Chapter 06 Sol(1)

# Chapter 06 Sol(1) - Exercise64(20minutes 1 TheHaakiShop,Inc...

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Exercise 6-4  (20 minutes) 1. The Haaki Shop, Inc. Income Statement—Surfboard Department For the Quarter Ended May 31 Sales. .................................................................... \$800,000 Variable expenses: Cost of goods sold (\$150 per surfboard × 2,000  surfboards*). .................................................... \$300,000 Selling expenses (\$50 per surfboard × 2,000  surfboards). ..................................................... 100,000 Administrative expenses (25% × \$160,000). ......       40,000       440,000     Contribution margin. ............................................. 360,000 Fixed expenses: Selling expenses. ............................................... 150,000 Administrative expenses. ...................................   120,000       270,000     Operating income. ................................................ \$      90,000     *\$800,000 sales ÷ \$400 per surfboard = 2,000 surfboards. 2. Since 2,000 surfboards were sold and the contribution margin  totaled \$360,000 for the quarter, the contribution of each surfboard  toward fixed expenses and profits was \$180 (\$360,000 ÷ 2,000  surfboards = \$180 per surfboard). Another way to compute the  \$180 is: Selling price per surfboard. .................. \$400 Less variable expenses: Cost per surfboard. ........................... \$150 Selling expenses. .............................. 50 Administrative expenses (\$40,000 ÷ 2,000 surfboards). ........       20       220     Contribution margin per surfboard. ...... \$180

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Exercise 6-10  (20 minutes) 1. X-rays Taken X-ray Costs High activity level (February). ........ 7,000 \$29,000 Low activity level (June). ................ 3,000   17,000     Change. ......................................... 4,000 \$12,000 Variable cost per X-ray: Change in cost \$12,000 = =\$3.00 per X-ray Change in activity 4,000 X-rays Fixed cost per month: X-ray cost at the high activity level. .......................... \$29,000 Less variable cost element: 7,000 X-rays × \$3.00 per X-ray.
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## This note was uploaded on 12/04/2011 for the course ADM 2341 taught by Professor Managerialaccounting during the Spring '07 term at University of Ottawa.

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Chapter 06 Sol(1) - Exercise64(20minutes 1 TheHaakiShop,Inc...

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