Managerial Accounting Homework Revew Chapter 4 Answer Key

Managerial Accounting Homework Revew Chapter 4 Answer Key -...

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Chapter 4 Homework Assignment Review Sheet EXERCISES E3. LO 4 At the Men’s Wearhouse, the gross margin is equal to net sales less cost of goods sold, including buying and occupancy costs. Since store occupancy cost is primarily a fixed cost, dividing the gross margin by sales is not likely to provide a good estimate of the contribution margin ratio. At Best Buy, the gross profit is equal to revenues less cost of goods sold. Since cost of goods sold is the company’s primary variable cost, dividing gross profit by revenues may yield a relatively good estimate of the firm’s weighted average contribution margin ratio. E5. LO 2 ($10,000 - $4,000) ÷ (800,000 - 200,000) = $0.01 per machine hour of variable repair cost $10,000 - ($0.01 × 800,000) = $2,000 per month of fixed repair cost. E7. LO 2 a. b. The relation appears to be approximately linear (note that R – Square is .89). There are no obvious outliers.
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E8. LO 2 a. Arguably, the only variable costs in human resources are salaries and office supplies (and a case could be made that even salaries are fixed). In this case, variable costs are $504 per hire [($25,000 + $200) ÷ 50 hires]. Fixed costs are $8,800. b. The estimated cost for June with 60 new hires is: $8,800 + ($504 × 60) = $39,040. c. The incremental cost associated with 10 more employees is $5,040 (i.e., $504 × 10). E11. LO 3 a. The break-even point equals fixed cost divided by the contribution margin per unit. Thus, the break-even point is 20 cakes [i.e., $6,000 ÷ ($500 - $200) = 20 cakes]. b. The company must sell 50 cakes to earn a profit of $9,000. ($6,000 + $9,000) ÷ ($500 − $200) = 50 cakes E13. LO 3 a. The contribution margin is $500 (i.e., $800 - $300). b. The effect on profit of selling 5 more pairs of speakers is $2,500 (i.e., $500 × 5). c. The contribution margin ratio is $500 ÷ $800 = 62.5% d. $5,000 × 62.5% = $3,125 E14. LO 3 a. Expected profit is $800 (120) − $300 (120) − $50,000 = $10,000. b. The contribution margin ratio is $500 ÷ $800 = 0.625
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Managerial Accounting Homework Revew Chapter 4 Answer Key -...

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