Madison is the newly appointed manager of spark communication a small computer monitor manfacturing company based out of halifox nova Scottia. During her first few days on the jobs she collected the following data about the company. The company has the capacity to produce 750 monitors per month and is currently producing 525monitors every month and selling it to wholesaler The company is expenses are :rent $4000 per month, salaries of $12500 per month, insurance of $1500 per month , material is of $6 permonth, labour of $35 per month and sales commissions of $19 per month. Each month is sold for $105. a. What is the contribution margin and the contribution rate? b. What is the break even volume and break even revenue per month? c. How much net income per month we earned at the current level of presentation.?

Madison is the newly appointed manager of spark communication a small computer monitor manfacturing company based out of halifox nova Scottia. During her first few days on the jobs she collected the following data about the company. The company has the capacity to produce 750 monitors per month and is currently producing 525monitors every month and selling it to wholesaler The company is expenses are :rent $4000 per month, salaries of $12500 per month, insurance of $1500 per month , material is of $6 permonth, labour of $35 per month and sales commissions of $19 per month. Each month is sold for $105. a. What is the contribution margin and the contribution rate? b. What is the break even volume and break even revenue per month? c. How much net income per month we earned at the current level of presentation.?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 6E: Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of...

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Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of$25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk usesa PC and laser printer in processing orders. Time available on each PC system is sufficient toprocess 6,500 orders per year. The cost of each PC system is $1,100 per year. In addition to thesalaries, Elliott spends $27,560 for forms, postage, and other supplies (assuming 26,000 purchaseorders are processed). During the year, 25,350 orders were processed.Required:1. Classify the resources associated with purchasing as (1) flexible or (2) committed.2. Compute the total activity availability, and break this into activity usage and unused activity.3. Calculate the total cost of resources supplied (activity cost), and break this into the cost ofactivity used and the cost of unused activity.4. (a) Suppose that a large special order will cause an additional 500 purchase orders. Whatpurchasing costs are…
Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of $25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is $1,100 per year. In addition to the salaries, Elliott spends $27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Which of the resources associated with purchasing can be classified as flexible resources? Forms, Postage and Supplies Which of the resources associated with purchasing can be classified as committed resources? PC system and clerks 2. Compute the total activity availability, and break this into activity usage and unused activity. Activity availability: fill in the blank 3 purchase orders Activity usage: fill in the blank…
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Foto-Fast Copy Shop provides a variety of photocopying and printing services. On June 5, the owner invested in some computer-aided photography equipment that enables customers to reproduce a picture or illustration, input it digitally into the computer, enter text into the computer, and then print out a four-color professional quality brochure. Prior to the purchase of this equipment, Foto-Fast Copy Shop’s overhead averaged $37,500 per year. After the installation of the new equipment, the total overhead increased to $90,000 per year. Foto-Fast Copy Shop has always costed jobs on the basis of actual materials and labor plus overhead assigned using apredetermined overhead rate based on direct labor hours. Budgeted direct labor hours for theyear are 7,500, and the wage rate is $8 per hour.Required:1. What was the predetermined overhead rate prior to the purchase of the new equipment?2. What was the predetermined overhead rate after the new equipment was purchased?3. Suppose Rick Anselm…
Olga was planning to set up a business where she would purchase paintings for $1,050 per unit and sell them for $1,800 per unit. She wanted to conduct a break-even analysis and identified the following costs for running her business: $4,470.00 per month for store leasing, $54 per month website hosting fee, $5,150 per month for staff salary, $2,040 per month for advertising costs, and $25 per unit for labour charges to pack the paintings. a. How many paintings would she have to sell per month to break-even? Round up to the next whole number b. If she wants to make a profit of $24,000 in a month, how many paintings would she have to sell? Round up to the next whole number
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Sunland Horticulture provides and maintains live plants in office buildings. The company's 884 customers are charged $37 per month for this service, which includes weekly watering visits. The variable cost to service a customer's location is $17 per month. The company incurs $2,194 each month to maintain its fleet of four service vans and $3.004 each month in salaries. Sunland pays a bookkeeping service $2 per customer each month to handle all invoicing and accounting functions A.) picture one B.) What is the expected monthly operating income if 174 customers are added? Operating income $________ C.) second picture
Baby Doll Shop currently manufactures wooden parts for dollhouses. Itssole worker is paid $8.10 an hour and, using a handsaw, can produce a year's required production (1,600 parts) in just eight weeks of 40 hours per week. That is, the worker averages five parts per hour when working by hand. The shop is considering the purchase of a power band saw with associated fixtures in order to improve the productivity of this operation. Three models of power saw could be purchased: Model A (economy version), Model B (high-powered version), and Model C (deluxe high-end version). The major operating difference between these models is their speed of operation. The investment costs, including the required fixtures and other operating characteristics, are summarized as follows: Assume that MARR = 10%. Are there enough potential savings to make iteconomical to purchase any of the power band saws? Which model is most economical according to the rate-of-return principle? (Assume that any effect of…
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