Jetson Co. sold 20,800 units of its only product and incurred a$56,672 loss (ignoring taxes) for the current year as shown here.During a planning session for year 2012âs activities, theproduction manager notes that variable costs can be reduced 50% byinstalling a machine that automates several operations. To obtainthese savings, the company must increase its annual fixed costs by$158,000. The maximum output capacity of the company is 40,000units per year.
JETSON COMPANY
Contribution Margin Income Statement
For Year Ended December 31, 2011 Sales $ 796,640 Variable costs 637,312 Contributionmargin 159,328 Fixed costs 216,000 Net loss $ (56,672 )
rev: 02_07_2012
References
Section BreakLearning Objective: 22-A1 Computethe contribution margin and describe what it reveals about acompanyâs cost structure.Learning Objective: 22-P2 Compute thebreak-even point for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
2.
value:
3.12 points
Required information
Required: 1. Compute the break-even point in dollar sales for year 2011.(Round your intermediate calculations to 2 decimal places.Omit the "$" sign in your response.)
Break-even point indollar sales for year 2011 $
References
eBook & Resources
WorksheetLearning Objective: 22-A1 Compute thecontribution margin and describe what it reveals about a companyâscost structure.Learning Objective: 22-P2 Compute the break-evenpoint for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
Check my work
3.
value:
3.12 points
Required information
2. Compute the predicted break-even point in dollar sales for year2012 assuming the machine is installed and there is no change inthe unit sales price. (Round your intermediate calculationsto 2 decimal places and final answer to nearest dollar amount. Omitthe "$" sign in your response.)
Break-even point indollar sales for year 2012 $
rev: 02_07_2012
References
eBook & Resources
WorksheetLearning Objective: 22-A1 Compute thecontribution margin and describe what it reveals about a companyâscost structure.Learning Objective: 22-P2 Compute the break-evenpoint for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
Check my work
4.
value:
3.12 points
Required information
3. Prepare a forecasted contribution margin income statement for2012 that shows the expected results with the machine installed.Assume that the unit sales price and the number of units sold(20,800 units) will not change, and no income taxes will be due.(Input all amounts as positive values. Omit the "$" sign inyour response.)
JETSON COMPANY
Forecasted Contribution Margin Income Statement
For Year Ended December 31, 2012 (Click toselect)Sales commissionsSalesRent on factoryIncome taxesIncomebefore taxes $ (Click toselect)Income before taxesVariable costsTaxes on factoryFactorymaintenanceIncome taxes (Click toselect)Gross profitContribution margin (Click toselect)Fixed costsFactory maintenanceRent on factorySalescomissionsTaxes on factory Net income $
References
eBook & Resources
WorksheetLearning Objective: 22-A1 Compute thecontribution margin and describe what it reveals about a companyâscost structure.Learning Objective: 22-P2 Compute the break-evenpoint for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
Check my work
5.
value:
3.12 points
Required information
4. Compute the sales level required in both dollars and units toearn $168,000 of after-tax income in 2012 with the machineinstalled and no change in the unit sales price. Assume that theincome tax rate is 40%. (Round your intermediatecalculations to 2 decimal places and final answers to the nearestwhole number. Omit the "$" sign in your response.)
Sales level requiredin dollars $ Sales level requiredin units units
References
eBook & Resources
WorksheetLearning Objective: 22-A1 Compute thecontribution margin and describe what it reveals about a companyâscost structure.Learning Objective: 22-P2 Compute the break-evenpoint for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
Check my work
6.
value:
3.12 points
Required information
5. Prepare a forecasted contribution margin income statement thatshows the results at the sales level computed in part 4. Assume anincome tax rate of 40%. (Input all amounts as positivevalues. Round your "Sales level required in units" to nearest wholenumber. Round your intermediate calculations to 2 decimal placesand final answers to the nearest whole number. Omit the "$" sign inyour response.)
JETSON COMPANY
Forecasted Contribution Margin Income Statement
For Year Ended December 31, 2012 (Click toselect)Sales commissionsRent on factoryFactorymaintenanceSalesIncome taxes $ (Click toselect)Variable costsIncome taxesFactory maintenanceSalescommissionsIncome before taxes (Click toselect)Gross profitContribution margin (Click toselect)Factory maintenanceOffice equipment leaseFixed costsSalescommissionsSales (Click toselect)Factory maintenanceSales commissionsIncome before incometaxesTaxes on factoryOffice equipment lease (Click toselect)Rent on factoryOffice equipment leaseTaxes on factoryIncometaxesSales comissions (Click to select)NetincomeNet loss $
Jetson Co. sold 20,800 units of its only product and incurred a$56,672 loss (ignoring taxes) for the current year as shown here.During a planning session for year 2012âs activities, theproduction manager notes that variable costs can be reduced 50% byinstalling a machine that automates several operations. To obtainthese savings, the company must increase its annual fixed costs by$158,000. The maximum output capacity of the company is 40,000units per year. |
| JETSON COMPANY Contribution Margin Income Statement For Year Ended December 31, 2011 | |||||
| Sales | $ | 796,640 | |||
| Variable costs | 637,312 | ||||
| Contributionmargin | 159,328 | ||||
| Fixed costs | 216,000 | ||||
| Net loss | $ | (56,672 | ) | ||
rev: 02_07_2012
References
Section BreakLearning Objective: 22-A1 Computethe contribution margin and describe what it reveals about acompanyâs cost structure.Learning Objective: 22-P2 Compute thebreak-even point for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
2.
value:
3.12 points
Required information
| Required: | |
| 1. | Compute the break-even point in dollar sales for year 2011.(Round your intermediate calculations to 2 decimal places.Omit the "$" sign in your response.) |
| Break-even point indollar sales for year 2011 | $ |
References
eBook & Resources
WorksheetLearning Objective: 22-A1 Compute thecontribution margin and describe what it reveals about a companyâscost structure.Learning Objective: 22-P2 Compute the break-evenpoint for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
Check my work
3.
value:
3.12 points
Required information
| 2. | Compute the predicted break-even point in dollar sales for year2012 assuming the machine is installed and there is no change inthe unit sales price. (Round your intermediate calculationsto 2 decimal places and final answer to nearest dollar amount. Omitthe "$" sign in your response.) |
| Break-even point indollar sales for year 2012 | $ |
rev: 02_07_2012
References
eBook & Resources
WorksheetLearning Objective: 22-A1 Compute thecontribution margin and describe what it reveals about a companyâscost structure.Learning Objective: 22-P2 Compute the break-evenpoint for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
Check my work
4.
value:
3.12 points
Required information
| 3. | Prepare a forecasted contribution margin income statement for2012 that shows the expected results with the machine installed.Assume that the unit sales price and the number of units sold(20,800 units) will not change, and no income taxes will be due.(Input all amounts as positive values. Omit the "$" sign inyour response.) |
| JETSON COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2012 | |
| (Click toselect)Sales commissionsSalesRent on factoryIncome taxesIncomebefore taxes | $ |
| (Click toselect)Income before taxesVariable costsTaxes on factoryFactorymaintenanceIncome taxes | |
| (Click toselect)Gross profitContribution margin | |
| (Click toselect)Fixed costsFactory maintenanceRent on factorySalescomissionsTaxes on factory | |
| Net income | $ |
References
eBook & Resources
WorksheetLearning Objective: 22-A1 Compute thecontribution margin and describe what it reveals about a companyâscost structure.Learning Objective: 22-P2 Compute the break-evenpoint for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
Check my work
5.
value:
3.12 points
Required information
| 4. | Compute the sales level required in both dollars and units toearn $168,000 of after-tax income in 2012 with the machineinstalled and no change in the unit sales price. Assume that theincome tax rate is 40%. (Round your intermediatecalculations to 2 decimal places and final answers to the nearestwhole number. Omit the "$" sign in your response.) |
| Sales level requiredin dollars | $ | |
| Sales level requiredin units | units | |
References
eBook & Resources
WorksheetLearning Objective: 22-A1 Compute thecontribution margin and describe what it reveals about a companyâscost structure.Learning Objective: 22-P2 Compute the break-evenpoint for a single product company.
Difficulty: HardLearning Objective: 22-C2Describe several applications of costvolume- profit analysis.
Check my work
6.
value:
3.12 points
Required information
| 5. | Prepare a forecasted contribution margin income statement thatshows the results at the sales level computed in part 4. Assume anincome tax rate of 40%. (Input all amounts as positivevalues. Round your "Sales level required in units" to nearest wholenumber. Round your intermediate calculations to 2 decimal placesand final answers to the nearest whole number. Omit the "$" sign inyour response.) |
| JETSON COMPANY Forecasted Contribution Margin Income Statement For Year Ended December 31, 2012 | |
| (Click toselect)Sales commissionsRent on factoryFactorymaintenanceSalesIncome taxes | $ |
| (Click toselect)Variable costsIncome taxesFactory maintenanceSalescommissionsIncome before taxes | |
| (Click toselect)Gross profitContribution margin | |
| (Click toselect)Factory maintenanceOffice equipment leaseFixed costsSalescommissionsSales | |
| (Click toselect)Factory maintenanceSales commissionsIncome before incometaxesTaxes on factoryOffice equipment lease | |
| (Click toselect)Rent on factoryOffice equipment leaseTaxes on factoryIncometaxesSales comissions | |
| (Click to select)NetincomeNet loss | $ |
Related questions
| Jetson Co. sold 20,000 units of its only product and incurred a$50,000 loss (ignoring taxes) for the current year as shown here.During a planning session for year 2012%u2019s activities, theproduction manager notes that variable costs can be reduced 50% byinstalling a machine that automates several operations. To obtainthese savings, the company must increase its annual fixed costs by$150,000. The maximum output capacity of the company is 40,000units per year.
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