Answers for Chapters for "Intro to Managerial Accounting" 5th edition by Brewer

Answers for Chapters for "Intro to Managerial Accounting" 5th edition by Brewer

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Unformatted text preview: Chapter 6 Cost-Volume-Profit Relationships Exercise 6-11 (20 minutes) Total Per Unit 1. Sales (20,000 units × 1.15 = 23,000 units)...... $345,000 $ 15.00 Variable expenses........................................... 207,000 9.00 Contribution margin......................................... 138,000 $ 6.00 Fixed expenses............................................... 70,000 Net operating income...................................... $ 68,000 2. Sales (20,000 units × 1.25 = 25,000 units)...... $337,500 $13.50 Variable expenses........................................... 225,000 9.00 Contribution margin......................................... 112,500 $ 4.50 Fixed expenses............................................... 70,000 Net operating income...................................... $ 42,500 3. Sales (20,000 units × 0.95 = 19,000 units)...... $313,500 $16.50 Variable expenses........................................... 171,000 9.00 Contribution margin......................................... 142,500 $ 7.50 Fixed expenses............................................... 90,000 Net operating income...................................... $ 52,500 4. Sales (20,000 units × 0.90 = 18,000 units)...... $302,400 $16.80 Variable expenses........................................... 172,800 9.60 Contribution margin......................................... 129,600 $ 7.20 Fixed expenses............................................... 70,000 Net operating income...................................... $ 59,600 6-1 Exercise 6-12 (30 minutes) 1. Profit = Unit CM × Q − Fixed expenses $0 = ($30 − $12) × Q − $216,000 $0 = ($18) × Q − $216,000 $18Q = $216,000 Q = $216,000 ÷ $18 Q = 12,000 units, or at $30 per unit, $360,000 Alternative solution: Fixed expenses Unit sales = to break even Unit contribution margin $216,000 = = 12,000 units $18 or at $30 per unit, $360,000 2. The contribution margin is $216,000 because the contribution margin is equal to the fixed expenses at the break-even point. 3. Target profit + Fixed expenses Units sold to attain = target profit Unit contribution margin $90,000 + $216,000 = = 17,000 units $18 Total Unit Sales (17,000 units × $30 per unit)......... $510,000 $30 Variable expenses (17,000 units × $12 per unit)................ 204,000 12 Contribution margin................................. 306,000 $18 Fixed expenses....................................... 216,000 Net operating income.............................. $ 90,000 6-2 Exercise 6-12 (continued) 4. Margin of safety in dollar terms: Margin of safety = Total sales - Break-even sales...
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This note was uploaded on 02/02/2011 for the course ACCT 226 taught by Professor Smith during the Fall '10 term at South Carolina.

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Answers for Chapters for "Intro to Managerial Accounting" 5th edition by Brewer

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