Chapter_21_Solutions_7e

Chapter_21_Solutions_7e - Chapter 21 Cost-Volume-Profit...

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Chapter 21 Cost-Volume-Profit (CVP) Analysis Quick Check Answers: 1. b 3. a 5. d 7. b 9. a 2. d 4. b 6. a 8. c 10. c Explanations: 2. d. $110,000 = (100,000 × $1) + $10,000 3. a. Breakeven sales = $50,000 = 1,000 passengers in units $60 $10 4. b. Breakeven sales = $0.60 million = $1.5 million in dollars 0.40 Contribution margin ratio (40%) = $3 billion $1.8 billion $3 billion 5. d. Target sales = $50,000 + $100,000 = $375,000 in dollars 0.40 Contribution margin ratio (40%) = $60 $36 $60 Chapter 21 Cost-Volume-Profit (CVP) Analysis 73
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9. a. Margin of safety ($0) = Expected sales ($800,000*) breakeven sales ($800,000) *($600,000 + $700,000 + $900,000 + $800,000 + $1,000,000) / 5 = $800,000 10. c. Breakeven sales = $50,000 = 1,250 passengers in total units $40* 625 regular 625 discount *Weighted-average = ($60 $10) + ($40 $10) = $40 contribution margin 2 per unit Accounting 7/e Solutions Manual 74
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Short Exercises (5-10 min.) S 21-1 F 1. Depreciation on routers used to cut wood enclosures V 2. Wood for speaker enclosures F 3. Patents on crossover relays V 4. Crossover relays V 5. Grill cloth V 6. Glue F 7. Quality inspector’s salary Chapter 21 Cost-Volume-Profit (CVP) Analysis 75
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(5-10 min.) S 21-2 F 1. Building rent F 2. Toys F 3. Playground equipment V 4. Afternoon snacks F 5. Sally’s salary V 6. Wages of after-school employees V 7. Drawing paper F 8. Tables and chairs Accounting 7/e Solutions Manual 76
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(5-10 min.) S 21-3 Req. 1 a. Call for 20 minutes $5.00 + (20 × $0.35) $5.00 + $7.00 = $12.00 b. Call for 40 minutes $5.00 + (40 × $0.35) $5.00 + $14.00 = $19.00 c. Call for 80 minutes $5.00 + (80 × $0.35) $5.00 + $28.00 = $33.00 Chapter 21 Cost-Volume-Profit (CVP) Analysis 77
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(continued) S 21-3 Req. 2 Accounting 7/e Solutions Manual 78
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(5-10 min.) S 21-4 Req. 1 Variable cost per unit = Change in total cost ÷ Change in volume of activity = ($2,400 $2,200) ÷ (1,000 machine hours 500 machine hours) = $200 ÷ 500 hours = $.40 per machine hour Req. 2 Total fixed cost = Total mixed cost Total variable cost = $2,400 ($.40 × 1,000 machine hours) = $2,400 $400 = $2,000 In this example the highest cost and volume were chosen to calculate the total fixed cost, but the lowest cost and volume also could be used to calculate the $2,000 total fixed cost: Total fixed cost = Total mixed cost Total variable cost = $2,200 ($.40 × 500 machine hours) = $2,200 $200 = $2,000 Chapter 21 Cost-Volume-Profit (CVP) Analysis 79
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(5-10 min.) S 21-5 Income statement approach: Sales revenue Variable costs Fixed = Operating costs income Sale price Units per unit × sold Variable cost Units Fixed = Operating per unit × sold costs income ($60 × Units sold) ($20 × Units sold) $275,000 = $0 ($60 $20) × Units sold $275,000 = $0 $40 × Units sold = $275,000 Units sold = 6,875 tickets Alternative: Shortcut contribution margin approach: Units sold = Fixed costs + Operating income (to break even)
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Chapter_21_Solutions_7e - Chapter 21 Cost-Volume-Profit...

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