Chapter 3 – Cost-Volume-Profit Analysis and Pricing Decisions
Problem 3-37
a. molded briefcase contribution margin: $40.00 – $27.40 = $12.60
Problem 3-38
a. sales mix: 4:6 or 1:1.5
Chapter 3 – Cost-Volume-Profit Analysis and Pricing Decisions
3-43
Problem 3-38, continued
d. Operating income if the company advertises XL-709:
Solutions for Davis & Davis, Managerial Accounting, 2nd ed.
3-44
Problem 3-39
a.
Price
Demand
Sales
Revenue
Variable
Costs
Fixed
Expenses
Operating
Income
$200
40,657
$ 8,131,400
$2,439,420
$350,000
$5,341,980
$190
44,486
$ 8,452,340
$2,669,160
$350,000
$5,433,180
$180
48,675
$ 8,761,500
$2,920,500
$350,000
$5,491,000
$170
53,259
$ 9,054,030
$3,195,540
$350,000
$5,508,490
$160
58,275
$ 9,324,000
$3,496,500
$350,000
$5,477,500
$150
63,763
$ 9,564,450
$3,825,780
$350,000
$5,388,670
$140
69,768
$ 9,767,520
$4,186,080
$350,000
$5,231,440
$130
76,338
$ 9,923,940
$4,580,280
$350,000
$4,993,660
$120
83,527
$10,023,240
$5,011,620
$350,000
$4,661,620
$110
91,393
$10,053,230
$5,483,580
$350,000
$4,219,650
$100
100,000
$10,000,000
$6,000,000
$350,000
$3,650,000
60$
60$100$
60$
60$170$
60$200$
60$
Chapter 3 – Cost-Volume-Profit Analysis and Pricing Decisions
3-45
Problem 3-40
variable costs of serving the meal.
$30
$30
On the downside, if the mayor chooses to use Gail again, he may
3-46
SOLUTIONS TO C&C RUNNING CASE
Problem 3-41
51,975 units (
$1,039,500
$20
).
new cost of jersey =
$ 15.30
current cost of jersey =
$ 14.80
cost increase =
$ 0.50
jerseys sold
×
51,975
decrease in operating income =
$25,987.50
b. Alternative 1: new sales price: $20.00 + $0.50 = $20.50
Total
Per unit
Sales
$1,065,487.50
$20.50
–Variable expenses
Cost of goods sold
795,217.50
15.30
Commission
63,929.25
1.23
Contribution margin
206,340.75
$ 3.97
Fixed expenses
178,000.00
Operating income
$ 28,340.75
Chapter 3 – Cost-Volume-Profit Analysis and Pricing Decisions
Problem 3-41, continued
Alternative 2: sales price remains $20.00 per jersey