Stuart Corporation sells hammocks; variable costs are $71 each, and the hammocks are sold for $136 each. Stuart incurs $450,500 offixed operating expenses annually.Requireda1. Determine the sales volume in units and dollars required to attain a $63,000 profit.a2. Prepare an income statement using the contribution margin format.b. Stuart is considering implementing a quality improvement program. The program will require a $6 increase in the variable costper unit. To inform its customers of the quality improvements, the company plans to spend an additional $39,200 for advertising.Assuming that the improvement program will increase sales to a level that is 5,300 units above the amount computed inRequirement a, prepare a budgeted income statement using the contribution margin format.c. Determine the new break-even point in units and sales dollars as well as the margin of safety percentage, assuming that thequality improvement program is implemented.Complete this question by entering your answers in the tabs below.Req A1Req A2Req BSales volume in unitsSales volume in dollarsReq CDetermine the sales volume in units and dollars required to attain a $63,000 profit.

Sales Volume (in units) = (Fixed costs + Desired profit) / Contribution per unitSales volume (in…

Answered: Stuart Corporation sells hammocks;…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2CE

See similar textbooks

Similar questions

Olivian Company wants to earn 420,000 in net (after-tax) income next year. Its product is priced at 275 per unit. Product costs include: Variable selling expense is 14 per unit; fixed selling and administrative expense totals 290,000. Olivian has a tax rate of 40 percent. Required: 1. Calculate the before-tax profit needed to achieve an after-tax target of 420,000. 2. Calculate the number of units that will yield operating income calculated in Requirement 1 above. (Round to the nearest unit.) 3. Prepare an income statement for Olivian Company for the coming year based on the number of units computed in Requirement 2. 4. What if Olivian had a 35 percent tax rate? Would the units sold to reach a 420,000 target net income be higher or lower than the units calculated in Requirement 3? Calculate the number of units needed at the new tax rate. (Round dollar amounts to the nearest dollar and unit amounts to the nearest unit.)
1 Lazy Days Inc. (LDI), sells hammocks. Revenue and cost information is given below: Sales Price 3. TL 30 Unit Variable Cost 20 Annual Fixed Operating Expenses 47,500 Required: a) Determine the sales volume in units and TL amount that would be required to attain a TL 12,500 profit. Verify your answer by preparing an income statement using the contribution margin format. b) LDI is considering the implementation of a quality improvement program. The program will require a TL 2.50 increase in the variable cost per unit. To inform its customers of the quality improvements, the company plans to spend an additional TL 5,000 for advertising. Assuming that the improvement program will increase sales to a level that is 1,500 units above the amount computed in requirement a, should LDI proceed with plans to improve product quality? Support your answer by preparing a budgeted income statement. c) Determine the new break-even point volume of units and sales in TL as well as the margin of safety…
Zachary Corporation sells hammocks; variable costs are $70 each, and the hammocks are sold for $132 each. Zachary incurs $294,000 of fixed operating expenses annually. Required Determine the sales volume in units and dollars required to attain a $78,000 profit. Prepare an income statement using the contribution margin format.Zachary is considering implementing a quality improvement program. The program will require a $8 increase in the variable cost per unit. To inform its customers of the quality improvements, the company plans to spend an additional $51, 600 for advertising. Assuming that the improvement program will increase sales to a level that is 5,700 units above the amount computed in Requirement a, prepare a budgeted income statement using the contribution margin format.Determine the new break- even point in units and sales dollars as well as the margin of safety percentage, assuming that the quality improvement program is implemented. C Required A1 Required A2 Required B…
• Calculate the revenue needed to earn a target operating income of $102,000. • If fixed costs increase by $19,000, what decrease in variable cost per person must be achieved to maintain the breakeven point calculated in requirement 1? • The general manager at Lifețime Escapes proposes to increase the price of the package tour to $8,200 to decrease the breakeven point in units. Using information in the original problem, calculate the new breakeven point in units. What factors should the general manager consider before deciding to increase the price of the package tour?
D&R Corp. has annual revenues of $262,000, an average contribution margin ratio of 33%, and fixed expenses of $101,800. Required: a. Management is considering adding a new product to the company's product line. The new item will have $8.7 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio. b. If the new product adds an additional $29,100 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in part a to break even on the new product? c. If 20,900 units of the new product could be sold at a price of $14.2 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Required C If 20,900 units of the new product could be sold at a price of…
Lakeside Incorporated produces a product that currently sells for $70 per unit. Current production costs per unit include direct materials, $18.5; direct labor, $20.5; variable overhead, $13.5; and fixed overhead, $13.5. Product engineering has determined that certain production changes could refine the product quality and functionality. These new production changes would increase material and labor costs by 20% per unit. Required: a. What would be the incremental profit or loss if Lakeside could sell the refined version of its product for $76 per unit? Note: Do not round your intermediate calculations. Round your final answer to 2 decimal places. Loss amounts should be indicated with a minus sign. b. Should it be processed further? > Answer is complete but not entirely correct. a. Incremental Profit (Loss) b. Should it be processed further? $ Yes 2.20 x
Zulu sells its waterproof phone case for $114 per unit. Fixed costs total $222,000, and variable costs are $34 per unit. Compute the units that must be sold to get a target income of $200,000. Numerator: Units to be sold to achieve targeted income / Denominator: 1 = = Units to Achieve Target Units to achieve target 0
Lakeside Incorporated produces a product that currently sells for $62 per unit. Current production costs per unit include direct materials, $16.5; direct labor, $18.5; variable overhead, $11.5; and fixed overhead, $11.5. Product engineering has determined that certain production changes could refine the product quality and functionality. These new production changes would increase material and labor costs by 20% per unit. Required: a. What would be the incremental profit or loss if Lakeside could sell the refined version of its product for $68 per unit? Note: Do not round your intermediate calculations. Round your final answer to 2 decimal places. Loss amounts should be indicated with a minus sign. b. Should it be processed further? a. Incremental Profit (Loss) b. Should it be processed further?
Voice Com, Inc., uses the product cost method of applying the cost - plus approach to product pricing. The costs of producing and selling 5,000 units of cell phones are as follows:Voice Com desires a profit equal to a 13% rate of return on invested assets of $600, 800.a. Determine the amount of desired profit from the production and sale of 5,000 units of cell phones.Sfill in the blank 1b. Determine the product cost per unit for the production of 5,000 of cell phones. If required, round your answer to nearest dollar.Sfill in the blank 2 per unitc. Determine the product cost markup percentage (rounded to two decimal places) for cell phones.fill in the blank 3 %d. Determine the selling price of cell phones. Round to the nearest dollar.
Sharp Company makes and sells pencil sharpeners. The variable cost of each sharpener is $20. The sharpeners are sold for $30 each. Fixed operating expenses amount to $40,000. a. Determine the break-even point in units and sales dollars. b-1. Determine the sales volume in units and dollars that is required to attain a profit of $12,000. b-2. Prepare an income statement using the contribution margin format to verify your answer. c. Determine the margin of safety between sales required to attain a profit of $12,000 and break-even sales.
Current operating income for Bay Area Cycles Company is $26,000. Selling price per unit is $100, the contribution margin ratio is 25%, and fixed expense is $104,000. Required: 1. Calculate Bay Area Cycle's per unit variable expense and contribution margin. How many units are currently being sold? 2. How many additional unit sales would be necessary to achieve operating income of $65,000? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate Bay Area Cycle's per unit variable expense and contribution margin. How many units are currently being sold? Revenue Variable expense Contribution margin Fixed expense Operating income $ Per Unit 100.00 Volume
Kirk Co. manufactures mobile cellular equipment and develops a price for the product by using a variable cost concept. Kirk incurs variable costs of $1,900,000 in the production of 100,000 units. Fixed costs total $50,000. The company employs $4,725,000 of assets and wishes to earn a profit equal to a 10% rate of return on assets. a. Compute a markup percentage based on the variable costs concept. Round your answer to one decimal place.fill in the blank 1 % b. Determine a selling price. Round your answer to two decimal places.$fill in the blank 2

SEE MORE QUESTIONS

Recommended textbooks for you

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning