DB Week 3, Schultz

DB Week 3, Schultz - BUS5431 Managerial Accounting Week 3...

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03/27/2011 BUS5431 Managerial Accounting Week 3 Homework Chapter 4 Exercise 5 (\$20,500 - \$8,500) ÷ (900,000 - 300,000) = \$.02 per copy of variable repair cost \$8,500 - (\$.02 x 300,000) = \$2,500 per month of fixed repair cost. Exercise 8 a. The only variable costs are staff salaries and office supplies. In this case, variable costs are \$555 per hire [(\$33,000 + \$300) ÷ 60 hires]. Fixed costs are \$10,000 (manager salary and rent). b. The estimated cost for June with 70 new hires is: \$10,000 + (\$555 × 70) = \$48,850. c. The incremental cost associated with 10 more employees is \$5,550 (i.e., \$555 × 10). Exercise 12 a. Given that variable cost per dollar of sales is \$.40, the contribution margin per dollar of sales is .60. The break-even point equals fixed cost divided by the contribution margin ratio. Thus, the break-even point is 1,200,000 (300,000 ÷ .60 = 1,200,000). b. (\$300,000 + \$60,000) ÷ \$.60 = 600,000 c. The expected level of profit is: (\$1,000,000 × \$.60) - 300,000 = \$300,000

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This note was uploaded on 05/15/2011 for the course BUS 5541 taught by Professor Collins during the Spring '11 term at FIT.

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DB Week 3, Schultz - BUS5431 Managerial Accounting Week 3...

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