financial accounting test 3

The University Golf Shop desires to make $10,000 on its taxable income (EBT). If the contribution margin is 50% of the revenues, and the fixed costs are $110,000; what is the required amount of revenues?

$240,000

The owner of a local motel told you to help him set up his budget with the following information: Its monthly Fixed Cost amount is $120,000, while its Variable Cost is $15 per room sold. During the slowest month, he will reduce his ADR to $30 to sell 6,000 rooms. However, the Variable Cost per room will not change. Using the information provided, complete the Pro Forma Income Statements (Operating Budget); and provide your answer to the question below. (If the data shows broken on your screen, please use Zoom-in/out function to have it displayed correctly. Or you also may need to expand it to the full-screen mode.) Slowest month (6,000 rooms to sell @ lowered ADR of $30) Vertical Analysis (%) Revenues: $180,000 XXXXXX Variable Cost ($15 per room): __(25)___ __(30)___ Contribution Margin: __(26)___ __(31)___ Fixed Cost: $120,000 __(32)___ EBT: __(27)___ XXXXXX Tax (40%) __(28)___ XXXXXX Net Income: __(29)___ __(33)___

90,000

1. The dollar amount of a fixed cost varies as revenues change.

F

1. The dollar amount of a variable cost remains the same as the revenues change.

F

1. The percentage of a variable cost of its revenues changes as the revenues change.

F

At the Virtual Cafe, the average price per meal sold is $20 with an average variable cost at 45% of the price. Fixed costs for July are expected to be $65,000. If the restaurant manager expects to sell 5,000 meals in July, the taxable income (EBT) of the month would be:

-$10,000 (loss)

Revenues: $180,000 XXXXXX Variable Cost ($15 per room): __(25)___ __(30)___ Contribution Margin: __(26)___ __(31)___ Fixed Cost: $120,000 __(32)___ EBT: __(27)___ XXXXXX Tax (40%) __(28)___ XXXXXX Net Income: __(29)___ __(33)___

-16

Revenues: $180,000 XXXXXX Variable Cost ($15 per room): __(25)___ __(30)___ Contribution Margin: __(26)___ __(31)___ Fixed Cost: $120,000 __(32)___ EBT: __(27)___ XXXXXX Tax (40%) __(28)___ XXXXXX Net Income: __(29)___ __(33)___

-30,000

Revenues: $180,000 XXXXXX Variable Cost ($15 per room): __(25)___ __(30)___ Contribution Margin: __(26)___ __(31)___ Fixed Cost: $120,000 __(32)___ EBT: __(27)___ XXXXXX Tax (40%) __(28)___ XXXXXX Net Income: __(29)___ __(33)___

0

The Thrifty Inn maintains an average selling price per room at $50; and also maintains the variable cost per room sold at 60% of the sales price. The property's fixed costs are $24,000 for each month, How many rooms does the hotel need to sell per month to have the profit before tax (EBT) of -$0-?

1,200

Based on the description below, answer the questions that follow. The manager of a local motel asked you to figure out his cost structure to project his future operations. According to his records, the motel recorded the total costs of $72,000 by selling 7,500 rooms during the busiest month of the past year. During the slowest month, it sold 4,500 rooms at the total costs of $48,000. Based on the given information, please answer the following questions. Find out the motel's fixed cost amount per month

12,000

Based on the description below, answer the questions that follow. The manager of a local restaurant spends $8,400 for its monthly fixed cost. Its variable cost is $8 per customer. Determine the amount of its Contribution Margin to generate the EBT of $6,600.

15,000

The following records are the operational results of two extreme months of the HFT Enterprise. (If the data shows broken on your screen, please use Zoom-in/out function to have it displayed correctly. Or you also may need to expand it to the full-screen mode.) Month 1 Month 2 Customer Count 9,000 customers 12,000 customers Revenues $630,000 $840,000 Variable Costs $220,500 $294,000 Mixed Costs $239,000 $302,000 Fixed Costs $100,000 $100,000 Using the High-Low Two Point Method, divide the Mixed Costs into the VC & FC involved in the MC. With the new result of this business's cost structure answer the following questions: Determine the amount of the Total Amount of Fixed Cost

150,000

Based on the description below, answer the questions that follow. The manager of a local restaurant spends $8,400 for its monthly fixed cost. Its variable cost is $8 per customer. 1. If 1,200 customers are served in the next month, what will be the amount of Total Cost?

18,000

The following records are the operational results of two extreme months of the HFT Enterprise. (If the data shows broken on your screen, please use Zoom-in/out function to have it displayed correctly. Or you also may need to expand it to the full-screen mode.) Month 1 Month 2 Customer Count 9,000 customers 12,000 customers Revenues $630,000 $840,000 Variable Costs $220,500 $294,000 Mixed Costs $239,000 $302,000 Fixed Costs $100,000 $100,000 Using the High-Low Two Point Method, divide the Mixed Costs into the VC & FC involved in the MC. With the new result of this business's cost structure answer the following questions: Determine the amount of the Total Variable Cost per Customers.

45.5

Revenues: $180,000 XXXXXX Variable Cost ($15 per room): __(25)___ __(30)___ Contribution Margin: __(26)___ __(31)___ Fixed Cost: $120,000 __(32)___ EBT: __(27)___ XXXXXX Tax (40%) __(28)___ XXXXXX Net Income: __(29)___ __(33)___

50

1. The Thrifty Inn maintains an average selling price per room at $50; and also maintains the variable cost per room sold at 60% of the sales price. The property's fixed costs are $24,000 for each month, What is the amount of monthly sales necessary for this hotel to have the EBT of -$0- under the current cost structure?

60,000

Revenues: $180,000 XXXXXX Variable Cost ($15 per room): __(25)___ __(30)___ Contribution Margin: __(26)___ __(31)___ Fixed Cost: $120,000 __(32)___ EBT: __(27)___ XXXXXX Tax (40%) __(28)___ XXXXXX Net Income: __(29)___ __(33)___

66.7

Based on the description below, answer the questions that follow. The manager of a local motel asked you to figure out his cost structure to project his future operations. According to his records, the motel recorded the total costs of $72,000 by selling 7,500 rooms during the busiest month of the past year. During the slowest month, it sold 4,500 rooms at the total costs of $48,000. Based on the given information, please answer the following questions. Find out the motel's variable cost per room sold

8

A local inn maintains an average selling price per room of $40. Its variable cost per room sold is $10. If the property's fixed costs are $24,000 for the month, the breakeven point can be achieved when it sells:

800

Revenues: $180,000 XXXXXX Variable Cost ($15 per room): __(25)___ __(30)___ Contribution Margin: __(26)___ __(31)___ Fixed Cost: $120,000 __(32)___ EBT: __(27)___ XXXXXX Tax (40%) __(28)___ XXXXXX Net Income: __(29)___ __(33)___

90,000

The percentage of a fixed cost of its revenues remains the same as the revenues change

F

1. You also want to determine how the company (mentioned in the questions above) has been utilizing its resources to generate profits. Which ratio provides the information on this dimension?

ROA

You are one of the investors of a company; and you want to find out the return on your investment. Which ratio will give you the answer?

ROE

1. The dollar amount of a fixed cost remains the same as revenues vary.

T

1. The dollar amount of a variable cost varies as the revenues change.

T

1. The percentage of a variable cost of its revenues remains the same as the revenues change.

T

The percentage of a fixed cost of its revenues changes as the revenues change

T

The owner of a local restaurant needs to decide between two lease options for the next 3 years: one is an annual fixed lease at $60,000 per year, while the other is a variable lease set at 5% of annual revenue. Because the business is relatively new, her projected sales for the next five years will be lower than $1,200,000. Which one of the following would you recommend, and why?

The variable lease should be chosen. It costs less

Which of the following is not a common assumption in cost-volume-profit (or Breakeven) analysis?

Variable Cost per unit activity can be different from one month to another

1. If you want to find out the amount of revenues generated from a unit investment (i.e., $1 investment) into the company's entire resources, which ratio would you calculate?

asset turnover