Quiz – Chapter 17 – Solution 1. Rider Company sells a single product. The product has a selling price of $40 per unit and variable expenses of $15 per unit. The company's fixed expenses total $30,000 per year. The company's break-even point in terms of total dollar sales is: A) $100,000. B) $80,000. C) $60,000. D) $48,000. The answer is d. CMR = (P-V)/P = ($40 - $15)/$40 = 62.5% Px = F/ (CMR) Px = $30,000/.625 = $48,000 Use the following to answer questions 2-3: Weiss Corporation produces two models of wood chairs, Colonial and Early American. The Colonial sells for $60 per chair and the Early American sells for $80 per chair. Variable expenses for each model are as follows:…
8. The TLW Company is looking at developing a new surf board. The CEO wants to know the break-even point for the new board given the following data: fixed costs = $155,000; variable costs per board = $115 and the proposed sales price for the board according to marketing will be $575. Calculate the break-even point for this product.…
3. Question : (TCO B) The Congress Company has identified two methods for producing playing cards. One method involves using a machine having a fixed cost of $10,000 and variable costs of $1.00 per deck of cards. The other method would use a less expensive machine (fixed cost = $5,000), but it would require greater variable costs ($1.50 per deck of cards). If the selling price per deck of cards will be the same under each method, at what level of output will the two methods produce the same net operating income (EBIT)?…
Mendel Paper Company has been doing relatively well with the sales of computer paper, napkins, place mats, and poster board. With more people eating out, the demand for napkins and place mats have increased. Computer paper and poster boards have slowly increased in demand as well. However, there is concern at the company with the fixed cost of operations. Marlene Herbert, the plant superintendent, said, “As we have automated our operation, we have experienced increases in fixed overhead and even variable overhead. And, we will have to add more equipment since it appears that we need even more plant capacity. We are operating over our normal capacity as it is.” (Case 2B). With the new production costs added in, will the Mendel Paper Company have what it takes to succeed?…
p. 262 During its first year of operations Nickelson produced 60,000 units and sold 60,000 units. During its second year of operations it produced 75,000 units and sold 50,000 units. In its third year, Nickelson produced 40,000 units and sold 65,000 units. The selling price of the company's product is $56 per unit. Required: 1. Compute the company's break-even point in units sold. 2. Assume the company uses variable costing: a. Compute the unit product cost for year 1, year 2, and year 3. b. Prepare an income statement for year 1, year 2, and year 3. 3. Assume the company uses absorption costing: a. Compute the unit product cost for year 1, year 2, and year…
2.3 The U.S. government subsidizes flood insurance because those who want to buy it live in the flood plain and cannot get it at reasonable rates. What inefficiency does this create?…
At an output level of 50 units per day a firm has average total costs of $60 and average variable costs of $35. Its total fixed costs are:…
1. What are fixed costs, if contribution margin is positive and breakeven is one unit? Using this cost structure, what is the operating leverage if they sell 2 units?…
BA essaySummarize your current level of responsibility and decision-making ability in your company. What role do you play in your organization's strategy? What are your career goals for the next five years? What steps do you see yourself taking to achieve these goals? How will a UNC Kenan-Flagler MBA help you reach your goals?…
In order for the company to maximize on production, producing 70,000 units at Ogden and 50,000 units at Sandy will give the company a difference of $220.00 versus $270.00 at producing 75,000 at Ogden and 45,000 at Sandy. The operating leverage here shows the effects that fixed cost have on the change in operating income. Understanding the breakeven at both facilities helps to determine how allocation can occur (Datar, Schoenebeck, 2014).…
Kayla Rodney MBA 575 Case 4 Questions The University of Northwestern Ohio Jinjian Garment Factory Motivating Go-Slow Workers…
2) One idea that the consultant had was to reduce prices to bring in more customers. If average prices were reduced ten percent (10%), and the number of sales tickets (unit sales) increased to 7,500, would the company's income be increased? With prices reduced, what would be the new breakeven point in sales tickets and sales dollars?…
1. At CoBA, we place great importance in values, initiative and professionalism. Describe one example of how you have demonstrated these qualities.…
1. At its current level of production, a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1000 units. What is the firm's current profit? What is likely to occur in this market, and why?…
d. If Healthy Foods has an annual interest expense of $10,000, calculate the degree of financial leverage at both 20,000 and 25,000 bags. The EBIT at 20,000 bags is 20,000 as worked out in part b. So, calculate: (20,000)/ (20,000-10,000) to get a DFL at 2 times. The EBIT at 25,000 bags is 45,000 as worked out in part b. Calculate: (45,000)/ (45,000 - 10,000) to get a DFL at 1.29 times.…