1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Step2247 [10]
3 years ago
15

9) A firm is selling two products, chairs and bar stools, each at $50 per unit. Chairs have a variable cost of $25, and bar stoo

ls $20. Fixed cost for the firm is $20,000. a. If the sales mix is 1:1 (one chair sold for every bar stool sold), what is the break-even point in dollars of sales? In units of chairs and bar stools? (Round your unit answers to a whole number before calculating the breakeven point and round the break-even point to the nearest whole number.) b. If the sales mix changes to 1:4 (one chair sold for every four bar stools sold), what is the break-even point in dollars of sales? In units of chairs and bar stools? (Round your unit answers to a whole number before calculating the breakeven point and round the break-even point to the nearest whole number.)
Business
1 answer:
Ksivusya [100]3 years ago
5 0

Answer:

Ans.

a) BEP (units) =727; BEP($)= $36,350

b) BEP (units) =690; BEP($)=$34,500

Explanation:

Hi, in order to find the break even point in units, we have to use the following equation in both cases.

BEP(Units)=\frac{Fixed Costs}{(AveragePrice-Average VariableCost)}

Since the sales mix is different in both scenarios, let´s find the average variable cost for a) (notice that there is no need to find the average price because both, the stool and the chair have the same price)

AverageVariableCost=25*\frac{1}{2} +20*\frac{1}{2} =22.5

Now, the fraction aside each of the price is 1/2 in both cases, because the sale mix 1:1 means that the company makes 1 stool for every chair it makes, in fraction that is, for every 2 items that the company makes, 1 is a stool (1/2) and 1 is a chair (1/2).

So, our BEP in units is:

BEP(Units)=\frac{20,000}{(50-22.5)} =727

BEP(Dollars)=727*50=36,350

That means that the company has to make 727 units, which 363 are chairs and 364 are stools (you could say 364 chairs and 363 stools too, because we are heavily rouding numbers). This is represented in $36,350 in sales.

Now, for b), our average cost is:

AverageVariableCost=25*\frac{1}{5} +20*\frac{4}{5} =21

As you can see, the fraction changed, that is because of the new sales mix of 1:4, that is: the company makes 4 stool for every chair it makes, in fraction that is, for every 5 items that the company makes, 4 are a stools (4/5) and 1 is a chair (1/5).

Now, let´s find our new BEP in units and dollars.

BEP(Units)=\frac{20,000}{(50-21)} =690

BEP(Dollars)=690*50=34,500

That means that the company has to make 690 products, which 138 are chairs and 552 are stools. This is represented in $34,500 in sales.

Best of luck.

You might be interested in
Tracey decides to lease a car for two years. She puts $0 money down and pays $209.15 per month. At the end of the lease, Tracey
Yanka [14]

Answer:

$16,019.6

Explanation:

The amount of money Tracey puts down for the car = $0

The amount Tracey pays each month for the lease the car = $209.15

The number of years Tracey leases the car = 2 years

The amount at which Tracey can buy the car at the end of the lease, Pp = $11,000

The selling price of the car today = $13,500

The total amount Tracey pays while leasing the car for two years, L = $209.15/month × 2 years × 12 months/year = $5,019.6

The total cost of the car if Tracey buys it at the end of the lease, C = Pp + L

∴ C = $11,000 + $5,019.6 = $16,019.6

The total cost of the car if Tracey buys it at the end of the lease, C = $16,019.6.

6 0
3 years ago
The following information is available for Carla Corporation for 2019 (its first year of operations).
Anastasy [175]

Answer:

The calculations and journal entries are shown below:

Explanation:

The computations are shown below:

a. The taxable income is

Pretax financial income  $302,100

Less: Excess of tax depreciation over book depreciation -$43,800

Add: Rent received in advance deferred for book purposes $18,100

Taxable income $276,400

b.  The journal entry is shown below:

Income tax expense $60,420  

Deferred tax asset (20% × $18,100) $3,620

           To Income tax payable (20% × $276,400) $55,280

           To Deferred tax liability (20% × $43,800) $8,760

(Being the income tax expense, deferred income taxes, and income taxes payable for 2019 is recorded)

c.  The journal entry is shown below:

Income tax expense $63,270  

Deferred tax liability ($8760 ÷ 4 years) $2,190  

         To Income tax payable (20% × $309,200)  $61,840

         To Deferred tax asset (20% × $18,100) $3,620

(Being the income tax expense, deferred income taxes, and income taxes payable for 20 is recorded)

5 0
3 years ago
Menlove Corporation has provided the following cost data for last year when 100,000 units were produced and sold:
Nezavi [6.7K]

Answer:

Net operating income= $405,000

Explanation:

<u>First, we need to calculate the unitary variable cost:</u>

Total variable cost= 650,000 - 100,000 - 100,000= $450,000

Unitary variable cost= 450,000 / 100,000

Unitary variable cost= $4.5

Total fixed cost= 100,000 + 100,000= $200,000

<u>Now, the net operating income for 110,000 units:</u>

<u />

Sales= 10*110,000= 1,100,000

Total variable cost= 110,000*4.5= (495,000)

Total contribution margin= 605,000

Total fixed cost= 200,000

Net operating income= $405,000

3 0
3 years ago
$26 per share is the current price for Foster Farms' stock. The dividend is projected to increase at a constant rate of 7.00% pe
ladessa [460]

Answer:

33.94%

Explanation:

The computation of stock's expected price 5 years is shown below:-

Stock price = $26

Required return = 12%

Growth rate = 7%

Current dividend per share = Stock price × (Required return - Growth rate) ÷ (1 + Growth rate)

= $26 × (12% - 7%) ÷ (1 + 7%)

= $26 × 5% ÷ 1.07

= $1.21

Stock price in 5 years = Expected dividend ÷ (required return - Growth rate)

Expected dividend = $1.21 × (1 + 7%)^5

= $1.21 × 1.402551731

= $1.697

Stock price in 5 years = $1.697 ÷ (12% - 7%)

= $1.697 ÷ 5%

= 33.94%

8 0
3 years ago
Fixed overhead was budgeted at $200,000, and 25,000 direct labor hours were budgeted. If the fixed overhead volume variance was
Liono4ka [1.6K]

Answer:

$208,000

Explanation:

Calculation for fixed overhead applied

Using this formula

Fixed overhead applied =Budgeted Fixed overhead+Fixed overhead volume variance

Let plug in the formula

Fixed overhead applied =$200,000+$8,000

Fixed overhead applied=$208,000

Therefore Fixed overhead applied must be $208,000

3 0
3 years ago
Other questions:
  • Packages arrive at a facility at a rate of 30 per hour and are processed continuously at a rate of 25 per hour. The facility is
    8·1 answer
  • Financial assets Group of answer choices
    10·1 answer
  • The group of accounting educators who perform research to determine the possible effects on financial reporting and the economy,
    5·1 answer
  • A code used to identify and authenticate a person or organization sending data over a network
    15·1 answer
  • Which of the following is not a reason that the subject line should never be left blank
    14·2 answers
  • A firm's strategic choices and leadership approaches need to: a. be rigid and concrete to be effective. b. adapt and change to r
    11·1 answer
  • Bob, the owner of Orthopedic Supply, just discovered that his trusted friend Ruth, his accountant for over 30 years, has been mi
    9·1 answer
  • An economy has three sectors producing products:
    12·1 answer
  • You work for a Europe-based company that is interested in doing business internationally. As a top manager of the firm, you want
    13·1 answer
  • Jeff wants to ship a small order to his friend he places to order by phone and his package is delivered the same day which wareh
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!