115. You have been provided with the following information regarding the VLCD
Manufacturing Company:
This information is based on forecasted sales of 33,000 units.
Required:
(a) What is the expected operating profit for the upcoming year?
(b) What is the break-even point in dollars?
(c) How much in sales dollars is required to generate an operating profit of $275,000?
116. You have been provided with the following information regarding the York Manufacturing
Company:
This information is based on forecasted sales of 30,000 units.
Required:
(a) What is the expected operating profit for the upcoming year?
(b) What is the break-even point in units?
(c) If $160,000 of operating profit is desired, how many units must be sold?
117. You have been provided with the following information regarding the York Manufacturing
Company:
This information is based on forecasted sales of 33,000 units.
Required:
(a) What is the expected operating profit for the upcoming year?
(b) What is the break-even point in dollars?
(c) How much in sales dollars is required to generate an operating profit of $275,000?
118. Craddock sells three products. Last month’s results are as follows:
Total fixed costs are $100,000 marketing and $125,000 administrative.
Required:
(a) What was the operating profit last month?
(b) What is Craddock’s break-even sales volume (at the given mix)?
(c) What is Craddock’s margin of safety?
119. Craddock sells three products. Last month’s results are as follows:
Total fixed costs are $100,000 marketing and $125,000 administrative.
Required:
(a) What was the contribution margin ratio?
(b) What sales volume does Craddock need to achieve a $100,000 monthly profit?
(c) What will profit be if Craddock increases sales by 20%?
120. The Scottso Corporation has budgeted fixed costs of $225,000 and an estimated selling
price of $24 per unit. The variable cost ratio is 40% and the company plans to sell 48,000 units in
2013.
Required:
(a) Compute the break-even point in units.
(b) Compute the margin of safety in units for 2013.
(c) Compute the expected operating profit for 2013.
121. Rosy’s Creations has budgeted annual fixed costs of $240,000 and an estimated variable
cost ratio of 60%.
Required:
(a) Compute Rosy’s break-even point in sales dollars.
(b) Compute Rosy’s margin of safety if the company expects to earn revenues of $800,000.
(c) Compute Rosy’s expected operating profit at the $800,000 revenue.
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122. The sales manager of Acme Enterprises is considering expanding sales by producing
three different versions of its product. Each will be targeted by the marketing department to
different income levels and will be produced from three different qualities of materials. After
reviewing the sales forecasts, the sales department feels that 40% of units sold will be the
original product, 35% will be new model #1 and the remainder will be new model #2.
The following information has been assembled by the sales department and the production
department.
The fixed costs associated with the manufacture of these three products are $175,000 per year.
Required:
Determine the number of units of each product that would be sold at the break-even point.
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123. The sales manager of Jorgensen Sales is considering expanding sales by producing three
different versions of its product. Each will be targeted by the marketing department to different
income levels and will be produced from three different qualities of materials. After reviewing the
sales forecasts, the sales department feels that 70% of units sold will be the original product,
20% will be new model #1 and the remainder will be new model #2.
The following information has been assembled by the sales department and the production
department.
The fixed costs associated with the manufacture of these three products are $250,000 per year.
Required:
(a) Determine the number of units of each product that would be sold at the break-even point.
(b) Determine the break-even point if the sales estimates are instead 50% original product, 30%
model #1 and the remainder model #2.
124. The Ciao Line Buffet is a new buffet-style restaurant offering pizza and Italian dishes.
The buffet has a fixed price of $8.50 per person. The estimated food costs are $2.00 per person,
regardless of volume. Fixed costs are related to the number of buffet lines that are maintained,
with the estimated costs as follows:
Required:
Determine the break-even point(s).
125. The Spice House packages horseradish and mustards in a factory that can operate one,
two, or three shifts. The product sells for $10 a case and has variable costs of $4 per case. Fixed
costs are related to the number of shifts that are operated, with the estimated costs as follows:
Required:
(a) Determine the break-even point(s).
(b) If Spice House can sell all it can produce, how many shifts should be operated?
126. Guitian Corporation produces and sells a single product. The company’s contribution
format income statement for June appears below:
Required:
Redo the company’s contribution format income statement assuming that the company sells
5,700 units.
127. Jalonen Inc., which produces and sells a single product, has provided the following
contribution format income statement for October:
Required:
Redo the company’s contribution format income statement assuming that the company sells
4,500 units.
128. Colen Corporation produces and sells a single product. In January, the company sold
1,700 units. Its total sales were $153,000, its total variable costs were $79,900, and its total fixed
costs were $56,800.
Required:
a. Construct the company’s contribution format income statement for January in good form.
b. Redo the company’s contribution format income statement assuming that the company sells
1,600 units.
129. In September, Pinto Corporation sold 2,100 units of its only product. Its total sales were
$195,300, its total variable costs were $84,000, and its total fixed costs were $98,700.
Required:
a. Construct the company’s contribution format income statement for September in good form.
b. Redo the company’s contribution format income statement assuming that the company sells
2,300 units.
130. Bunning Corporation’s contribution margin ratio is 74% and its fixed monthly costs are
$43,000. Assume that the company’s sales for July are expected to be $102,000.
Required:
Estimate the company’s operating profit for July, assuming that the fixed monthly costs do not
change.
131. The management of Payne Corporation expects sales in April to be $130,000. The
company’s contribution margin ratio is 65% and its fixed monthly costs are $54,000.
Required:
Estimate the company’s operating profit for April, assuming that the fixed monthly costs do not
change.
132. Schlag Inc. expects its sales in January to be $111,000. The company’s contribution
margin ratio is 65% and its fixed monthly costs are $64,000.
Required:
Estimate the company’s operating profit for January, assuming that the fixed monthly costs do
not change.
133. Zippy Corporation produces and sells a single product. Data concerning that product
appear below:
Fixed costs are $355,000 per month. The company is currently selling 5,000 units per month.
Required:
The marketing manager believes that a $12,000 increase in the monthly advertising budget would
result in a 160 unit increase in monthly sales. What should be the overall effect on the company’s
monthly operating profit of this change?
134. Calderon Corporation produces and sells a single product. Data concerning that product
appear below:
Fixed costs are $110,000 per month. The company is currently selling 1,000 units per month.
Required:
Management is considering using a new component that would increase the variable cost per
unit by $56. Since the new component would improve the company’s product, the marketing
manager predicts that monthly sales would increase by 500 units. What should be the overall
effect on the company’s monthly operating profit of this change if fixed costs are unaffected?