mho data by uc86

VIEWS: 1 PAGES: 4

									                                             PROBLEM 1

                        Net Income                                 $      62,000
                        Add: adjustments
                        Depreciation expense                       $      16,000
                        Amortization expense                       $       3,000
                        Loss on sale of fixed assets               $       2,000
                        Increase in Account Receivable             $      (9,200)
                        Decrease in Inventory                      $       5,900
                        Decrease in Prepaid rent                   $          300
                        Increase in account payable                $       2,400
                        Decrease in wages payable                  $        (700)
                        Decrease in Tax payable                    $       1,100
                        Cash provided by operating activities      $      20,800


                                             Problem 2
Required No. a

Solution

Sales                                                  $        450,000
Variable Cost of goods sold ($200,000-$50,000)         $        150,000
Variable Operating expense ($196,000-$166,000)         $         30,000
Contribution margin                                    $        270,000


Required No. b

Solution

Contribution margin ratio =?

Contribution margin ratio = $270,000/$450,000

Contribution margin ratio = 0.60 or 60%

Required No. c

Solution

Break-even volume in sale dollar =?

Break-even volume in sale dollar = ($50,000+$166,000) / 60%
Break-even volume in sale dollar = $360,000



                                       PROBLEM 2 (continued)

Required No. a

Solution

Contribution margin per unit =?

Contribution margin per unit =$68.50-$50.95

Contribution margin per unit =$17.55

Required No. b

Solution

Contribution margin ratio =?

Contribution margin ratio = ($68.50-$50.95)/$68.50

Contribution margin ratio = 25.62%

Required No. c

Solution

Break-even point in unit =?

Break-even point in unit = $500,000 / ($68.50-$50.95)

Break-even point in unit = 28,490 units

Required No. d

Solution

Break-even volume in dollar =?

Break-even volume in dollar = $500,000 /[$68.50-$50.95/$68.50]

Break-even volume in dollar = $1,951,567



                                              PROBLEM 3
Answer

   1)    D
   2)    A
   3)    B
   4)    B
   5)    D
   6)    C
   7)    B
   8)    D
   9)    B
   10)   C

                                                  PROBLEM 4

         Solution


                                                Without             Effect of       With Special
                                           Special Order       Special Order              Order

             Units                                 2,000                 100               2,100
             Sales                            $   36,000        $      1,500        $     37,500
             Purchase cost                    $   20,000        $      1,000        $     21,000
             Variable printing cost          $     4,000       $         200        $      4,200
             Total variable cost              $   24,000        $      1,200        $     25,200
             Contribution margin              $   12,000       $         300        $     12,300
             Fixed cost                      $     8,000           $        -       $      8,000
             Operating income                $     4,000       $         300        $      4,300



                                                   PROBLEM 5
         Required No. 1
         Solution

             Assume they outsource:
             Costs (30,000 x 12 )                                               $    360,000
                Less cost savings:
                Variable manufacturing costs ($3 + $4 + $5) x 30,000            $    360,000
             Fixed overhead saved ($1.5 x 60,000 units)                         $       90,000
             Net cost savings                                                   $       90,000
Required No. 2
Solution

             If they outsource, their costs are:
             (30,000 x $12) + $4.50 x 60,000       $    630,000
             If they accept the special order:
             Net revenue                           $    230,000
             Cost for order                        $    840,000
             Net cost of the special order         $    610,000


                 The special order makes them better off by $20,000.

								
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