comparative income approach,
Q: Calculate the incremental savings (or loss) per pound if the company outsources the product. If the…
A: In the given question, we have to take decision whether to internally produce the product or…
Q: Observe the net income for both companies. Which company is more profitable? Which company is more…
A: Solution:- Observation of net income for both companies as follows under:- Company 2010 2009 2008…
Q: If a company decreases the variable expense per unit while increasing the total fixed expenses, the…
A: Breakeven Point: The breakeven point is the level of creation at which the costs of creation are…
Q: Walkin Inc. is considering the write-down of its longtermplant because of a lack of profitability.…
A:
Q: A growing firm is contemplating switching from a FIFO to a LIFO cost flow assumption forinventories…
A: In case of rising prices, when the LIFO is applied the cost of goods sold will increase (as the…
Q: Let’s say that two firms, A and B have positive profit margins. B’s fixes costs as a percentage of…
A: Fixed costs are expenses that do not change based on production levels; variable costs are expenses…
Q: The Golden Fence Company and Stone Wall Corporation are competitors in manufacturing walls and…
A: Profitability ratios are the ratios that are calculated to know the different profits as a…
Q: How might a company simplify its use of the NRV method when final selling prices can vary sizably in…
A: Net Realizable Value (NRV) Method: NRV method is a method of joint cost allocation which takes into…
Q: Explain what the significance of having a high/low Price-to-Book ratio means about the company's
A: Price/Book value is ratio of stock price in actual market and book value is value of share as books…
Q: A graphic depiction of the break-even point is known as a cost-volume-profit (CVP) chart whereby the…
A: The representation of break even point in graphical form is said to be cost volume profit analysis.
Q: Explain why a segment with an operating loss can cause the company to have a decrease in total…
A: Introduction A segment is eliminated based on the comparison of total cost incurred by that segment…
Q: In a multi-product company, as the mix of the products being sold changes, the overall contribution…
A: Overall contribution margin is the mix of individual contribution margin with the weights of their…
Q: During a period of rising inventory costs and stable output prices, describe how net income and…
A: First in first out Method (FIFO) First in first out method is one of the popular method which was…
Q: Which of the following occurs if a company experiences a decrease in its fixed costs? Select one: O…
A: Contribution margin = Selling price - variable cost Break even point = Fixed cost / Contribution…
Q: Explain how LIFO, FIFO, and Weighted average inventory systems will have different affects on a…
A: FIFO (First in first out) method makes the assumption that inventory items that are purchased first…
Q: Break-even analysis is concerned with determining a point at which the company can minimize total…
A: Break-even point is the point reached by the company where the revenues and costs of the firm are in…
Q: Which of the following statements is true?
A: Companies tries to use the methods of the inventory valuation so that the tax liability of the…
Q: The assumptions on which cost-volume-profit analysis is based appear to be most valid for…
A: Cost volume profit analysis in the business shows relationship between costs, number of units and…
Q: Discuss the economic characteristics of firms that have the following mix of profit margin and asset…
A: Introduction: The net asset turnover is inversely proportional to the profit margin. it means higher…
Q: In all respects, Company A and Company B are identical except that Company A’s costs are mostly…
A:
Q: in a cost volume profit analysis explain what happen at the break even point and why company do not…
A: Cost volume profit analysis: It is a technique that analyses the effect of cost and volume on…
Q: Explain how a shift in the sales mix could result in both a higher break-even point and a lower net…
A: Sales mix involves the composition of different products and some products have a higher margin of…
Q: What is the interpretation of a price-to-book ratio = 1? Select one: a. The selling price of the…
A: PB ratio is a commonly used ratio in the industry to identify the stocks for investing. It comes…
Q: Is there a point in a cost-volume-profit analysis when the company is expected to profit?
A: Is there a point in a cost-volume-profit analysis when the company is expected to profit? Answer:…
Q: operating leverage factor t
A: Operating leverage factor = (Sales - Variable costs)/(Sales - Variable costs) - Fixed costs
Q: Calculate the effect on profit of a proposed change in ‘Sales Mix’ from the following data and also…
A: Sales mix should be such that the total contribution can be maximised. Which can be done by giving…
Q: When comparing the lower of cost to market the appropriate market value is determined before…
A: The inventory costing approach known as the lower-of-cost-or-market (LCM) values inventory at the…
Q: Observe the net income for both companies. Which company is more profitable? Which company is more…
A: Net income is defined as gross profit minus any other expenses and costs, as well as any other…
Q: Which of the following option shows the rate at which company is earning profit? Select one: a. All…
A: The question is multiple choice question. Required Choose the Correct Option.
Q: A company's break-even point will not be changed by:
A: Break-even point i Break-even point is a level of activity where no profit is gained and no loss…
Q: Bulldogs Inc. wants to determine the impact of the change in selling price of its sole product in…
A: Sales price variance is the difference between the actual and standard/Budgeted selling price of…
Q: If a company decreases its selling price for its products. The Increase? Total cost Cost plus…
A: Breakeven quantity increases with the following changes: Increase in amount of fixed costs,…
Q: Questions: Does a low return on sales indicate a weak company? (Y/N). Explain your answer. Do…
A: Multi Step statement of comprehensive income shows all incomes and all expenses of the business at…
Q: When comparing the lower of cost to market the appropriate market value is determined before…
A: The inventory costing approach known as the lower-of-cost-or-market (LCM) values inventory at the…
Q: For each situation, list the assumption, principle, or constraint that has been violated, if any.…
A: Situation a violates the revenue recognition principle.
Q: When applying lower of cost or net realizable value under the FIFO, average cost, or specific…
A: The lower of cost or net realizable value method says we should record the inventory at market price…
Q: Which of the following occurs if a company experiences an increase in its fixed costs? Select one: O…
A: Fixed cost indicates the cost which remains constant to a certain level of activity after which the…
Q: In competitive markets economic profit becomes zero in the long-run. However, it is also possible…
A: Economic profits and losses play a crucial role in the model of perfect competition. The existence…
Q: In a cost-volume-profit analysis, explain what happens at the break-even point and why companies do…
A: Break-even point: It is that point in the business when all its costs have been recovered.…
Q: Compared to companies that have a cost structure that is mainly comprised of variable costs,…
A: Ans. Mostly companies incur two types of cost - Variable cost or fixed cost. Variable cost changes…
By using the comparative income approach, calculate the dropping of Glass
Globe segment. Justify whether Excess Earth Company should retain or drop the segment.
Step by step
Solved in 2 steps
- Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans to sell 40,000 ceiling fans and 70,000 table fans in the coming year. Product price and cost information includes: Ceiling Fan Table Fan Price $56 $17 Unit variable cost $13 $8 Direct fixed cost $21,200 $43,000 Common fixed selling and administrative expenses total $98,000. Required: Question Content Area 1. What is the sales mix estimated for next year (calculated to the lowest whole number for each product)?Sales mix of ceiling fans to table fans = ___________ : ______________ 2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans. How many ceiling fans and table fans are sold at break-even? Round your intermediate calculations and final answers to the nearest whole number. Break-even ceiling fans _______ Break-even table fans ______ 3. Prepare a contribution-margin-based income…Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lowerlimits of activity for the year ended December 31, 2020.Lower Limit Upper LimitProduction (# of boxes) 4,000 6,000Production Costs:Direct Materials …………………… $60,000 $90,000Direct Labour ………………………. 80,000 120,000Overhead:Indirect Materials…………... 25,000 37,500Indirect Labour ……………. 40,000 50,000Depreciation ………………. 20,000 20,000Selling & Administrative Expenses:Sales Salaries ……………………… 50,000 65,000Office Salaries ……………………… 30,000 30,000Advertising ………………………….. 45,000 45,000Other …………………………………………. __15,000 __20,000Total $365,000 $477,500 g) Briefly explain the impact of each of the following scenarios on the contribution margin per unit and thebreak-even point:(i) Sales volume increases(ii) Total fixed cost decreases(iii) Selling price per unit increases(iv) Variable…Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lowerlimits of activity for the year ended December 31, 2020.Lower Limit Upper LimitProduction (# of boxes) 4,000 6,000Production Costs:Direct Materials …………………… $60,000 $90,000Direct Labour ………………………. 80,000 120,000Overhead:Indirect Materials…………... 25,000 37,500Indirect Labour ……………. 40,000 50,000Depreciation ………………. 20,000 20,000Selling & Administrative Expenses:Sales Salaries ……………………… 50,000 65,000Office Salaries ……………………… 30,000 30,000Advertising ………………………….. 45,000 45,000Other …………………………………………. __15,000 __20,000Total $365,000 $477,500 Required:a) Classify each cost element as either fixed, variable, or mixed
- Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lowerlimits of activity for the year ended December 31, 2020. Lower Limit Upper LimitProduction (# of boxes) 4,000 6,000Production Costs:Direct Materials …………………… $60,000 $90,000Direct Labour ………………………. 80,000 120,000Overhead:Indirect Materials…………... 25,000 37,500Indirect Labour ……………. 40,000 50,000Depreciation ………………. 20,000 20,000Selling & Administrative Expenses:Sales Salaries ……………………… 50,000 65,000Office Salaries ……………………… 30,000 30,000Advertising ………………………….. 45,000 45,000Other …………………………………………. __15,000 __20,000Total $365,000 $477,500 d) Assuming sales of 5,000 units, calculate Buggs-Off break-even point and margin of safety in units and sales dollars. e) Recompute the break-even point in units, assuming that variable costs increased by 20% and fixed costs are…Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lowerlimits of activity for the year ended December 31, 2020. Lower Limit Upper LimitProduction (# of boxes) 4,000 6,000Production Costs:Direct Materials …………………… $60,000 $90,000Direct Labour ………………………. 80,000 120,000Overhead:Indirect Materials…………... 25,000 37,500Indirect Labour ……………. 40,000 50,000Depreciation ………………. 20,000 20,000Selling & Administrative Expenses:Sales Salaries ……………………… 50,000 65,000Office Salaries ……………………… 30,000 30,000Advertising ………………………….. 45,000 45,000Other …………………………………………. __15,000 __20,000Total $365,000 $477,500 Required:a) Classify each cost element as either fixed, variable, or mixed b) Calculate:i) the variable production cost per unit and the total fixed production overhead.ii) The total variable cost per unit and the total fixed…Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenbergplans to sell 30,000 ceiling fans and 70,000 table fans in the coming year. Product price and costinformation includes: Ceiling Fan Table FanPrice $60 $15Unit variable cost $12 $7Direct fixed cost $23,600 $45,000Common fixed selling and administrative expenses total $85,000.Required:1. What is the sales mix estimated for next year (calculated to the lowest whole number foreach product)?2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans.How many ceiling fans and table fans are sold at break-even?3. Prepare a contribution-margin-based income statement for Vandenberg, Inc., based on theunit sales calculated in Requirement 2.4. What if Vandenberg, Inc., wanted to earn operating income equal to $14,400? Calculate thenumber of ceiling fans and table…
- Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lowerlimits of activity for the year ended December 31, 2020.Lower Limit Upper LimitProduction (# of boxes) 4,000 6,000Production Costs:Direct Materials …………………… $60,000 $90,000Direct Labour ………………………. 80,000 120,000Overhead:Indirect Materials…………... 25,000 37,500Indirect Labour ……………. 40,000 50,000Depreciation ………………. 20,000 20,000Selling & Administrative Expenses:Sales Salaries ……………………… 50,000 65,000Office Salaries ……………………… 30,000 30,000Advertising ………………………….. 45,000 45,000Other …………………………………………. __15,000 __20,000Total $365,000 $477,500Required:a) Classify each cost element as either fixed, variable, or mixedb) Calculate:i) the variable production cost per unit and the total fixed production overhead.ii) The total variable cost per unit and the total fixed costsHint:…Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit Production (# of boxes) 4,000 6,000 Production Costs: Direct Materials …………………… $60,000 $90,000 Direct Labour ………………………. 80,000 120,000 Overhead: Indirect Materials…………... 25,000 37,500 Indirect Labour ……………. 40,000 50,000 Depreciation ………………. 20,000 20,000 Selling & Administrative Expenses: Sales Salaries ………………… 50,000 65,000 Office Salaries ………………… 30,000 30,000 Advertising …………………………45,000 45,000 Other …………………………… 15,000 20,000 Total $365,000 $477,500 d) Assuming sales of 5,000 units, calculate Buggs-Off break-even point and margin of safety in units and sales dollars. e) Recompute the break-even point in units, assuming that variable costs increased by 20% and fixed costs…Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit Production (# of boxes) 4,000 6,000Production Costs:Direct Materials …………$60,000 $90,000Direct Labour …................. $80,000 $120,000Overhead:Indirect Materials…………... $25,000 $ 37,500Indirect Labour ……………. $40,000 $50,000Depreciation ………………. $20,000 $20,000Selling & Administrative Expenses:Sales Salaries ……………………$50,000 $65,000Office Salaries …………………$30,000 $30,000Advertising …………………… $ 45,000 $45,000Other ………………………………$415,000 $20,000Total…
- Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit Production (# of boxes) 4,000 6,000 Production Costs: Direct Materials …………………… $60,000 $90,000 Direct Labour ………………………. 80,000 120,000 Overhead: Indirect Materials…………... 25,000 37,500 Indirect Labour ……………. 40,000 50,000 Depreciation ………………. 20,000 20,000 Selling & Administrative Expenses: Sales Salaries…Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit Production (# of boxes) 4,000 6,000 Production Costs: Direct Materials …………………… $60,000 $90,000 Direct Labour ………………………. 80,000 120,000 Overhead: Indirect Materials…………... 25,000 37,500 Indirect Labour ……………. 40,000 50,000 Depreciation ………………. 20,000 20,000 Selling & Administrative Expenses: Sales Salaries ……………………… 50,000 65,000 Office Salaries ……………………… 30,000 30,000 Advertising ………………………….. 45,000 45,000 Other …………………………………………. __15,000 __20,000 Total $365,000 $477,500 Required: a) Classify each cost element as either fixed, variable, or mixed b) Calculate: i) the variable production cost per unit and the total fixed production overhead. ii) The total variable cost per unit and the…nick limited sells creme, a cream suitable for variety of first aid uses. The company commenced operations earlier this year and expects to sell 100,000 tubes of Super crème. The following Information is available: Selling price per tube 7.00Direct material cost per tube 2.10 Direct labour cost per tube 1.35Variable overhead cost per tube 0.75Total fixed costs for the year. 210,000RequiredWhat is the Break-even point (BEP) in tubes and sales revenue? 4) If the company wanted to earn a profit of UGX 46,200 for the year how many tubes of Super crème must be sold? By what percentage should expected sales revenue fall before NICK Limited starts to make a loss? State the assumptions and limitations of break-even analysis