SolutionstoHW2

# SolutionstoHW2 - Homework Problems 3-22 3-26 3-36 3-44 5-43...

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Homework Problems: 3-22, 3-26, 3-36, 3-44, 5-43 Optional: 3-33, 3-38, 3-45, 5-46 3-22. (30 min.) CVP analysis—Planning and Decision making: T-Tunes a. Profit = (\$180 – \$100) 7,000 – \$200,000 = \$360,000 . b. 10% price decrease. Now P = \$162 Profit = (\$162 – \$100) x 7,000 – \$200,000 = \$234,000. Profit decreases by \$126,000 20% price increase. Now P = \$216 Profit = (\$216 – \$100) x 7,000 – \$200,000 = \$612,000 Profit increases by \$252,000 c. 10% variable cost decrease. Now V = \$90 Profit = (\$180 – \$90) x 7,000 – \$200,000 = \$430,000. Profit increases by \$70,000 20% variable cost increase. Now V = \$120 Profit = (\$180 – \$120) x 7,000 – \$200,000 = \$220,000. Profit decreases by \$140,000 d. Profit = (\$180 – \$110) x 7,000 – \$180,000 = \$310,000. Profit decreases by \$50,000 3-26. (30 min.) Analysis of Cost Structure: Foxx Comapny vs. Beyonce, Inc. a. Foxx Company Beyonce, Inc. Amount Percentage Amount Percentage Sales . ................................. \$. 600,000 100% \$600,000 100% Variable cost. ...................... 450,000 75 120,000 20 Contribution margin . .......... \$. 150,000 25% \$ 480,000 80% Fixed costs . ....................... 100,000 17 400,000 67 Operating profit. ................. \$. 50,000 8% \$ 80,000 13% b. Foxx Company’s profits increase by \$30,000 [= .25 x (\$600,000 x .20)] and Beyonce Inc’s profits increase by \$96,000 [= .80 x (\$600,000 x .20)].

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3-36. (35 min.) CVP Analysis with Semifixed Costs: Cesar’s Bottlers. a. There are three possible break-even points (one with each additional shift): 1 shift: X = \$1,980 ÷ (\$2.00 – \$0.90) = 1,800 cases 2 shifts: X = \$3,740 ÷ (\$2.00 – \$0.90) = 3,400 cases 3 shifts: X = \$5,170 ÷ (\$2.00 – \$0.90) = 4,700 cases Each of the three break-even points is feasible. b. To answer this question, we just need to check at the three maximum levels for each lane alternative: Alternative Profit 1 shift [(\$2.00 - \$0.90) x 2,000 cases – \$1,980] = \$220 2 shifts [(\$2.00 - \$0.90) x 3,600 cases – \$3,740] = \$220 3 shifts [(\$2.00 - \$0.90) x 5,000 cases – \$5,170] = \$330 Cesar should operate 3 shifts.
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SolutionstoHW2 - Homework Problems 3-22 3-26 3-36 3-44 5-43...

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