Exercise 3-13A (Algo) Conducting sensitivity analysis using the equation method LO 3-5 Stuart Company currently produces and sells 6,700 units annually of a product that has a variable cost of $15 per unit and annual fixed costs of $191,300. The company currently earns a $70,000 annual profit. Assume that Stuart has the opportunity to invest in new labor- saving production equipment that will enable the company to reduce variable costs to $13 per unit. The investment would cause fixed costs to increase by $9,500 because of additional depreciation cost. Required a. Use the equation method to determine the sales price per unit under existing conditions (current equipment is used). b. Prepare a contribution margin income statement, assuming that Stuart invests in the new production equipment. Complete this question by entering your answers in the tabs below. Required A Required B X Answer is not complete. Prepare a contribution margin income statement, assuming that Stuart invests in the new production equipment. STUART COMPANY Contribution margin Income statement hs

Exercise 3-13A (Algo) Conducting sensitivity analysis using the equation method LO 3-5 Stuart Company currently produces and sells 6,700 units annually of a product that has a variable cost of $15 per unit and annual fixed costs of $191,300. The company currently earns a $70,000 annual profit. Assume that Stuart has the opportunity to invest in new labor- saving production equipment that will enable the company to reduce variable costs to $13 per unit. The investment would cause fixed costs to increase by $9,500 because of additional depreciation cost. Required a. Use the equation method to determine the sales price per unit under existing conditions (current equipment is used). b. Prepare a contribution margin income statement, assuming that Stuart invests in the new production equipment. Complete this question by entering your answers in the tabs below. Required A Required B X Answer is not complete. Prepare a contribution margin income statement, assuming that Stuart invests in the new production equipment. STUART COMPANY Contribution margin Income statement hs

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter11: Performance Evaluation And Decentralization

Section: Chapter Questions

Problem 47P: (Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30...

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K Exercise 3-13A (Algo) Conducting sensitivity analysis using the equation method LO 3-5 Campbell Company currently produces and sells 7,200 units annually of a product that has a variable cost of $6 per unit and annual fixed costs of $309,600. The company currently earns a $72,000 annual profit. Assume that Campbell has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to $4 per unit. The investment would cause fixed costs to increase by $9,500 because of additional depreciation cost. Required a. Use the equation method to determine the sales price per unit under existing conditions (current equipment is used). b. Prepare a contribution margin income statement, assuming that Campbell invests in the new production equipment. Complete this question by entering your answers in the tabs below. Required A Required B Use the equation method to determine the sales price per unit under existing conditions (current…
QUESTION 4 Exxarro Llimited is considering pricing and costing for the year ahead. The following data based on expected production and sales of 15 000 units are provided for analysis: Variable manufacturing cost Fixed manufacturing cost R1 185 000 R510 000 R5 per unit sold R130 000 Sales commission Fixed administration cost Sales R210 per unit Study the information provided above and answer the following questions independently: 4.1 Calculate the break-even sales value. 4.2 Calculate the sales volume required to achieve a profit of R 800 000. 4.3 Suppose Exxaro Limited is considering a decrease of 10% per unit in the selling price of the product with the expectation that it would increase sales volume by 10%. Is this a good idea? Motivate your answer with relevant calculations.
Exercise 3-13A (Algo) Conducting sensitivity analysis using the equation method LO 3-5 Vernon Company currently produces and sells 8,100 units annually of a product that has a variable cost of $8 per unit and annual fixed costs of $399,800. The company currently earns a $70,000 annual profit. Assume that Vernon has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to $6 per unit. The investment would cause fixed costs to increase by $10,900 because of additional depreciation cost. Required a. Use the equation method to determine the sales price per unit under existing conditions (current equipment is used). b. Prepare a contribution margin income statement, assuming that Vernon invests in the new production equipment.
QUESTION 38 Insourcing incurs an annual fixed cost of $30,000 and a variable cost of $60 per unit. Outsourcing incurs an annual fixed cost of $50,000 and a variable cost of $20 per unit. Using the Make-or-Buy analysis, what is the indifference point between the two alternatives? (Note your answer for question 39) a) 500 units b) 1000 units c) 1500units d) 2000 units e) 800 units QUESTION 39 For the scenario in Q38, anticipated demand is then forecast to be 1000 units. Which option would be most appropriate? a) Insource b) Outsource c) Either option d) Not enough information to evaluate e) None
Required information Problem 03.036 DEPENDENT MULTI-PART PROBLEM - ASSIGN ALL PARTS A process for producing the mosquito repellant Deet has an initial investment of $205,000 with annual costs of $55,000. Income is expected to be $90,000 per year. Problem 13.036.b: Calculate the breakeven point What is the annual breakeven production quantity for both payback periods if net profit, that is, income minus cost, is $10 per gallon? When i=0%, the annual breakeven production quantity is determined to be 3504 gallons per year. When 12%, the annual breakeven production quantity is determined to be 1914 gallons per year.
PROBLEM 7 Tito Company sells several products. Information of average revenue and costs are as follows: Selling price per unitPhp20.00 Variable costs per unit: Direct materialsPhp4.00 Direct manufacturing labor Php1.60 Manufacturing overhead Php0.40 Selling costsPhp2.00 Annual fixed costs Php96,000 26. Calculate the contribution margin per unit. 27. Calculate the number of units Tito's must sell each year to break even. 28. Determine the breakeven point in peso. 29. Calculate the number of units Tito's must sell to yield a profit of Php144,000. PROBLEM
Chapter 7 Problem Solution 1 Please select the correct answer and solve and explain. "Goodstone Tire Corp sells tires for $90 each. Per unit costs associated with producing and selling the tires are: Direct Materials $35 Direct Labor $10 Factory Overhead $20 The variable portion of the factory overhead is $8 per unit. A foreign company wants to purchase 1,000 tires for $65 each. Assuming Goodstone has excess capacity: 1) The incremental profit from special order will be $12,000 2) The incremental loss from the special order will be $25,000 3) The will be no incremental loss or profit from the special order
Problem 6-18 (Algo) Relevant Cost Analysis in a Variety of Situations [LO6-2, LO6-3, LO6-4] Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $60 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $ 7.50 8.00 2.90 5.00 ($435,000 total) 2.70 2.50 ($217,500 total) $28.60 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume that Andretti Company has sufficient capacity to produce 113,100 Daks each year without any increase in fixed. manufacturing overhead costs. The company could increase its unit sales by 30% above the present 87,000 units each year if it were willing to increase the fixed selling expenses by $110,000. What is the financial…
(Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30 minutes per unit. The budgeted conversion costs for the manufacturing cell are 2,700,000 per year. The total labor minutes available are 600,000. During the year, the cell was able to produce 1.5 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per unit (the amount of conversion cost actually assigned to the product). 3. CONCEPTUAL CONNECTION Discuss how this approach to assigning conversion costs can improve delivery time performance.
KIMEP BCB Task 1-CVP SINGLE PRODUCT- The Arman Company manufactures and sells pens. Present sales output is 5,000,000 units per year at a sel price of KZT 50 per unit. Fixed costs are KZT 9,000,000 per year. Variable costs are KZT 30 per unit. Required: a. What is the present breakeven point in revenues? ( Now Arman is considering adding two more products: pencils and erasers Relevant information for their production is as follows: Pencils KZT75 KZT30 Sales price Erasers 60 30 Variable Costs per unit Fixed costs for the reporting year remain at the same level while the sales mix is predicted as 40:60:20 respectively for pens, pencils and erasers respectively. Required: b. What is the company's breakeven point in units, assuming that the given sales mix is maintained? Calculate the quantities of each product. Bry
6 Three production processes - A, B, and C - have the following cost structure: the selling price is 6.22 per unit Process Fixed Cost per Year Variable Cost per Unit A 109532 3.83 B 86834 4.29 C 87149 4.41 How many units per year must be sold with process C to have annual pre-tax profits of 42743 if the selling price is 6.22 per unit? (Round to the nearest integer). 7 Considering the pre-tax profits per period , what is the break-even volume for process A? (Round to the nearest integer). 8 Considering the pre-tax profits per period , What is the break-even volume for process B? (Round to the nearest integer). 9
View Policies Current Attempt in Progress pport Werth Company produces tie racks. Its estimated fixed costs for the year are $288,000, and the estimated variable costs per unit are $14. Werth expects to produce and sell 60,000 racks at a price of $20 per unit. How many units will be sold at breakeven? D48,000. O 20,571. 3,600. O 14,400.