Put these decisions in the correct order

I’m a relationship between an employee and supervisor, who must do the most of the adjusting

kozerog [31]

Supervisor must make more adjustments

3 0

3 years ago

Franchising is a contractual agreement between a firm, the franchisor, and another firm or individual, known as the ______.

xxTIMURxx [149]

Franchising is a contractual agreement between a firm, the franchisor, and another firm or individual, known as the franchisee.

8 0

3 years ago

The Doral Company manufactures and sells pens. Currently, 5,000,000 units are sold per year at $0.50 per unit. The fixed costs a

SVEN [57.7K]

Answer:

Operating Income = $100,000

Explanation:

1 a. What is the current annual operating income?

Revenue - 5,000,000* $0.5 = 2,500,000

Less: Variable Costs - 5,000,000*$0.3 = 1,500,000

Contribution = 1,000,000 (margin = 1m/2.5m = 40%)

Less: Fixed Costs ....$900.000

Operating Income = $100,000

b. What is the present break even point in revenues?

BEP = FC/Contribution Margin = 900,000/0.4 = $2,250,000

2. A $0.04 per unit increase in variable costs

Revenue - 5,000,000* $0.5 = 2,500,000

Less: Variable Costs - 5,000,000*$0.34 = 1,700,000

Contribution = 800,000

Less: Fixed Costs ....$900.000

Operating Income = ($100,000)

3. A 10% increase in fixed costs and a 10% increase in units sold

Revenue - 5,500,000* $0.5 = 2,750,000

Less: Variable Costs - 5,500,000*$0.3 = 1,650,000

Contribution = 1,100,000

Less: Fixed Costs ....$990.000

Operating Income = $110,000

4. A 20% decrease in fixed costs, a 20% decrease in selling price, a 10% decrease in variable cost per unit and a 40% increase inunits sold.

Revenue - 7,000,000* $0.4 = 2,800,000

Less: Variable Costs - 7,000,000*$0.27 = 1,890,000

Contribution = 910,000

Less: Fixed Costs ....$720.000

Operating Income = $190,000

5.Compute the new breakeven point in units for each of the following changes: A 10% increase in fixed costs

BEP = FC/Contribution Margin = 810,000/0.4 = $2,025,000

6. A 10% increase in selling price and a $20,000 increase in fixed costs

Revised Contribution Margin = 0.55 - 0.3 = 0.25; 0.25/0.55 = 0.4545

BEP = FC/Contribution Margin = 1080,000/0.4545 = $2,376,238

8 0

4 years ago

Read 2 more answers

Before liquidating any assets, the partners determined the amount of safe cash and distributed it. The noncash assets were then

Alex787 [66]

Answer: $98,000

Explanation:

3 0

3 years ago

Application of full costing is widely used by managers as an operational tool. However, it may not always be the optimal method.

True [87]

Answer:

Please check the explanation below.

Explanation:

Full costing is also known as absorption costing. Under the full costing method, all the costs of production (whether fixed or variable) are included in the product cost and are therefore, allocated to each unit produced during the period. Selling and administrative expenses (whether fixed or variable) are treated as period costs under this method.

A major disadvantage of the full costing method is that it results in higher profit if the volume of production exceeds the volume of sales during the relevant period. It is so because some portion of the fixed cost will get included in the ending inventory. This method, can therefore, be used by managers to inflate profits by showing an increase in production.

Full costing method is generally method for external reporting purposes. For decision making and internal reporting purposes, managers prefer to use variable costing method. Under, variable costing method, fixed expenses (all type) are treated as period costs and are not included in the product costs. Only the variable costs of production are included in producting costs. This method relies on the premise of "Contribution" margin which is commonly used as the basis for decision making in various complex situations/scenarios.

Full costing method will not preferably be used in the following 2 situations:

1) decisions relating to special orders

2) where a make or buy decision is required to be made

In both the above cases, we will have to consider only the relevant costs (which are generally variable in nature) in order to make a decision. For instance, a company operating at 70% of the capacity can accept a special order if the price offered by the customer exceeds the variable cost of producing those units. It is so because the fixed manufacturing costs will have to be incurred by the company irrespective of the fact whether it accepts or rejects the special order.

8 0

3 years ago