User Account

All Pages

Calculate the sales dollars required of each product line

Assignment Help Accounting Basics
Reference no: EM131752304

Question: ACG 2071 Comprehensive Problem III When submitting the completed project, it should include:

1. Please show all work and number each answer accordingly.

2. Round all answers to two decimal places.

Part I: Use CVP to Plan Profits  (worth a total of 21 points 3 points for each question) Nottingham News Company has the rights to sell and deliver the city newspaper in a designated area in the country. A monthly subscription sells for $30.00 and Nottingham News pays $10.00 per month for each newspaper subscription. In addition to this variable cost, Nottingham News has fixed costs of $3,000 per month. Nottingham News currently activity level is 700 subscriptions.

Required: 1. Calculate the contribution margin ratio and explain the ratio as it pertains to Nottingham News Company.

2. Use the mathematical formula to calculate Nottingham News' monthly breakeven point in units (number of subscriptions).

3. Use the shortcut contribution margin approach to calculate Nottingham News' monthly breakeven in units (number of subscriptions).

4. Prove the breakeven point by preparing a contribution margin income statement.

5. Use the contribution margin ratio, which you calculated in number one to compute Nottingham News' breakeven point in sales dollars.

6. Calculate the margin of safety ratio and explain the ratio as it pertains to Nottingham News Company.

7. The owner of Nottingham News' wants to earn a $10,000 profit per month. Calculate the sales volume in units (number of subscriptions) and sales dollars required to achieve this level of profit.

Part II:  Effect of Sales Mix on CVP Analysis  (worth a total of 24 points) Fat Cat Furniture store sells two types of products; cat beds and scratching posts. Over the past year Fat at sold 6,000 cat beds and 4,000 scratching posts, the sales mix of 6,000 beds to 4,000 posts creates a percentage of 60% for the cat beds and 40% for the scratching posts. Fat Cat's total fixed costs are $40,000. The cat bed's unit selling price is $44.00 and variable costs per bed are $24.00. The scratching post's unit selling price is $100.00 and variable cost per post is $30.00.

Required: 1. Calculate the weighted average contribution margin per unit.

2. Calculate Fat Cat's breakeven point in units for the package of products.

3. Calculate how many units of each product line the company must sell in order to breakeven.

4. Calculate the sales dollars required of each product line to breakeven Do not use the weighted average contribution margin ratio formula due to rounding issues. May still use the weighted average contribution margin per unit formula.

5. Prove the breakeven point by preparing a contribution margin income statement Make sure to provide three columns: one for Cat Beds, one for Scratching Posts, and one for Total.

6. The owner of Fat Cat Furniture wants to earn a $60,000 profit.

Calculate the sales volume in units and total sales dollars of each product line the company must sell in order to earn $60,000 in profit. Do not use the weighted average contribution margin ratio formula due to rounding issues. May still use the weighted average contribution margin per unit formula.

Part III: CVP Analysis  (worth a total of 5 points) How will changes in sales price, variable or fixed costs, affect the breakeven point? Answer the question using the chart below. Cause Effect Result Contribution Margin per unit Breakeven Point

1. Selling Price per Unit Increase

2. Selling Price per Unit Decrease

3. Variable Cost per Unit Increase

4. Variable Cost per Unit Decrease

5. Total Fixed Cost Increase

6. Total Fixed Cost Decrease

Reference no: EM131752304

Questions Cloud

Impeding adoption of internal corporate social networks : Identify the people, organization, and technology factors responsible for impeding adoption of internal corporate social networks.
Compute the flexible-budget variances for each of the cost : Providence Hospital generates monthly performance reports for each of its departments. Compute the flexible-budget variances for each of the cost categories
How the project charter helps a project avoid scope creep : Discuss how the project charter helps a project avoid scope creep. Identify three key elements of the project charter that help a project stay within scope.
Analyse the situation or risk that needs to be resolved : Communication Plan for continuous change management - what change theory would you use to overcome workers' resistance to change and drive success
Calculate the sales dollars required of each product line : Calculate the sales dollars required of each product line to breakeven Do not use the weighted average contribution margin ratio formula due to rounding issues.
The intangible services and the facilitating goods : Define the service-product bundle that is being provided for guests, including the tangible services, the intangible services and the facilitating goods.
Why were you moved to pick the given topic : Why were you moved to pick this topic? Why was it interesting to you? What lessons does your topic teach? Why is this information important in the present?
What is the sociological perspective : How do the questions sociologists ask differ from the questions asked by psychologists or by health care workers?
Calculate the gain to be recognized from the exchange : The exchange lacked commercial substance. Calculate the gain to be recognized from the exchange

Reviews

Write a Review

Accounting Basics Questions & Answers

  Determine the sales amount required to achieve a target

The following data are from Lily Company for year 1. Determine the sales amount required to achieve a target net income of $46,000

  The management of martinez manufacturing company has asked

the management of martinez manufacturing company has asked for your assistance in deciding whether to continue

  Do you think the investor will prevail

Now assume that instead of applying for a bank loan, Given the violations I discussed in my solution to the week 1 homework, do you think the investor will prevail?

  Find finances partial payment of the sale

On April 1, 20X0, your company finances partial payment of the sale of machinery to a customer for a $20,000, 3-year, 8% note receivable.

  Advantageous to use a cloud database (daas)

Why would a small company with 400 employees find it advantageous to use a cloud database (DaaS)?

  Business problem and opportunity confronting

Prepare a paper which examining a business problem and opportunity confronting your organization that you feel could be addressed through the application of business research principles by performing the following:

  What are the basic assumptions of cvp analysis

What are the basic assumptions of CVP analysis with regard to variable cost, fixed cost, and selling price per unit

  Data on time to breakdown of an insulating fluid

Insulating  fluid (Weibull). Use the 26-kV data on time to breakdown of an insulating fluid in Table 1.1 of Chapter 3. Use a computer program if you have one. (a)    Make a Weibull plot of the data, and graphically estimate the Weibull parameters.

  Charitable contribution deduction for the current year

On October 1, Kingbird Corporation made a contribution to a qualified charitable organization of $6,300 in cash (not included in any of the above items). Determine Kingbird's charitable contribution deduction for the current year.

  Calculate ending inventory and cost of goods sold

Calculate ending inventory and cost of goods sold assuming the average cost method and a periodic inventory system.

  Analyse cash flow statements of the last six years

Analyse cash flow statements of the last six years and explain any three major changes which have occurred in relation to investing, financing and/or operating activities of the business. Justify your answer

  How much of the sd output should be transferred to the ad

General guideline, transfer pricing. The Slate Company manufactures and sells television sets. Its assembly division (AD) buys television screens.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd