YOUR ANSWERS MUST BE TYPED, LABELED, AND CIRCLED SHOW YOUR WORK TO SUPPORT YOUR ANSWERS!!!! 1. (4 POINTS) THE…

YOUR ANSWERS MUST BE TYPED, LABELED, AND CIRCLED SHOW YOUR WORK TO SUPPORT YOUR ANSWERS!!!!

1. (4 POINTS)
THE NEW AMERICAN DOLL HAS AN EXPECTED SELLING PRICE PER DOLL OF $69.50, THE PROJECTED VARIABLE COST PER UNIT IS $27.80 AND ESTIMATED FIXED COSTS PER MONTH ARE $48,900. CALCULATE THE BREAKEVEN POINT IN SALES DOLLARS.

2. (8 POINTS)
CURRENT OPERATIONS FOR GOODYEAR MANUFACTURING SHOW :
SELLING PRICE PER UNIT $ 85
VARIABLE COST PER UNIT 30.60
TOTAL FIXED COST 232,000

IF GOODYEAR MANUFACTURING CAN ACHIEVE A $8,000 REDUCTION IN FIXED COSTS, CALCULATE AND STATE HOW MUCH THE BREAKEVEN SALES WILL (DECREASE) OR INCREASE BY. (YOU MUST INDICATE THE AMOUNT AND YOU MUST INDICATE WHETHER THE BREAKEVEN SALES INCREASES OR DECREASES)

3. (4 POINTS)
SUNLIGHT, INC. IS CONSIDERING THE PRODUCTION AND SALE OF SOLAR LAMPS. ANNUAL FIXED COSTS ASSOCIATED WITH THE PROJECT ARE EXPECTED TO TOTAL $98,800. IN ADDITION, EACH LAMP WOULD SELL FOR $125 AND WOULD REQUIRE $65 IN VARIABLE COSTS. CALCULATE THE NUMBER OF SOLAR LAMPS THAT MUST BE SOLD TO EARN A PROFIT OF $320,000.

4. (4 POINTS)
SUPPOSE FIXED COSTS ARE $35,000, VARIABLE COSTS PER UNIT ARE $21, AND THE PRODUCT SELLS FOR $77. WHAT IS THE CONTRIBUTION MARGIN PER UNIT?

5. (4 POINTS)
DURING THIS PAST YEAR, A SMALL PUBLISHING COMPANY SOLD 60,000 COPIES OF SUPER TRAVEL PAPERBACKS (THEIR ONLY PRODUCT) AT $10.50 PER BOOK; TOTAL FIXED COSTS WERE $62,464; AND TOTAL VARIABLE COSTS WERE $4.40 PER BOOK. WHAT IS THIS COMPANY’S BREAKEVEN POINT IN UNITS?

6. (4 POINTS)
PIZZA HUT INC. WISHES TO MAKE A PROFIT OF $150,000 IN THE COMING YEAR. THEIR LARGE PIZZAS SELLS FOR $22.75 A UNIT, WITH AN $8.60 CONTRIBUTION MARGIN PER UNIT. FIXED COSTS ARE PROJECTED TO BE $222,337. COMPUTE THE NUMBER OF PIZZAS /UNITS) NEEDED TO REACH THE DESIRED PROFIT.

7. (5 POINTS)
IN 2010, SELF MAGAZINE COMPANY HAD BREAKEVEN SALES OF $1,280,500 BASED ON A SELLING PRICE OF $12 PER UNIT AND FIXED COSTS OF $537,810. IN 2011, THE SELLING PRICE AND VARIABLE COSTS PER UNIT DID NOT CHANGE, BUT THE BREAKEVEN SALES INCREASED TO $1,884,000. CALCULATE THE FIXED COSTS FOR 2011.

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8. (8 POINTS)
IN 2010 GROUPON REPORTED BREAKEVEN SALES OF $3,800,000. FIXED COSTS WERE $1,102,000.
REQUIRED: COMPUTE THE CONTRIBUTION MARGIN RATIO (CMR) AND COMPUTE THE VARIABLE COST RATIO (VCR).

9. (20 POINTS)
THE FOLLOWING INFORMATION IS AVAILABLE FOR AMERICAN APPAREL’S NEW PRODUCT LINE:

VARIABLE COSTS PER UNIT:
DIRECT MATERIALS $15.80
DIRECT LABOR 11.60
MANUFACTURING OVERHEAD 18.40
SELLING COSTS 8.20
FIXED COST ESTIMATES:
PRODUCTION COSTS $212,400
SELLING AND ADMINISTRATIVE COSTS 417,600
AMERICAN APPAREL CO. SELLS ITS PRODUCT FOR $90.00 PER UNIT.

THERE WERE NO INVENTORIES AT THE BEGINNING OF THE YEAR. DURING THE
YEAR, 20,900 UNITS WERE PRODUCED AND SOLD.

REQUIRED:
(A) PREPARE A CONTRIBUTION FORMAT INCOME STATEMENT FOR THE YEAR
DECEMBER 31, 2010.
(B) CALCULATE THE CONTRIBUTION MARGIN RATIO
(C) CALCULATE THE CONTRIBUTION MARGIN PER UNIT

10. (6 POINTS)
PASADENA MANUFACTURING LEASES A VACUUM CLEANING SYSTEM FOR A BASIC MONTHLY FEE PLUS AN ADDITIONAL COST PER HOUR USED ABOVE A GIVEN MINIMUM FOR EACH MONTH. GIVEN BELOW IS THE INFORMATION FOR THE MOST RECENT SIX-MONTH PERIOD ON THE NUMBER OF MACHINE HOURS OF USE AND THE TOTAL COST UNDER THIS LEASE.

REQUIRED: DETERMINE THE FIXED COST AND VARIABLE COST PER UNIT USING THE HIGH/LOW METHOD. (SHOW ALL WORK)

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11. (5 POINTS)
THE DELIVERY TRUCKS OF LITTLE ITALY’S PIZZERIA INCURRED MAINTENANCE COSTS OF $2,400 DURING ITS BUSIEST MONTH OF 2012, IN WHICH 8,000 MILES WERE DRIVEN COLLECTIVELY. DURING ITS SLOWEST MONTH, $1,800 IN MAINTENANCE COSTS WERE INCURRED, RESULTING FROM 5,000 MILES BEING DRIVEN. USING THE HIGH-LOW METHOD, HOW MUCH WOULD THE COMPANY EXPECT TO INCUR IN MAINTENANCE COSTS IF THE RECORDED MILEAGE WAS 7,900.

12. (4 POINTS)
PANDORA JEWELRY SOLD 32,000 CHARM BRACELETS IN MAY AT $90 PER UNIT. COST OF GOODS SOLD MADE UP 55% OF THE TOTAL VARIABLE EXPENSES OF $36 PER UNIT. COMPUTE THE TOTAL VARIABLE EXPENSES.

13.(6 POINTS)
THE GAP COMPANY HAS THE FOLLOWING DATA FOR SELLING SCARFS.
SALES IN UNITS…………………. 9,800
VARIABLE COST PER UNIT…………….$ 5.06
FIXED COSTS……………………… $46,644
SELLING PRICE PER UNIT…………….$ 23.00

REQUIRED: COMPUTE THE MARGIN OF SAFETY DOLLARS ; AND THE MARGIN OF SAFETY
UNITS.

14. (9 POINTS)
McDONALD SELLS THREE SIZES OF COFFEE. LARGE, MEDIUM, AND SMALL, WITH A SALE MIX OF 3:1:4. THE COMPANY’S FIXED COSTS ARE $72,875. PRODUCT DATA INCLUDE THE FOLLOWING:
UNIT UNIT
SALES PRICE VARIABLE COSTS
LARGE $ 1.40 $ .70
MEDIUM 1.25 .65
SMALL 1.00 .35
CALCULATE HOW MANY CUPS OF COFFEE MUST BE SOLD OF EACH SIZE N ORDER TO BREAKEVEN. ***NOTE: THIS IS A SALES MIX-WTG.CONTRIBUTION MARGIN PROBLEM- (TAKE THE WTG. CONTRIBUTION RATE OUT TO FOUR DECIMAL PLACES)***

15. (8 POINTS)
A DIGITIZED MUSIC TUNER HAS BEEN A STAPLE IN SMOOTH SOUNDS PRODUCT LINE FOR SEVERAL YEARS. ANNUAL FIXED COSTS OF PRODUCTION AND ADMINISTRATION RELATED TO THIS PRODUCT IN THE PAST HAVE BEEN $989,800. VARIABLE COSTS OF PRODUCTION AND SALES HAVE BEEN $42 PER UNIT. THE SELLING PRICE IN THE PAST HAS BEEN $140 PER UNIT. BASED ON THE APPEARANCE OF COMPETING PRODUCTS ON THE MARKET, MANAGEMENT HAS ASKED YOU TO DO THE FOLLOWING:
A. COMPUTE THE BREAKEVEN POINT IN UNITS FOR THE PRESENT PRODUCT.
B. COMPUTE THE BREAKEVEN POINT IN UNITS IF THE VARIABLE COSTS INCREASED BY $3 PER UNIT AND THE FIXED COSTS INCREASED BY $17,235 PER MONTH.

BONUS QUESTION (2POINTS)
MAC ENTERPRISES HAS SALES REVENUE OF $860,000 FOR 2012. THEIR PRODUCT SELLS FOR $20 AND HAS A 40 PERCENT CONTRIBUTION MARGIN. FIXED COSTS ARE $120,000. WHAT IS MAC ENTERPRISES’ OPERATING INCOME FOR 2010?