales Volume (Units) Selling Price Variable Cost R 17,600 $ 19 $ 13 S 13,600 15 6 T 54,800 16 10 What is the company's weighted-average unit contribution margin?
QUESTION2 A company manufactures a single product. Budget and Standard cost details for next year include: Selling Price per unit R24.00 Variable Production cost per unit R8.60 Fixed production costs R650 000 Fixed selling and distrivution costs R230 400 Sales commission 5% of selling price Sales 90 000 units Required 1. Calculate the break-even point in units 2. Calculate the breakeven point in rands 3. Calculate the percentage by which the budgeted sales can fall before The company begins to make a loss 4. The marketing manager has suggested that the selling price per unit can be increased to R25.00.If the sales…
Prove that CMRxMSR=NPR Barack Co. BEP in sales are P528,000. The variable cost to sales is 60%, while the profit ratio is 8% Determine the following: Fixed cost 2. Actual Sales 3. Profit 4. Margin of Safety 5. Margin of Safety Ratio Mahjong Co. produces and sells two products, tables and chairs. Following is next month’s income budget Sales in units Chairs Tables Total 600 150 750 Sales P 1,200.00 P 187.50 P 1,387.50 VC 1,050.00 112.50 1,162.50 CM 150.00 75.00 225.00 FX 90.00 NI 135.00 Required: How many units of tables should be sold next month to break even? How many units of chairs should be sold to earn a profit of P150 How many units of chairs should be sold to earn a profit of P100 net of 30% tax? Actual operating results for the shop are presented below: S 250,000.00 VC 100,000.00 CM…
Assume the following cost information for Standard Corporation: Selling price per unit: $45.00 Variable costs per unit: $25.00 Total fixed costs: $100,000.00 Standard's goal for the month is to earn befote tax net income of $42.500. How many units must be sold to achieve this goal? a. 8.188 umits b. 2125 umits c. 1125 units d. 3.188 units
Samcor Limited manufactures tables. The following information was extracted from the budget June 2022: 1. 2. 3. 4. 5. Total production and sales Selling price per table Variable manufacturing costs per table: Direct material Direct labour Overheads Fixed manufacturing overheads Other costs: Fixed marketing and administrative costs Sales commission 2 400 units year R1 200 R288 R192 R96 R216 960 R144 000 5%
Barack Co. BEP in sales are P528,000. The variable cost to sales is 60%, while the profit ratio is 8% Determine the following: Fixed cost 2. Actual Sales 3. Profit 4. Margin of Safety 5. Margin of Safety Ratio Mahjong Co. produces and sells two products, tables and chairs. Following is next month’s income budget Sales in units Chairs Tables Total 600 150 750 Sales P 1,200.00 P 187.50 P 1,387.50 VC 1,050.00 112.50 1,162.50 CM 150.00 75.00 225.00 FX 90.00 NI 135.00 Required: How many units of tables should be sold next month to break even? How many units of chairs should be sold to earn a profit of P150 How many units of chairs should be sold to earn a profit of P100 net of 30% tax? Actual operating results for the shop are presented below: S 250,000.00 VC 100,000.00 CM 150,000.00 FX…