Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
6th Edition
ISBN: 9780134486857
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 20, Problem 12SE
Using the Funday Park information presented, do the following tasks.
Requirements
- 1. Suppose Funday Park cuts its ticket price from $70 to $56 to increase the number of tickets sold. Compute the new breakeven point in tickets and in sales dollars.
- 2. Ignore the information in Requirement 1. Instead, assume that Funday Park increases the variable cost from $42 to $56 per ticket. Compute the new breakeven point in tickets and in sales dollars.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Using (a) the regression equation and (b) the high-low equation, what is the increase in revenues for each $10,000 spent on promotional costs within the relevant range? Which method should Catherine use to predict the effect of promotional costs on ticket revenues? Explain briefly.
Imaginationtime Park competes with Cool World by providing a variety of rides. Imaginationtime sells tickets at $60 per person as a one-day entrance fee. Variable costs are $24 per person, and fixed costs are $226,800 per month. Compute the contribution margin per unit and the number of tickets Imaginationtime Park must sell to break even. Perform a numerical proof to show that your answer is correct.Begin by selecting the formula labels and then entering the amounts to compute the contribution margin per unit.
-
=
Contribution margin per unit
-
=
Begin by selecting the formula labels and then entering the amounts to compute the number of tickets Imaginationtime must sell to break even. (Abbrevision used: CM = contribution margin. Complete all input fields. For items with a zero value, enter "0".)
(
+
) ÷
=
Required sales in units
(…
Refer to the original data ($30 ticket price per person). Prepare a Cost –Volume – Price (CVP) graph for the Extravaganza from a zero level of activity up to 600 tickets sold. Number of persons should be placed on the horizontal (X) axis, and dollars should be placed on the vertical (Y) axis4. Write two pros and two cons associated with the use of the Break even analysis as a planning tool.
Chapter 20 Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Ch. 20 - Following is a list of costs for a furniture...Ch. 20 - Following is a list of costs for a furniture...Ch. 20 - Prob. 3TICh. 20 - Following is a list of costs for a furniture...Ch. 20 - Following is a list of costs for a furniture...Ch. 20 - Prob. 6TICh. 20 - Prob. 7TICh. 20 - Prob. 8TICh. 20 - Prob. 9TICh. 20 - Prob. 10TI
Ch. 20 - Prob. 11TICh. 20 - Prob. 12TICh. 20 - Prob. 13TICh. 20 - Prob. 14TICh. 20 - Prob. 15TICh. 20 - Prob. 16TICh. 20 - Prob. 17TICh. 20 - Prob. 18TICh. 20 - A furniture manufacturer specializes in wood...Ch. 20 - For Franks Funky Sounds, straight-line...Ch. 20 - Assume Intervale Railway is considering hiring a...Ch. 20 - If Intervale Railways fixed costs total 90,000 per...Ch. 20 - If Intervale Railways fixed costs total 90,000 per...Ch. 20 - If Intervale Railways fixed costs total 90,000 per...Ch. 20 - On a CVP graph, the total cost line intersects the...Ch. 20 - If a company increases its sales price per unit...Ch. 20 - If a company increases its fixed costs for Product...Ch. 20 - Prob. 9QCCh. 20 - Rocky Mountain Waterpark sells half of its tickets...Ch. 20 - What is a variable cost? Give an example.Ch. 20 - What is a fixed cost? Give an example.Ch. 20 - What is a mixed cost? Give an example.Ch. 20 - What is the purpose of using the high-low method?Ch. 20 - Describe the three steps of the high-low method.Ch. 20 - Prob. 6RQCh. 20 - Prob. 7RQCh. 20 - Prob. 8RQCh. 20 - Prob. 9RQCh. 20 - What are the three ways contribution margin can be...Ch. 20 - Prob. 11RQCh. 20 - What is cost-volume-profit analysis?Ch. 20 - What are the CVP assumptions?Ch. 20 - What is the breakeven point?Ch. 20 - Prob. 15RQCh. 20 - Prob. 16RQCh. 20 - Prob. 17RQCh. 20 - Why is the calculation to determine the target...Ch. 20 - Prob. 19RQCh. 20 - What is sensitivity analysis? How do managers use...Ch. 20 - What effect does an increase in sales price have...Ch. 20 - Prob. 22RQCh. 20 - What is the margin of safety? What are the three...Ch. 20 - What is a companys cost structure? How can cost...Ch. 20 - What is operating leverage? What does it mean if a...Ch. 20 - Prob. 26RQCh. 20 - Philadelphia Acoustics builds innovative speakers...Ch. 20 - Hollys Day Care has been in operation for several...Ch. 20 - Mark owns a machine shop. In reviewing the shops...Ch. 20 - Glenn Company sells a product for 80 per unit....Ch. 20 - Gabelman Company sells a product for 95 per unit....Ch. 20 - Mackler, Inc. sells a product with a contribution...Ch. 20 - Ocean Company sells a product with a contribution...Ch. 20 - Compute the missing amounts for the following...Ch. 20 - Compute the missing amounts for the following...Ch. 20 - Use the following information to complete Short...Ch. 20 - Compute Funday Parks contribution margin ratio....Ch. 20 - Using the Funday Park information presented, do...Ch. 20 - Prob. 13SECh. 20 - Refer to the original information (ignoring the...Ch. 20 - Refer to the original information (ignoring the...Ch. 20 - Prob. 16SECh. 20 - For 2019, Wild Waters expects a sales mix of four...Ch. 20 - Match the following terms with the correct...Ch. 20 - Identify each cost as variable (V), fixed (F), or...Ch. 20 - For each total fixed cost listed below, determine...Ch. 20 - Prob. 21ECh. 20 - Prob. 22ECh. 20 - The manager of Trusty Car Inspection reviewed the...Ch. 20 - For its top managers, Worldwide Travel formats its...Ch. 20 - Complete the table below for contribution margin...Ch. 20 - Prob. 26ECh. 20 - Prob. 27ECh. 20 - Owner Shan Mu is considering franchising her...Ch. 20 - Prob. 29ECh. 20 - Prob. 30ECh. 20 - Determine how each change effects the elements of...Ch. 20 - Mi Tierra Driving School charges 680 per student...Ch. 20 - Prob. 33ECh. 20 - Robbies Repair Shop has a monthly target profit of...Ch. 20 - Prob. 35ECh. 20 - Prob. 36ECh. 20 - The budgets of four companies yield the following...Ch. 20 - England Productions performs London shows. The...Ch. 20 - Crandall Company sells flags with team logos....Ch. 20 - Prob. 40APCh. 20 - The contribution margin income statement of Sugar...Ch. 20 - The budgets of four companies yield the following...Ch. 20 - Famous Productions performs London shows. The...Ch. 20 - White Company sells flags with team logos. White...Ch. 20 - Diversified Investor Group is opening an office in...Ch. 20 - The contribution margin income statement of...Ch. 20 - Prob. 48PCh. 20 - The Jacksonville Shirt Company makes two types of...Ch. 20 - Prob. 1TIATCCh. 20 - Steve and Linda Hom live in Bartlesville,...Ch. 20 - Prob. 1EI
Additional Business Textbook Solutions
Find more solutions based on key concepts
This year, Prewer Inc. received a 160,000 dividend on its investment consisting of 16 percent of the outstandin...
PRINCIPLES OF TAXATION F/BUS.+INVEST.
(a) Standard costs are the expected total cost of completing a job. Is this correct? Explain, (b) A standard im...
Managerial Accounting: Tools for Business Decision Making
Dave Nelson recently retired at age 48, courtesy of the numerous stock options he had been granted while presid...
Managerial Accounting: Creating Value in a Dynamic Business Environment
Using the information from Problem 1-2B and the inventory information for the Best Bikes below, complete the re...
Managerial Accounting
Bank loan; accrued interest LO132 On October 1, Eder Fabrication borrowed 60 million and issued a nine-month, ...
INTERMEDIATE ACCOUNTING
This year, Prewer Inc. received a 160,000 dividend on its investment consisting of 16 percent of the outstandin...
Principles Of Taxation For Business And Investment Planning 2020 Edition
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Funday Park competes with Cool World by providing a variety of rides. Funday sells tickets at $85 per person as a one-day entrance fee. Variable costs are $17 per person, and fixed costs are $428,400 per month. Compute Funday Park's contribution margin ratio. Carry your computation to two decimal places. Use the contribution margin ratio approach to determine the sales revenue Funday Park needs to break even. Begin by selecting the formula labels and then enter the amounts to compute the contribution margin ratio. (Enter you answer to the nearest percent, X%.) ÷ = Contribution margin ratio ÷ = % Begin by selecting the formula and then entering the amounts to calculate the sales in dollars Funday needs to break even. (Abbreviation used: CM = contribution margin. Complete all input fields. For items with a zero value, enter "0".) ( + ) ÷ = Required sales in dollars…arrow_forwardAA Company produces and sells refrigerator magnets to be sold as novelty items by resorts. Last year, the company sold 198,400 units. The income statement for AA Company for last year is as follow: $992,000 545,600 $446,400 Sales Less: Variable expenses Contribution margin Less: Fixed expenses 180,000 $266,400 Operating Income How much was the margin of safety in revenue for last year? (Answer format: $123,456.78) * Your answer Suppose that the selling price decreases by 8 percent. How much is the revised breakeven point in units? (Answer format: 123.45) * Your answerarrow_forwardAssume that the linear cost and revenue models apply. An item costs $12 to make. If fixed costs are $3000 and profits are $5000 when 100 items are made and sold, find the revenue equation. (Let x be the number of items.)R(x) =arrow_forward
- APPLY THE CONCEPTS: Use the CVP graph to analyze the effects of changes in price and costs Graph the following on your own paper. At the original position, the break-even point in sales dollars is $24,000 at 500 units. The fixed costs are $8,000. Assume the slope of the sales line is equal to the selling price. When the two points of the sales line are at the origin and the break-even point, you see that the slope of the line is $48, which means that the selling price is $ When the two points of the total costs line are at the origin and the break-even point, you see that the slope of the line is $32.00, which means that the variable cost per unit is $ Leave the break-even point (x) at its original position. Use it as a reference point to answer the following questions. Analyze the scenarios by sliding the points on the lines to get the slope desired. Recall that the new break-even point for each scenario exists where the sales and total costs lines intersect. Compare it to the…arrow_forward(a) Build a spreadsheet model to calculate the profit/loss for a given demand. What is the demand? (b) Use Goal Seek to calculate the price that results in breakeven. If required, round your answer to two decimal places. c) Use a data table that varies price from 350 to 3400 in increments of 325 to find the price that maximizes profit.arrow_forwardCalculate the number of package tours that must be sold to break even.The general manager at Lifetime 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?arrow_forward
- Take into account the possibility of raising the cost of a good with an 8% profit margin. Calculate the effect of this price increase on the profit margin if you could raise the price by 1% while keeping the sales volume (in unit terms) at the same level as before the price increase. (Assume there are no fixed costs while answering this question. Only the percentage change in profit margin has to be calculated.)arrow_forward• 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?arrow_forwardImagine that you could increase the price for a product that has a profit margin of 8% on its price. If you could increase the price by 1% AND simultaneously keep the sales volume (in unit terms) at the same level as before the price increase, calculate the impact of this price increase on the profit margin. (For this question, assume there are no fixed costs. You just need to calculate the PERCENTAGE CHANGE in profit margin)arrow_forward
- Question is in the image Required:a) Calculate the weighted average unit contribution margin, assuming a constant sales mix. b) How many units of each printer must be sold to break even? c) i) Explain what is margin of safety ii) Calculate in sales units the margin of safety for IPM, assuming projected sales are 25,000 units?arrow_forward(b) What economic concept relates a cut in prices to an increase in demand? Explain how to use this concept to calculate the change in revenue from a 1% cut in prices. In Chicago, the reduction of fares by 23% led to 12% increase in revenue. What do these data imply about the concept in (b)?arrow_forwardExercise 10-32 (Algo) Activity-Based Costing of Customers (LO 10-3, 4) Northwestern Bank (NB) offers only checking accounts. Customers can write checks and use a network of automated teller machines. NB earns revenue by investing the money deposited; currently, it averages 4.1 percent annually on its investments of those deposits. To compete with larger banks, NB pays depositors 0.3 percent on all deposits. A recent study classified the bank's annual operating costs into four activities. Activity Using ATM Visiting branch Processing transactions Managing functions Total overhead Cost Driver Number of uses Number of visits Number of transactions Total deposits Cost $ 1,936,800 1,900,800 8,521,920 7,321,600 $ 19,681,120 Driver Volume 3,228,000 uses 396,000 visits 129,120,000 transactions $ 615,035,000 in deposits Data on two representative customers follow: Emily Jacob ATM uses 40 130 Branch visits 5 Number of transactions Average deposit 200 45 520 $ 10,000 $ 10,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY