Two compares are expected to have annual sales of I .000.000 decks at playing cards next year Eirne1es for next year are presented below:
Answer(s): A
the BEP in units Is found by dividing the fixed costs by tile UCM
Lyman Company has the opportunity increase annual sales $100,000 by selling to a new. riskier group of customers The uncollectible expense is expected to be 15%, and collection costs will be 5%. The company's manufacturing and selling expenses are 70% of sales, and its effective tax rate is 40%. If Lyman should accept this opportunity. the company's after-tax profits would increase by
Sales increase by $100,000. Collection and bad debt expense is 20% of sales (15% + Total variable expenses for the new sales will be 90% (20% + 70%) of each sales dollar.
The statement of income for Dimmell Co. presented below represented the operating result for the fiscal year just ended. Dimmell had sales of 1,800 tons of product during the current year. The manufacturing capacity of Dimmell's facilities is 3.000 tons of product.The breakeven volume in tons of product for 2002 is ?
Answer(s): B
The breakeven formula sets sales equal to the sum of fixed and variable costs. Thus, sales equal $247,500 plus 0.55S. The variable costs of $495,000 are 55% of the total sales of $900,000. Working through the formula, sales are equal to $550,000. Because 1,800tons were sold for $900,000. the selling price is $500 per ton ($900,000+ 1,800tons). The breakeven point in tons is the breakeven point in dollar of $550,000 divided by $500 per ton, or 1,100 tons.
The statement of income for Dimmell Co presented below represents the operating resifts for the tsar year Just ended Dimmell had sales of 1.800 tons of product during the current year The manufacturing capacity of Dimmell's facilities is 3.000 tons of product.If the sales volume is estimated to be 2,100 tons in the next year, aid if the prices and costs stay at the same levels and amounts next year. The after-tax net income that Dimmell can expect for 2003 is
Because the selling price is $500 per ton, sales will be $1,050,000. The contribution margin ratio is 45% ($405,000 ÷ $900,000), resulting En a contribution margin of $472,500. Net income before taxes is the contribution margin minus fixed costs of $247,500. which equals $225,000 Net income is $135,000 [$225,000 * (1.0 -40%)tax rate).
The statement of income for Dimmell Co presented below represents the operating results for me fiscal year just ended Dimmell had sales of I .800 tons of product during the current year. The manufacturing capacity of Dimmers facilities is 3,000 tons of product.Dimmell has a potential foreign customer that has offered to buy 1.500 tons at $450 per ton. Assume that all of Dimmell's costs would be at the same levels arid rates as in 2002. Whet net income after taxes would Dimmell make if it took this order and rejected some business from regular customers so as not to exceed capacity'?
Answer(s): C
Total sales equal $1 A25.000. The unit variable cost of sales is $275 (55% of $500). and total variable cost of sales is $825,000 (3,000 units x $275). The contribution margin is $1 A25.000 of sales minus $825,000 cost of sales Net income before taxes is $600,000 minus $247,500 fixed costs, or $352,500 Net income is 60% (1.0--40% tax rate) of the net income before taxes of $352,500, or $211,500
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