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

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