Review Day Exercises Solutions
Autor: img344 • May 4, 2015 • Study Guide • 2,486 Words (10 Pages) • 1,003 Views
REVIEW DAY EXERCISES
CVP Relationships
XYZ Company’s break-even sales level for the year was $40,000. When the company incurs total variable costs of $50,000 and fixed costs of $30,000, what would the actual profit (loss) before taxes for the year be?
Sales – VC = CM – FC = Profit before taxes
$40,000 – VC = CM - $30,000 = $0
Therefore, CM = $30,000 and VC = $10,000
>>>> Ratio of VC to Sales = 1:4
Therefore, $50,000 is Actual VC * 4 = $200,000 Sales
$200,000 - $50,000 = $150,000 - $30,000 = $120,000 Profit before taxes
CHAPTER 7. A company is releasing two new products. Financial details are as follows:
Product A Product B
Selling Price $200 $100
Variable Costs:
Marketing $25 $25
Manufacturing $65 $15
CM $110 $60
The fixed costs combined are $15,000,000. The sales mix is 70% Product A and 30% Product B. The company’s tax rate is 30%. The company’s goal is to have an after-tax profit of $1,000,000.
Required:
- How many units of Product A need to be sold? 172,933 * 70% = 121,053
- How many units of Product B need to be sold? 172,933 * 30% = 51,880
Weighted UCM = (110 * 70%) + (60 * 30%) = $95
Combined Units = (15,000,000 + (1,000,000/.70)) / $95 = 172,933
CHAPTER 2. A company has hired you to help complete the analysis below. The company allocates overhead to work-in-process as follows: $2.00 of overhead per direct labor dollar.
Account | $$ Amount | Account | $$ Amount | |
Work in process – Oct 31st | $ 1,800 | Revenues – October | $27,300 | |
Finished goods – Oct 1st | $ 4,200 | Gross Profit – October | $12,700 | |
October direct labor | $ 3,100 | Direct materials used in Oct | $ 8,000 | |
October purchases of raw materials | $ 9,200 | Raw materials inventory – Oct 31st | $ 3,300 | |
Work in process – Oct 1st | Zero | Selling & Admin expenses – October | $ 2,000 |
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