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Spring 2008 - ACC 359 - Chap 3 individual work - answer key

Spring 2008 - ACC 359 - Chap 3 individual work - answer key...

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Unformatted text preview: l. ’L . ACC 359 — Chapter 3 double-quiz Name: «[1 rum/e 1/ key January 24, 2008 Class (circle one): 12:30 or 2:00 Teddy Bear Daycare Teddy Bear Daycare provides daycare for children Mondays through Fridays. Its monthly variable costs per child are: Lunch and snacks $100 Educational supplies $ 75 Other supplies (paper products, toiletries, etc.) $_2§ Total $200 Monthly fixed costs consist of: Rent $2,000 Utilities 33 300 Insurance $ 300 Salaries $2,500 Miscellaneous 39 500 Total $5,600 Teddy Bear charges each parent $600 per child per month. Teddy Bear’s tax rate is 25%. + ['2 1. Teddy Bear’s target operating income is $10,400 per month. Compute the number of children who must be enrolled to achieve the target operating income. Round to the nearest child — no fraction of children! © «1» 16 2. Teddy Bear lost its lease and had to move to another building. Monthly rent for the new building is $3,000. At the suggestion of parents, Teddy Bear plans to take children on field trips. Monthly costs of the field trips are $1,000. What should the new monthly fee per child be to meet the target operating income of $10,400 per month, assuming the same number of children as in #1 above? Round to the nearest dollar. .7F( 600x ~200X 4500') 2 10,700 300): ~L/wo "2 {awe 300x 5: Iii/(500 «751: L/O‘x ~(‘1‘7M’Wl new? = lat/00 [7W Wx ~/7, V00 )C/o, £100 2475K ~ 23,0ro 2 N9, we 56,75} 2 13) 750 Cut-n-Sew Cut-n—Sew is a small company that makes jackets for a ready-to-wear clothes designer at a selling price of $20. Cut—n-Sew is considering investing in a new plant. It can either invest in a more-manual plant or a more-automated plant. Both types of plants will have the same level of quality. The manual plant will have fixed costs of $20,000 per year, and a variable cost of $10 per jacket. The automated plant will have fixed costs of $30,000 per year, and a variable cost of $8 per jacket. Ignore income taxes. +7 1. t7 2. fl 3' +174. +6 5- What is the breakeven point in units for the manual plant? What is the breakeven point in units for the automated plant? At what level of unit sales will the two types of plants have the same operating income? What range of unit sales will Cut-n—Sew prefer the manual plant? What range of unit sales will Cut-n-Sew prefer the automated plant? is 10x - wx ~7/O/000 ":0 lax : "LO/000 2.1M — 87x ~ 30,000 :0 llx 2 30,000 X 7 ”L310 3, 20x ~/0x VZQOOO : 10x Vgx ~3Q000 10x~1qooo : fix ’370,000 {0,000 7 2X Ll, [7,797 6mg, hut/er Si :00! OM higher. The Ronowski Company The Ronowski Company has three product lines of belts (A, B, and C) with contribution margins of $3, $2, and $1 respectively. The president foresees sales of 200,000 units in the coming period, consisting of 20,000 units of A, 100,000 units of B, and 80,000 units of C. The company’s fixed costs for the period are $255,000. {L ll 1. What is the company’s breakeven point in units, assuming that the given sales mix is maintained? Ignore income taxes. A, (9 2. If the sales mix is maintained, what is the total contribution margin when 200,000 units are sold? What is the operating income? Ignore income taxes. H l 3. What would be the breakeven point in units if the sales mix changed to 20,000 units of A, 80,000 units of B, and 100,000 units of C? Ignore income taxes. ’t/ (I 4. What would be the breakeven point in units if the sales mix changed to 20,000 units of A, 80,000 units of B, and 100,000 units of C? Assume a 20% tax rate. I. 1th) + 10m) +800 ~2rrm :0 0X” "V 10X tgx :Z§$,00(> 3hr :. 2531000 x; 7,700 x2, : [$000 unilr 075 A 7,?00 X M) :73000 MIA/tr 070 fl Six : 25$,0063 X‘ : 7,9627? x1 x E; 13938) Lin/tr 070 fl 53,750 WM? 07a [’9 "n 6887 M” 075 C H \\ i. ...
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