Suppl_Problems_CVP_09

# 24000 selling and administrative expenses 18000 of

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Manufacturing Expenses………………………………………………. \$240.00 Selling and Administrative Expenses…………………………………. \$180.00 Of the manufacturing expenses, 40% are fixed and 30% of the selling and administrative expenses are fixed. Compute the following, assuming that all inventories are negligible: 1. Total fixed manufacturing expenses…………………………………………\$________ 2. Total variable manufacturing expenses………………………………………\$_______ 3. Total fixed selling and administrative expenses……………………………..\$_______ 4. Total variable selling and administrative expenses…………………………..\$_______ 5. Total fixed expenses………………………………………………………….\$_______ 6. Total variable expenses……………………………………………………….\$_______ 7. Gross profit……………………………………………………………………\$_______ 8. Contribution margin…………………………………………………………..\$_______ 9. Net income…………………………………………………………………….\$_______ Problem 5: Genuine Ore Co. produces and sells two products as follows: Q R Selling prices per unit………………………………... \$25 \$16 Variable costs per unit……………………………….. \$20 \$13 Total fixed costs are \$40,500. Compute the breakeven point in terms of total units for each of these planned sales mixes: 1. Three Q’s for each R…………………………………………………. ________units 2. Three R’s for each Q…………………………………………………. ________units 3

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Problem 6: Hensley, a retailer, buys and sells turkeys. Hensley purchases the birds for \$7 each and sells them for \$15. Variable selling costs are 20% of Selling Price or Sales, and fixed costs are \$4,000 annually. Answer the following: a) The gross profit per turkey is………………………………………………\$_________ b) The contribution margin per turkey is……………………………………..\$_________ c) Breakeven sales dollars are………………………………………………...\$_________ d) Breakeven sales in units are…………………………………………… _________units e) If Hensley’s target profit is \$22,000, the sales needed to achieve this target are: \$____________ or _____________ turkeys. f) If Hensley desires a profit of \$26,000 when she sells 12,000 turkeys, she must set her selling price per turkey at……………………………………………………... \$_________ g) If Hensley sets her selling price at \$12 per turkey and sells 12,000 turkeys will she be over or under her target profit of \$26,000, and by how much? ………………………………………………………………._________by \$___________ 4
Problem 7: Ross Company, a retailer, purchases boots at \$4.50 per pair and sells them at \$10.00 per pair. Ross pays its salespeople a commission of 25% of the selling price. Fixed costs are \$525 per month, and the company is subject to income tax at the rate of 20%.

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