1)The manager of Able Car Inspection reviewed his monthlyoperating costs for the past year. His costs range from $4,100 for1,100 inspections to $3,700 for 700 inspections.
1. Calculate variable cost per inspection. use the high-lowmethod. round to the nearest cent
2. calculate the total fixed costs
3. write the equation and calculate the operating costs for 900inspections
4. Draw a graph illustrating your total cost under this plan.show your costs at 700, 900, and 1,100 inspections
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2) For its top managers, Airborn Travel formats its incomestatements as follows:
Airborn Travel
contribution margin income statement
three months ended March 31, 2012
Sales revenue $318500
Variable costs $111475
contribution margin 207025
fixed costs 176000
operating income $31025
Airborn's relevant range is between sales of $253000 and$366000
1) calculate the contribution margin ratio
2) Prepare two contribution margin income statements: one at the$253000 level and one at the $366,000 level. (Hint: the proportionof each sales dollar that goes toward variable costs is constantwithin the relevant range.) enter losses with a minus sign orparentheses
3) compute breakeven sales in dollars.
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3) Hang Ten, Co., produces sports socks. The company has fixedcosts of $91,080 and variable costs of $0.81 per package. Eachpackage sells for $1.80.
1. Compute the contribution margin per package and thecontribution margin ratio. (round answers to 2 decimal places)
2. Find the breakeven point in units and in dollars, using thecontribution margin approach.
1)The manager of Able Car Inspection reviewed his monthlyoperating costs for the past year. His costs range from $4,100 for1,100 inspections to $3,700 for 700 inspections.
1. Calculate variable cost per inspection. use the high-lowmethod. round to the nearest cent
2. calculate the total fixed costs
3. write the equation and calculate the operating costs for 900inspections
4. Draw a graph illustrating your total cost under this plan.show your costs at 700, 900, and 1,100 inspections
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2) For its top managers, Airborn Travel formats its incomestatements as follows:
Airborn Travel
contribution margin income statement
three months ended March 31, 2012
Sales revenue $318500
Variable costs $111475
contribution margin 207025
fixed costs 176000
operating income $31025
Airborn's relevant range is between sales of $253000 and$366000
1) calculate the contribution margin ratio
2) Prepare two contribution margin income statements: one at the$253000 level and one at the $366,000 level. (Hint: the proportionof each sales dollar that goes toward variable costs is constantwithin the relevant range.) enter losses with a minus sign orparentheses
3) compute breakeven sales in dollars.
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3) Hang Ten, Co., produces sports socks. The company has fixedcosts of $91,080 and variable costs of $0.81 per package. Eachpackage sells for $1.80.
1. Compute the contribution margin per package and thecontribution margin ratio. (round answers to 2 decimal places)
2. Find the breakeven point in units and in dollars, using thecontribution margin approach.
Related questions
The Hampshire Company manufactures umbrellas that sell for$12.50 each. In 2014, the company made and sold 60,000 umbrellas.The company had fixed manufacturing costs of $216,000. It also hadfixed costs for administration of $79,525. The per-unit costs ofeach umbrella are as follows:
Direct Materials: $3.00
Direct Labor: $1.50
Variable Manufacturing Overhead: $0.40
Variable Selling Expenses: $1.10
Using the information above, perform a cost-volume-profit (CVP)analysis by completing the steps below.
1. Compute net income before tax.
2. Compute the unit contribution margin in dollars and thecontribution margin ratio for one umbrella.
3. Calculate the break-even point in units and dollars ofrevenue.
4. Calculate the margin of safety:
In units
In sales dollars
As a percentage
5. Calculate the degree of operating leverage.
6. Assume that sales will increase by 20% in 2015. Calculate thepercentage of before-tax income for this increase. Providecalculations to prove that your percentage increase is correctbased on the operating leverage calculated in step 5.
7. Compute the number of umbrellas that Hampshire is required tosell if it plans to earn $150,000 in income before taxes by usingthe target income formula. Proof your calculation.
8. A company that specializes in tours in England has offered topurchase 5,000 umbrellas at $11 each from Hampshire. The variableselling costs of these additional units will be $1.30 as opposed to$1.10 per unit. Also, this production activity will incur another$15,000 of fixed administrative costs. Should Hampshire agree tosell these additional 5,000 umbrellas to the touring business?Provide calculations to support your decision.
| Requirement 1 | ||||
| Units | Price | Totals | ||
| Sales | X | $ | $ | |
| Variable Costs | X | $ | $ | |
| Fixed Costs | $ | |||
| Net Income | $ | |||
| Requirement 2 | ||||
| Contribution Margin per Unitin Dollars = Selling Price â Variable Costs | ||||
| Selling Price | Variable Costs | Contribution Margin per Unit | ||
| Contribution Margin Ratio =Contribution Margin/Selling Price | ||||
| Contribution Margin | Selling Price | Contribution Margin Ratio | ||
| Requirement 3 | ||||
| Break-Even Point = Fixed Costs/ Contribution Margin | ||||
| Fixed Costs | Contribution Margin | Break-Even Point in Units (Rounded) | ||
| Break-Even Point in Units XSelling Price per Unit = Break-Even Point Sales | ||||
| Break-Even Point in Units | Selling Price per Unit | Break-Even Point in Sales (Rounded) | ||
| Requirement 4A | ||||
| Margin of Safety in Units =Current Unit Sales â Break-Even Point in Unit Sales | ||||
| Current Unit Sales | Break-Even Point in Sales | Margin of Safety in Units | ||
| Requirement 4B | ||||
| Margin of Safety in Dollars =Current Sales in Dollars â Break-Even Point Sales in Dollars | ||||
| Current Sales in Dollars | Break-Even Point in Dollars | Margin of Safety in Dollars | ||
| Requirement 4C | ||||
| Margin of Safety as aPercentage = Margin of Sales in Units / Current Unit Sales | ||||
| Margin of Safety in Units | Current Unit Sales | Margin of Safety Percentage | ||
| Requirement 5 | ||||
| Degree of Operating Leverage =Contribution Margin / Operating Income | ||||
| Contribution Margin | Operating Income | Operating Leverage | ||
| Requirement 6 | ||||
| Units | $ Per Unit | Totals | ||
| Sales | X | $ | $ | |
| Variable Costs | X | $ | $ | |
| Fixed Costs | $ | |||
| Net Income | $ | |||
| Operating Leverage | Times % Increase | Increase would be XX% | ||
| Prior Income | $ | From Part 1 | ||
| Increase | $ | Prior Income X XX% Above | ||
| Total | $ | |||
| Requirement 7 | ||||
| Targeted Income = (Fixed Costs+ Target Income) / Contribution Margin | ||||
| Fixed Costs + Target Income | Divided by Contribution Margin | # of Units (Rounded) | ||
| Fixed Costs | $ | |||
| Target Income | $ | |||
| Total | $ | $ | X | |
| # of Units Above X $ Per Unit | ||||
| Proof | Revenue | XX,XXX X $XX.XX | $ | |
| Variable Costs | XX,XXX X $X.XX | $ | ||
| Contribution Margin | $ | |||
| Fixed Costs | $ | |||
| Net Income | $ | |||
| Requirement 8 | ||||
| Sales Mix | ||||
| Current | Specialty | Total | ||
| Expected Sales Units | X | X | ||
| Revenue = Sales X Price | $ | $ | $ | |
| Variable Costs X Units | $ | $ | $ | |
| Contribution Margin | $ | $ | $ | |
| Fixed Costs | $ | $ | $ | |
| Operating Income | $ | |||
| Prior Net Income FromRequirement 1 | $ | |||
| Additional Operating Income | (Operating Income Above Less Prior Income) | $ | ||
| Decision With Explanation | ||||
Presidio, Inc. produces one model of mountain bike. Partial information for the company follows:
Required:
1. Complete Presidioâs cost data table. (Round your Cost per Unit answers to 2 decimal places.)
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2. Calculate Presidioâs contribution margin ratio and its total contribution margin at each sales level indicated in the cost data table assuming the company sells each bike for $630. (Round your Margin Ratio percentage answers to 2 decimal places (i.e. .1234 should be entered as 12.34%.))
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3. Calculate net operating income (loss) at each of the sales levels assuming a sales price of $630. (Round your answers to the nearest whole dollar amount.)
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Presidio, Inc. produces one model of mountain bike. Partialinformation for the company follows:
Required: 1. Complete Presidioâs cost data table. (Round yourCost per Unit answers to 2 decimal places.)
| Bikes produced and sold | 410 Units | 770 Units | 1924 Units |
| Total Costs | |||
| Variable costs | $106,600 | ||
| Fixed costs | |||
| Total Costs | |||
| Cost per unit | |||
| Variable cost per unit | |||
| Fixed cost per unit | |||
| Total Cost per unit | $532 |
2. Calculate Presidioâs contribution margin ratio and its totalcontribution margin at each sales level indicated in the cost datatable assuming the company sells each bike for $610. (Round yourMargin Ratio percentage answers to 2 decimal places (i.e. .1234should be entered as 12.34%.))
| 410 units | 770 Units | 1924 Units | ||||
| Total Contribution Margin | ||||||
| Contribution Margin Ratio | % | % | % |
3. Calculate net operating income (loss) at each of the saleslevels assuming a sales price of $610. (Round your answers to thenearest whole dollar amount.)
| 410 Units | 770 Units | 1924 Units | |
Net Operating Income (Loss) |
