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Homework Problems:
322,
326,
336,
344,
543
Optional: 333, 338, 345, 546
322. (30 min.) CVP analysis—Planning and Decision making: TTunes
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
326. (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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View Full Document336. (35 min.) CVP Analysis with Semifixed Costs: Cesar’s Bottlers.
a. There are three possible breakeven 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 breakeven 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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 Spring '08
 FAN

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