Chapter 7 (1) - Chapter 7 Cost-Volume-Profit Analysis...

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Chapter 7 Cost-Volume-Profit Analysis Exercises E7-25, P7-43, P7-51 *E7-25: *E7-28 Traditional Sales $1,000,000 Less: cost of goods sold $750,000 Gross margin $250,000 Less operating expenses Selling expenses $75,000 Administrative expenses $75,000 $150,000 Net income $400,000 Contribution Sales $1,000,000 Less variable expenses Variable manufacturing 500,000 Variable selling 50,000 Variable admin 15,000 $565,000 Contribution margin $435,000 Less fixed expenses Fixed manufacturing 250,000 Fixed selling 25,000 Fixed admin 60,000 $335,000 Net income $10,000 *P7-35 1. $28,080 2. $35,454 3. $19 4. 5.70,200 6.The company must change the selling price per unit. (I had a hard time with this problem) *P7-43
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*P7-51 ******************************************************************************************************** Chapter 8 Absorption and Variable Costing E8-13 Income will be higher with absorption cost. Fixed manufacturing is needed in this production process. 20x1 20x2 20x3 Production 22000 10,600 11,000 Sales 25,000 10,600 9,800 Sales per unit $1,750 11,000,000/22,000=500 11,000,000/10,600=1037 11,000,000/11,000=1000 E8-15 1. Finished goods inventory cost on December 31 would be 2,000. 2. Absorption cost would show a higher operating income for the year, due to the fact that variable and fixed cost are associated.
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