Ch 5 Examples

Ch 5 Examples - CM for Hokies = $3.00 x 1 = $3.00 $33 + $3...

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Ch 5 Examples Wednesday, March 02, 2011 9:33 AM A. 195-196 #27-30 1. Expanded Hi-Low Y = a + bx Y hat = total costs A = fixed costs B = variable costs per unit x= # of units Budget = $520,000 for 50,000 units = $684,000 for 70,000 units Fixed costs are 18% more for 70,000 units What is variable cost per unit of output?? - b $520,000 = a + b(50,000) $684,000 = 1.18a + b(70,000) Multiply top equation x 1.18 Get $613,600 = 1.18a + b(59,000) Solve for B = $6.40 1. Taxes TFC = $281,688 Selling price per unit = $52 Variable cost per unit = $41 Tax = 30% How many units needs to be sold to have after-tax net income of $77,000? X = TFC + Profit/(1-t) CM/unit = 281,688 + 77,000/(.7) $11 = 35,608 units 1. MULTI PRODUCTS Two products: heels for $21, variable costs $14.40 each and hokies for $14, variable costs $11 each Tax ate = 35%
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Sales mix is 5 heels for each hokie Total fixed costs are $1,593,600 How many heels must be sold to have after-tax income of $195,000? CM for Heels= $6.60 x 5 = $33.00
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Unformatted text preview: CM for Hokies = $3.00 x 1 = $3.00 $33 + $3 = $36.00 CM per package X = $1,593,600 + $195,000(.65) $ 33 X = 52,600 packages = each package has 5 heels and 1 hokie = 263,000 heels, 52,600 hokies 1. Changing Parameters Less than or equal to 18,000 units = TFC of $250,000, VC = $45 per unit, CM = $15/unit Greater than 18,000 units and less than or equal 60,000 units = TFC of $350,000, VC = $52 per unit, CM = $8/unit Greater than 60,000 units = TFC of $578,000, VC = $56 per unit, CM = $4/unit Selling price = $60 per unit Want to earn a profit of $220,000 - what level of units will do that? $250,000 + $220,000 = 31,333 units NWJ - no way Jose $15/unit $350,000 + $220,000 - (18,000 units x $15 = $270,000) + 18,000 units = 55,500 units $8/unit Ex. 5-1 DM - Pure Variable DL - Pure Variable Utilities - Mixed Rent - Fixed Maintenance - Mixed Supervisor Salaries - Fixed Ex. 5-11 CM = Selling price-variable cost...
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This note was uploaded on 02/27/2012 for the course BUSI 101 taught by Professor Skender during the Spring '08 term at UNC.

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Ch 5 Examples - CM for Hokies = $3.00 x 1 = $3.00 $33 + $3...

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