Accounting Chapter 19

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MacCloud Industries has two divisions—Standard and Premium. Each division has hundreds of different types of tennis racquets and tennis products. The following information is available: Standard Division Premium Division Total Sales $400,000 $600,000 $1,000,000 Variable costs 280,000 360,000 Contribution margin $120,000 $240,000 Total fixed costs $270,000 13. What is the weighted-average contribution margin ratio?

36% (120000+240000=360000; 360000/1000000=36%)

Roosevelt Corporation has a weighted-average unit contribution margin of $20 for its two products, Standard and Supreme. Expected sales for Roosevelt are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000. how many standards would roosevelt sell at the breakeven point?

36,000 (1800000/20=90000; 90000*40%=36000)-40%=40000/100000 b. 54,000

Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $3,330,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. the WACM ratio is

37%. (.65*.3=.195; .35*.5=.175; .195+.175=.37

Capitol Manufacturing sells 2,000 units of Product A annually, and 3,000 units of Product B annually. The sales mix for Product A is

40%. (2000/5000)

MacCloud Industries has two divisions—Standard and Premium. Each division has hundreds of different types of tennis racquets and tennis products. The following information is available: Standard Division Premium Division Total Sales $400,000 $600,000 $1,000,000 Variable costs 280,000 360,000 Contribution margin $120,000 $240,000 Total fixed costs $270,000 13. What is the breakeven point in dollars?

750000 (270000/36%)

The contribution margin ratio:

Contribution margin divided by sales

Under absorption costing and variable costing, how are fixed manufacturing costs treated?

absortion = product cost variable = period cost

. If contribution margin is $100,000, sales is $300,000, and net income is $40,000, then variable and fixed expenses are

variable = 200000 fixed = 60000

The sales mix percentages for Novotna's Boston and Seattle Divisions are 70% and 30%. The contribution margin ratios are: Boston (40%) and Seattle (30%). Fixed costs are $888,000. What is Novotna's break-even point in dollars?

$2,400,000 (.7*.4=.28; .3*.3=.09; .28+.09=.37; 888000/.37=2.4m)

Roosevelt Corporation has a weighted-average unit contribution margin of $20 for its two products, Standard and Supreme. Expected sales for Roosevelt are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000. At the expected sales level, Roosevelt's net income will be

$200,000. (100000*20=2000000; 2000000-1800000=200000

Ramirez Corporation sells two types of computer chips. The sales mix is 30% (Q-Chip) and 70% (Q-Chip Plus). Q-Chip has variable costs per unit of $36 and a selling price of $60. Q-Chip Plus has variable costs per unit of $42 and a selling price of $78. The weighted-average unit contribution margin for Ramirez is

$32. (60-36=24; 24*30%=7.2; 78-42=36; 36*70%=25.2; 7.2+25.2=32.4; round to 32)

Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $3,330,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. what will sporting goods divisions sales be at breakeven point

$5,850,000 (9,000,000*.65=5,850,000)

For Buffalo Co., at a sales level of 5,000 units, sales is $75,000, variable expenses total $40,000, and fixed expenses are $21,000. What is the contribution margin per unit?

$7 (75k-45k=35k; 35k/5k=7

Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $3,330,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. the breakeven point in dollars is:

$9,000,000. (3,330,000/.37=9,000,000


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