# Problems on Management Accounting

Pages: 5 (562 words) Published: May 13, 2013
Simpson Company produces one golf cart model. A partially complete table of company costs follows: Requirement 1:
Complete the table. (Round your cost per unit answers to 2 decimal places. Omit the "\$" sign in your response.) Number of golf carts produced and sold 620 units 810 units 970 units Total costs

Variable costs\$
\$405,000 \$

Fixed costs per year
513,540

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Total costs\$

\$918,540 \$

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Cost per unit

Variable cost per unit\$
\$
\$

Fixed cost per unit

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Total cost per unit\$

\$
\$

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ________________________________________

Requirement 2:
Simpson sells its carts for \$1,230 each. Prepare a contribution margin income statement for each of the three production levels given in the table. (Indicate the negative operating income with a minus sign in front of the amount. Input all amounts as positive values. Omit the "\$" sign in your response.) Golf carts produced and sold 620 units 810 units 970 units Sales Revenue\$

\$
\$

Less: Variable Cost

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Contribution Margin

Less: Fixed Cost

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Requirement 4:
Calculate Simpson's break-even point in number of units and in sales dollars. (Round your break-even units answer up to the next whole number. Omit the "\$" sign in your response.)
Break-even units
carts
Break-even sales dollars \$

________________________________________

Requirement 5:
Assume Simpson sold 670 carts last year. Without performing any calculations, determine whether Simpson earned a profit last year.

Requirement 6:
Calculate the number of carts that Simpson must sell to earn \$74,000 profit. (Round your answer up to the next whole number.)

Target unit sales units

Requirement 7:
Calculate Simpson's degree of operating leverage if it sells 850 carts....