Solutions to assigned Ch 18 homework - Exercise 18-2 1 Graph#1 Variable cost Graph#2 Fixed cost Graph#3 Mixed cost Graph#4 Curvilinear cost Graph#5

Solutions to assigned Ch 18 homework - Exercise 18-2 1...

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Exercise 18-2 1. Graph #1. Variable cost Graph #2. Fixed cost Graph #3. Mixed cost Graph #4. Curvilinear cost Graph #5. Step-wise cost 2. a. Graph #5 b. Graph #2 c. Graph #3 d. Graph #1 e. Graph #4
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Exercise 18-3 1. A 2. E 3. B 4. D 5. F 6. C Exercise 18-4 Series A Variable cost Series B Mixed cost Series C Curvilinear cost Series D Step-wise cost Series E Fixed cost Exercise 18-5 1. Fixed costs + Target pretax income Dollar sales = Contribution margin ratio $160,000 + $164,000 = 25% = $1,296,000 2. Sales ................................................... $1,296,000 Fixed costs ......................................... (160,000) Pretax income .................................... (164,000 ) Variable costs .................................... $ 972,000 (Alternatively: $1,296,000 in sales x [1 - 0.25 CM ratio] = $972,000)
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Exercise 18-10 (a) Contribution margin per unit = $180 – $135 = $45 per unit (b) Contribution margin ratio = $45 / $180 = 25% (c) Break-even point in units = $562,500 / $45 = 12,500 units (d) Break-even point in dollars = $562,500 / 25% = $2,250,000 (Alternatively: 12,500 units x $180 = $2,250,000 ) Exercise 18-12 1. BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Sales (12,500 x $180) ........................................................................ $2,250,000 Variable costs (12,500 x $135) .......................................................... 1,687,500 Contribution margin (12,500 x $45) ................................................. 562,500 Fixed costs ....................................................................................... 562,500 Net income ....................................................................................... $ 0 2. Sales (in dollars) to break even with increased fixed costs Break-even
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