3-21
Exercise 3-19
a. Basic lawn care CM = $40 – $22 = $18 per hour
b.
$32x + 4($18x) – $166,400 =
$0
$104x =
$166,400
x =
1,600 deluxe lawn care hours
4x =
6,400 basic lawn care hours
c. Let x = deluxe lawn care hours; the sales mix is 1:1
$32x + $18x – $166,400 =
$0
$50x =
$166,400
x =
3,328 deluxe lawn care hours
x =
3,328 basic lawn care hours
3-22
Exercise 3-20
Breakeven point =
$360,000
$6(3x) $18x
=
10,000
reading tests = x = 10,000; math tests = 3x = 30,000
reading test sales:
10,000 tests × $36 per test =
$360,000
math test sales:
30,000 tests × $20 per test =
600,000
breakeven sales =
$960,000
b.
Math Testing
Reading Testing
Total Company
Total
Per Unit
Total
Per Unit
Sales
$1,200,000
$20
$1,200,000
$20
$2,400,000
Variable expenses
840,000
14
1,080,000
18
1,920,000
Contribution margin
$ 360,000
$ 6
$ 120,000
$ 2
480,000
Fixed expenses
360,000
Operating income
$ 120,000
3-23
Exercise 3-20, continued
c. Abado’s sales mix is now 60,000 math tests and 60,000 reading
tests, or a sales mix of 1 to 1.
Breakeven point =
$360,000
$6x $2x
=
45,000
reading tests = x = 45,000; math tests = x = 45,000
reading test sales:
45,000 tests × $20 per test =
$ 900,000
math test sales:
45,000 tests × $20 per test =
900,000
breakeven sales =
$1,800,000
change.
Exercise 3-21
($30 – $15)x + ($45 – $24)3x – $982,800 =
0
$15x + $63x =
$982,800
x =
12,600
plastic pitchers = x = 12,600; glass pitchers = 3x = 37,800
b.
($30 – $13)x + ($45 – $24)3x – $982,800 =
0
$17x + $63x =
$982,800
x =
12,285
plastic pitchers = x = 12,285; glass pitchers = 3x = 36,855
3-24
Exercise 3-22
a.
$2.00 – $0.40
$0.40
= 400%
b. markup = $0.40 × 500% = $2.00
price = cost + markup = $0.40 + $2.00 = $2.40
c.
$1.50 – $0.40
$0.40
= 275%
Exercise 3-23
sales price.
$629.00 $248.07
$248.07
d.
$629 – $310
$310
= 102.9%
3-25
Exercise 3-24
a.
$540,000 $324,000
$324,000
= = 67%
b. Total cost = $324,000 + $126,000 = $450,000
markup percentage =
$540,000 $450,000
$450,000
= = 20%
c. = .4 or 40%
d. Use the gross margin percentage
x $42
x
=
.4 or 40%
x – $42 =
.4x
.6x =
$42
x =
$70
Exercise 3-25
a.
.6 =
$36 x
x
.6x =
$36 – x
1.6x =
$36
x =
$22.50
b. Justin should try to value engineer the product to reduce the unit cost
by $1.50 to reach the target cost of $22.50.
000,324$
000,216$
000,450$
000,90$
000,540$
000,216$
3-26
Exercise 3-26
c. Pet Designs could
15$
Chapter 3 – Cost-Volume-Profit Analysis and Pricing Decisions
SOLUTIONS TO PROBLEMS
Problem 3-27
a. Using the sales revenue of $10,000 and sales price of $5.00 per unit,
000,10$
3-28
Problem 3-28
a.
$8 × 81,250 – FC =
$200,000
$650,000 – FC =
$200,000
FC =
$450,000
b.
$8x – $450,000 =
$0
$8x =
$450,000
x =
56,250 basketballs
or
$450,000
$8
= 56,250 basketballs
c.
(CM × 65,000) – $450,000 =
$200,000
(CM × 65,000) =
$650,000
CM =
$10
lower basketball cost from suppliers
e.
$8x – $450,000 =
,
.
$175 000
13
$8x – $450,000 =
$250,000
$8x =
$700,000
x =
87,500 basketballs
Chapter 3 – Cost-Volume-Profit Analysis and Pricing Decisions
Problem 3-29
Total
Per unit
Sales
$627,000
$13.20
Less variable expenses
332,500
7.00
Contribution margin
294,500
$ 6.20
Less fixed expenses
175,000
Operating income
$119,500
Total
Per unit
Sales
$660,000
$13.20
Less variable expenses
367,500
7.35
Contribution margin
292,500
$ 5.85
Less fixed expenses
175,000
Operating income
$117,500
c. new sales price: $12.00 × .9 = $10.80
000,600$
Less variable expenses
420,000
7.00
Contribution margin
$ 3.80
Less fixed expenses
175,000
Operating income
$ 53,000
Problem 3-29, continued