Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 3, Problem 3.27E
CVP analysis, income taxes. The Home Style Eats has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $430,500 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $8.75. The average cost of food and other variable costs for each customer is $3.50. The income tax rate is 36%. Target net income is $117,600.
- 1. Compute the revenues needed to earn the target net income.
Required
- 2. How many customers are needed to break even? To earn net income of $117,600?
- 3. Compute net income if the number of customers is 170,000.
Expert Solution & Answer
Trending nowThis is a popular solution!
Learn your wayIncludes step-by-step video
schedule03:27
Students have asked these similar questions
CVP analysis, income taxes. The Home Style Eats has two restaurants that are open 24 hours a
day. Fixed costs for the two restaurants together total $430,500 per year. Service varies from a cup of coffee
to full meals. The average sales check per customer is $8.75. The average cost of food and other variable
Costs for each customer is $3.50. The income tax rate is 36%, Target net income is $117,600.
Jau
Compute the revenues needed to earn the target net income.
How many customers are needed to break even? To earn net income of $117,600?
Compute net income if the number of customers is 170,000.
1.
2.
162
3.
The Home Style Eats has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $430,500 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $8.75. The average cost of food and other variable costs for each customer is $3.50. The income tax rate is 36%. Target net income is $117,600.
Q1. Compute the revenues needed to earn the target net income.
Q2. How many customers are needed to break even? To earn net income of $117,600?
Q3. Compute net income if the number of customers is 170,000.
Record 1-2-3 is a top-selling electronic spreadsheet product. Record is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Record 1-2-3, 4.0 or earlier
versions). Although the same physical product is provided to each customer group, sizable differences exist in selling prices and variable marketing costs:
(Click the icon to view the price and cost information.)
The fixed costs of Record 1-2-3 5.0 are $13,500,000. The planned sales mix in units is 60% new customers and 40% upgrade customers.
Read the requirements.
Requirement 1. What is the Record 1-2-3 5.0 breakeven point in units, assuming that the planned 60% / 40% sales mix is attained?
The breakeven point is
units for new customers and
units for upgrade customers.
Requirements
1.
2.
3.
What is the Record 1-2-3 5.0 breakeven point in units, assuming that the
planned 60% / 40% sales mix is attained?
If the sales mix is attained, what is the…
Chapter 3 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 3 - Define costvolumeprofit analysis.Ch. 3 - Describe the assumptions underlying CVP analysis.Ch. 3 - Distinguish between operating income and net...Ch. 3 - Prob. 3.4QCh. 3 - Prob. 3.5QCh. 3 - Why is it more accurate to describe the subject...Ch. 3 - CVP analysis is both simple and simplistic. If you...Ch. 3 - Prob. 3.8QCh. 3 - Prob. 3.9QCh. 3 - Give an example of how a manager can decrease...
Ch. 3 - Give an example of how a manager can increase...Ch. 3 - What is operating leverage? How is knowing the...Ch. 3 - There is no such thing as a fixed cost. All costs...Ch. 3 - Prob. 3.14QCh. 3 - In CVP analysis, gross margin is a less-useful...Ch. 3 - Jacks Jax has total fixed costs of 25,000. If the...Ch. 3 - During the current year, XYZ Company increased its...Ch. 3 - Under the contribution income statement, a...Ch. 3 - A company needs to sell 10,000 units of its only...Ch. 3 - Once a company exceeds its breakeven level,...Ch. 3 - Prob. 3.21ECh. 3 - CVP computations. Garrett Manufacturing sold...Ch. 3 - CVP analysis, changing revenues and costs. Sunset...Ch. 3 - CVP exercises. The Deli-Sub Shop owns and operates...Ch. 3 - CVP exercises. The Doral Company manufactures and...Ch. 3 - CVP analysis, income taxes. Westover Motors is a...Ch. 3 - CVP analysis, income taxes. The Home Style Eats...Ch. 3 - CVP analysis, sensitivity analysis. Perfect Fit...Ch. 3 - CVP analysis, margin of safety. Suppose Morrison...Ch. 3 - Operating leverage. Cover Rugs is holding a 2-week...Ch. 3 - CVP analysis, international cost structure...Ch. 3 - Sales mix, new and upgrade customers. Chartz 1-2-3...Ch. 3 - Prob. 3.33ECh. 3 - Prob. 3.34ECh. 3 - Contribution margin, decision making. Welch Mens...Ch. 3 - Contribution margin, gross margin, and margin of...Ch. 3 - Uncertainty and expected costs. Kindmart is an...Ch. 3 - CVP analysis, service firm. Lifetime Escapes...Ch. 3 - CVP, target operating income, service firm....Ch. 3 - CVP analysis, margin of safety. Marketing Docs...Ch. 3 - CVP analysis, income taxes. (CMA, adapted) J.T....Ch. 3 - CVP, sensitivity analysis. The Derby Shoe Company...Ch. 3 - CVP analysis, shoe stores. The HighStep Shoe...Ch. 3 - CVP analysis, shoe stores (continuation of 3-43)....Ch. 3 - Prob. 3.45PCh. 3 - Prob. 3.46PCh. 3 - CVP analysis, income taxes, sensitivity. (CMA,...Ch. 3 - Choosing between compensation plans, operating...Ch. 3 - Prob. 3.49PCh. 3 - Multiproduct CVP and decision making. Crystal...Ch. 3 - Sales mix, two products. The Stackpole Company...Ch. 3 - Prob. 3.52PCh. 3 - Ethics, CVP analysis. Megaphone Corporation...Ch. 3 - Deciding where to produce. (CMA, adapted) Portal...
Additional Business Textbook Solutions
Find more solutions based on key concepts
Ravenna Candles recently purchased candleholders for resale in its shops. Which of the following costs would be...
Financial Accounting (12th Edition) (What's New in Accounting)
3. Which method almost always produces the most depreciation in the first year?
a. Units-of-production
b. Strai...
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
FIFO, Perpetual Basis. Spider incorporated provided the following information regarding its inventory for the c...
Intermediate Accounting
With good internal controls, the person who handles cash can also
Learning Objective 1
account for cash paym...
Horngren's Accounting (11th Edition)
The accounting assumption that governs given situation.
Financial Accounting (11th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- CVP analysis, income taxes. The Express Banquet has two restaurants that are open 24-hours aday. Fixed costs for the two restaurants together total $459,000 per year. Service varies from a cup of coffeeto full meals. The average sales check per customer is $8.50. The average cost of food and other variablecosts for each customer is $3.40. The income tax rate is 30%. Target net income is $107,100.Required 1. Compute the revenues needed to earn the target net income.2. How many customers are needed to break even? To earn net income of $107,100?3. Compute net income if the number of customers is 170,000.arrow_forwardThe Home Style Eats has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $430,500 per year. Service varies from a cupm of coffee to full meals. The average sales check per customer is $8.75. The average cost of food and other variable costs for each customer is $3.50. The income tax rate is 36%. Target net income is $117,600 Requirements 1. Compute the revenues needed to earn the target net income. 2. How many customers are needed to break even? To earn net income of $117,600? 3. Compute net income if the number of customers is 170,000. Requirement 1. Compute the revenues needed to eam the target net income. Using the equation method, select the basic formula used to compute the revenues needed to eam the target net income. Target net income 1-Tax rate Revenues Variable costs Fixed costs 1,023,750 The revenues needed to earn the target net income is $ Requirement 2. How many customers are needed to break even? To earn net income of…arrow_forward3. The Swift Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $456,000 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $9.50. The average cost of food and other variable costs for each customer is $3.80. The income tax rate is 30%. Target net income is $159,600. Compute the revenues needed to earn the target net income. b. How many customers are needed to break even? To earn net income of S159,600? c. Compute net income if the number of customers is 145,000.arrow_forward
- The Swift Feast has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $450,000 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $8.00. The average cost of food and other variable costs for each customer is $3.20. The income tax rate is 30%. Target net income is $105,000. Requirements 1. Compute the revenues needed to eam the target net income. 2. How many customers are needed to break even? To eam net income of $105,000? 3. Compute net income if the number of customers is 145,000. Requirement 1. Compute the revenues needed to eam the target net income. Using the equation method, select the basic formula used to compute the revenues needed to earn the target net income.arrow_forwardbed Cruse Cleaning offers residential and small office cleaning services. An average cleaning service has the following price and costs. Sales price Variable costs Fixed costs $127.00 per service 89.00 per service 119,548 per year Cruse Cleaning is subject to an income tax rate of 22 percent. Required: a. How many cleaning services must Cruse Cleaning sell in a year to break even? ook b. How many cleaning services must Cruse Cleaning sell in a year to earn an annual operating profit of $32,604 after taxes? a Required sales in a year to break even int rences b. Required sales in a year to earn an annual operating profit of $32,604 after taxes: cleaning services cleaning servicesarrow_forwardCruse Cleaning offers residential and small office cleaning services. An average cleaning service has the following price and costs. Sales price $ 128.00 per service Variable costs 90.00 per service Fixed costs 124,982 per year Cruse Cleaning is subject to an income tax rate of 22 percent. Required: How many cleaning services must Cruse Cleaning sell in a year to break even? How many cleaning services must Cruse Cleaning sell in a year to earn an annual operating profit of $34,086 after taxes?arrow_forward
- CVP analysis, income taxes. Brooke Motors is a small car dealership. On average, it sells a car for$27,000, which it purchases from the manufacturer for $23,000. Each month, Brooke Motors pays $48,200 inrent and utilities and $68,000 for salespeople’s salaries. In addition to their salaries, salespeople are paid acommission of $600 for each car they sell. Brooke Motors also spends $13,000 each month for local advertisements.Its tax rate is 40%.Required 1. How many cars must Brooke Motors sell each month to break even?2. Brooke Motors has a target monthly net income of $51,000. What is its target monthly operatingincome? How many cars must be sold each month to reach the target monthly net income of $51,000?arrow_forwardThe LeeAnn Family Restaurant is open 24 hours a day and serves breakfast, lunch, and dinner. The owner of the business has determined that fixed costs are $24,000 per month. Variable costs are estimated at $9.60 per meal. The average total bill (excluding tax and tip) is $12 per customer. Assume that fixed costs increase to $30,000. How many additional meals must be served if the restaurant wishes to earn the same profit?arrow_forwardThe Rapido Muncho Restaurant has two outlets that are open 24 hours a day. Fixed costs for the two restaurants together total P450,000 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is P100. The average cost of food and other variable costs for each customer is P60. Answer the following: Compute for Breakeven sales in units. Compute for Breakeven sales in pesosarrow_forward
- The Body Fit Company sells high-energy bars to supermarkets for P135 per year. Variable cost is P45 per bar and annual fixed costs are P1,440,000. Determine: a. The breakeven point in pesos and units. b. The volume required to eam a before-tax profit of P360,000. The volume required to eam an after 40% tax retum of 15%. The price would be charged to earn a before tax profit of P300,000 if Body Fit Company can sell 30,000 bars. C. d.arrow_forwardAttica Candy Company is a wholesale distributor of candy. The company services grocery, con- venience, and drug stores in a large metropolitan area. Attica has achieved modest but steady growth in sales over the past few years, while candy prices have been increasing. The company is formulating its plans for the coming fiscal year. Following is the data used to project the current year's after-tax net income of $110,400. Average selling price 4.00 per box Average variable costs: Cost of candy Selling expenses 2.00 per box 0.40 per box 2.40 per box Annual fixed costs: $ 160,000 280,000 $ 440,000 Selling Administrative Expected annual sales volume (390,000 boxes) S1,560,000 Tax rate 40% Manufacturers of candy have announced they will increase prices of their products an aver- age of 15 percent in the coming year due to increases in raw materials (sugar, cocoa, peanuts, etc.) and labour costs. Attica Candy Company expects all other costs will remain at the same rates or levels as the…arrow_forwardThe LeeAnn Family Restaurant is open 24 hours a day and serves breakfast, lunch, and dinner. The owner of the business has determined that fixed costs are $24,000 per month. Variable costs are estimated at $9.60 per meal. The average total bill (excluding tax and tip) is $12 per customer. 1. Compute the break-even point in meals. 2. Compute the break-even volume in dollars. 3. Compute the number of meals that must be served if the LeeAnn Family Restaurant wishes to earn a profit of $6,000.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License