ACCT 212 Connect Homework 5 Cost-Volume-Profit Analysis Assignment solutions complete answers

ACCT 212 Connect Homework 5 Cost-Volume-Profit Analysis Assignment solutions complete answers 

 

Henna Company produces and sells two products, Carvings and Mementos. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 60,000 units of each product. Income statements for each product follow.

2. Assume that the company expects sales of each product to decline to 43,000 units next year with no change in unit selling price. Prepare a contribution margin income statement for the next year (as shown above with columns for each of the two products). (Round "per unit" answers to 2 decimal places.)

3. Assume that the company expects sales of each product to increase to 74,000 units next year with no change in unit selling price. Prepare a contribution margin income statement for the next year (as shown above with columns for each of the two products). (Round "per unit" answers to 2 decimal places.)

 

Handy Home sells windows (80% of sales) and doors (20% of sales). The selling price of each window is $390 and of each door is $880. The variable cost of each window is $220 and of each door is $540. Fixed costs are $1,203,600.

 

Nombre Company management predicts $456,000 of variable costs, $475,000 of fixed costs, and income of $209,000 in the next period. Management also predicts that the contribution margin per unit will be $9.

 

The marketing manager believes that increasing advertising costs by $185,000 will increase the company’s sales volume to 11,200 units. Prepare a contribution margin income statement for the next year assuming the company incurs the additional advertising costs.

If the company raises its selling price to $300 per unit.

The company is considering buying a new machine that will increase its fixed costs by $41,500 per year and decrease its variable costs by $8 per unit. Prepare a contribution margin income statement for the next year assuming the company purchases this machine.

 

Harrison Company expects to sell 160,000 units of its product next year, which would generate total sales of $12,960,000. Management predicts that income for next year will be $1,210,000 and that the contribution margin per unit will be $29.

 

Bloom Company predicts it will incur fixed costs of $267,000 and earn income of $353,100 in the next period. Its expected contribution margin ratio is 53%.

 

Sunn Company manufactures a single product that sells for $195 per unit and whose variable costs are $156 per unit. The company’s annual fixed costs are $510,900.

 

Sunn Company manufactures a single product that sells for $136 per unit and whose variable costs are $102 per unit. The company’s annual fixed costs are $496,400.
 
(1) Prepare a contribution margin income statement at the break-even point.
(2) If the company’s fixed costs increase by $131,000, what amount of sales (in dollars) is needed to break even?

 

Hudson Company reports the following contribution margin income statement.



HUDSON COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales (11,000 units at $300 each)
$ 3,300,000
Variable costs (11,000 units at $240 each)
2,640,000
Contribution margin
660,000
Fixed costs
360,000
Income
$ 300,000
1. Compute break-even point in units.
2. Compute break-even point in sales dollars.

 

1. Assume Hudson has a target income of $158,000. What amount of sales (in dollars) is needed to produce this target income?
2. If Hudson achieves its target income, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.)

 

Sunn Company manufactures a single product that sells for $184 per unit and whose variable costs are $138 per unit. The company’s annual fixed costs are $699,200. Management targets an annual income of $1,150,000.

 

Sunn Company manufactures a single product that sells for $200 per unit and whose variable costs are $182 per unit. The company’s annual fixed costs are $637,000. The sales manager predicts that next year’s annual sales of the company’s product will be 40,700 units at a price of $207 per unit. Variable costs are predicted to increase to $147 per unit, but fixed costs will remain at $637,000. What amount of income can the company expect to earn under these predicted changes?

Prepare a contribution margin income statement for the next year.

 

Bloom Company predicts it will incur fixed costs of $266,000 and earn income of $360,400 in the next period. Its expected contribution margin ratio is 54%.
 
1. Compute the amount of expected total dollar sales.
2. Compute the amount of expected total variable costs.

 

Harrison Company expects to sell 170,000 units of its product next year, which would generate total sales of $13,940,000. Management predicts that income for next year will be $1,220,000 and that the contribution margin per unit will be $28.

Complete the below table to calculate the next year’s expected variable costs and fixed costs.

 

Hudson Company reports the following contribution margin income statement.
 

HUDSON COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales (10,600 units at $300 each)
$ 3,180,000
Variable costs (10,600 units at $240 each)
2,544,000
Contribution margin
636,000
Fixed costs
480,000
Income
$ 156,000
The marketing manager believes that increasing advertising costs by $110,000 will increase the company’s sales volume to 12,000 units. Prepare a contribution margin income statement for the next year assuming the company incurs the additional advertising costs.

 

If the company raises its selling price to $320 per unit.
 
1. Compute Hudson Company's contribution margin per unit.
2. Compute Hudson Company's contribution margin ratio.
3. Compute Hudson Company's break-even point in units.
4. Compute Hudson Company's break-even point in sales dollars.

 

The company is considering buying a new machine that will increase its fixed costs by $45,500 per year and decrease its variable costs by $10 per unit. Prepare a contribution margin income statement for the next year assuming the company purchases this machine.

 

Nombre Company management predicts $1,240,000 of variable costs, $1,702,000 of fixed costs, and income of $158,000 in the next period. Management also predicts that the contribution margin per unit will be $30.

 

Handy Home sells windows (20% of sales) and doors (80% of sales). The selling price of each window is $380 and of each door is $860. The variable cost of each window is $215 and of each door is $530. Fixed costs are $1,737,450.

 

Information for two companies follows:

 

 
Skittles Company
Starburst Company
Sales
$ 7,054,000
$ 4,275,000
Contribution margin
5,304,000
1,395,000
Fixed costs
4,284,000
945,000

(1) Compute the degree of operating leverage (DOL) for each company.
(2) Which company is expected to produce a greater percent increase in income from a 10% increase in sales?

 

Astro Company sold 24,000 units of its only product and reported income of $174,800 for the current year. During a planning session for next year’s activities, the production manager notes that variable costs can be reduced 42% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $158,000. Total units sold and the selling price per unit will not change.
 

ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($58 per unit)
$ 1,392,000
Variable costs ($39 per unit)
936,000
Contribution margin
456,000
Fixed costs
281,200
Income
$ 174,800
1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal places.)

 

2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,392,000. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.)

 

Henna Company produces and sells two products, Carvings and Mementos. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 59,000 units of each product. Income statements for each product follow.
 

 
Carvings
Mementos
Sales
$ 997,100
$ 997,100
Variable costs
697,970
99,710
Contribution margin
299,130
897,390
Fixed costs
150,130
748,390
Income
$ 149,000
$ 149,000
rev: 09_29_2021_QC_CDR-376

Required:
1. Compute the break-even point in dollar sales for each product. (Enter CM ratio as percentage rounded to 2 decimal places.)

 

2. Assume that the company expects sales of each product to decline to 42,000 units next year with no change in unit selling price. Prepare a contribution margin income statement for the next year (as shown above with columns for each of the two products). (Round "per unit" answers to 2 decimal places.)

 

3. Assume that the company expects sales of each product to increase to 73,000 units next year with no change in unit selling price. Prepare a contribution margin income statement for the next year (as shown above with columns for each of the two products). (Round "per unit" answers to 2 decimal places.)