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Solutions Manual, Chapter 5 31
Exercise 5-13 (20 minutes)
Total Per Unit
1. Sales (20,000 units × 1.15 = 23,000 units)…. $345,000 $ 15.00
V
ariable expenses …………………………………. 207,000 9.00
2. Sales (20,000 units × 1.25 = 25,000 units)…. $337,500 $13.50
V
ariable expenses …………………………………. 225,000 9.00
3. Sales (20,000 units × 0.95 = 19,000 units)…. $313,500 $16.50
V
ariable expenses …………………………………. 171,000 9.00
4. Sales (20,000 units × 0.90 = 18,000 units)…. $302,400 $16.80
V
ariable expenses …………………………………. 172,800 9.60
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32 Managerial Accounting, 16th Edition
Exercise 5-14 (30 minutes)
2. The break-even points in unit sales (Q) and dollar sales are computed as
follows:
Sellin
g
price ……………………. $40 100%
V
ariable expenses …………….. 28 70%
Alternative solution:
Profit = CM ratio × Sales − Fixed expenses
$0 = 0.30 × Sales − $180,000
3. The unit sales and dollar sales needed to attain the target profit are
computed as follows:
Profit = Unit CM × Q − Fixed expenses
$60,000 = $12 × Q − $180,000
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Solutions Manual, Chapter 5 33
Exercise 5-14 (continued)
Alternative solution:
Profit = CM ratio × Sales − Fixed expenses
$60,000 = 0.30 × Sales − $180,000
4. The new break-even points in unit sales and dollar sales are computed
as follows:
The company’s new cost/revenue relation will be:
Sellin
g
price ………………………… $40 100%
V
ariable expenses ($28
–
$4) ….. 24 60%
Contribution mar
g
in ………………. $16 40%
Alternative solution:
Profit = CM ratio × Sales − Fixed expenses
$0 = 0.40 × Sales − $180,000
0.40 × Sales = $180,000
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
34 Managerial Accounting, 16th Edition
Exercise 5-14 (continued)
4. The dollar sales required to attain the target profit is computed as
follows:
Profit = CM ratio × Sales − Fixed expenses
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
Solutions Manual, Chapter 5 35
Exercise 5-15 (15 minutes)
1.
Total
Per
Unit
Sales (15,000
g
ames) ……… $300,000 $20
V
ariable expenses ………….. 90,000 6
Contribution mar
g
in ……….. 210,000 $14
2. a. Sales of 18,000 games represent a 20% increase over last year’s
b. The expected total dollar amount of net operating income for next
year would be:
Last year’s net operatin
g
income …………………. $28,000
T
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36 Managerial Accounting, 16th Edition
Exercise 5-16 (30 minutes)
1. The contribution margin per person would be:
Price per ticket ………………………………. $35
V
ariable expenses:
+ $1,000 + $1,300). The break-even point would be:
Profit = Unit CM × Q − Fixed expenses
$0 = ($35 − $20) × Q − $6,000
Alternative solution:
Fixed expenses
Unit sales to=
break even Unit contribution margin
2.
V
ariable cost per person ($18 + $2)…………….. $20
T
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
Solutions Manual, Chapter 5 37
Exercise 5-16 (continued)
3. Cost-volume-profit graph:
$12,000
$14,000
$16,000
$18,000
$20,000
Total
Expenses
Total Sales
Break–even point:
400 persons or
$14,000 total sales
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38 Managerial Accounting, 16th Edition
Exercise 5-17 (30 minutes)
1. Profit = Unit CM × Q − Fixed expenses
$0 = ($50 − $32) × Q − $108,000
Alternative solution:
Fixed expenses
Unit sales to =
break even Unit contribution margin
2. An increase in variable expenses as a percentage of the selling price
would result in a higher break-even point. If variable expenses increase
3.
Present:
8,000 Stoves
Proposed:
10,000 Stoves*
Total Per Unit Total Per Unit
Sales ………………………. $400,000 $50 $450,000 $45 **
V
ariable expenses ……… 256,000 32 320,000 32
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
Solutions Manual, Chapter 5 39
Exercise 5-17 (continued)
4. Profit = Unit CM × Q − Fixed expenses
$35,000 = ($45 − $32) × Q − $108,000
Alternative solution:
Tar
g
et profit + Fixed expenses
Unit sales to attain =
target profit Unit contribution margin
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40 Managerial Accounting, 16th Edition
Exercise 5-18 (30 minutes)
1. Profit = Unit CM × Q − Fixed expenses
$0 = ($30 − $12) × Q − $216,000
Alternative solution:
Fixed expenses
Unit sales
=
to break even Unit contribution margin
2. The contribution margin is $216,000 because the contribution margin is
3.
T
ar
g
et profit + Fixed expenses
Units sold to attain
=
target profit Unit contribution margin
Total Unit
Sales (17,000 units × $30 per unit)……. $510,000 $30
V
ariable expenses