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Verdich [7]
3 years ago
14

In 2019, Wildhorse Company had a break-even point of $244,000 based on a selling price of $5 per unit and fixed costs of $97,600

. In 2020, the selling price and the variable costs per unit did not change, but the break-even point increased to $442,000.
Compute the variable costs per unit and the contribution margin ratio for 2019. (Round Variable cost per unit to 2 decimal places, e.g. 2.25 and Contribution margin ratio to 0 decimal places, e.g. 20.)
Business
1 answer:
Luden [163]3 years ago
7 0

Answer:

unitary variable cost= $3

contribution margin ratio= 0.4

Explanation:

Giving the following information:

break-even point= $244,000

the selling price= $5 per unit

Fixed costs of $97,600.

First, we need to calculate the contribution margin ratio, we will use the following formula:

Break-even point (dollars)= fixed costs/ contribution margin ratio

244,000= 97,600/contribution margin ratio

contribution margin ratio= 97,600/244,000

contribution margin ratio= 0.4

Now, we can calculate the unitary variable cost:

contribution margin ratio= (selling price - unitary variable cost)/seling price

0.4= (5 - unitary variable cost)/5

2= 5 -unitary variable cost

unitary variable cost= 3

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Three different companies each purchased trucks on January 1, 2018, for $56,000. Each truck was expected to last four years or 2
katrin2010 [14]

Answer:

1. Company A, Retained earnings = $32,000

2. Company B, Retained earnings = $42.000

3. Company C, Retained earnings = $30,024

Explanation:

Requirement 1

<em>Company A</em> = Straight-line depreciation method

We know, Depreciation expense under straight-line depreciation method = (Purchase value of truck - Salvage value) ÷ useful life.

Depreciation expense = ($56,000 - $4,000) ÷ 4

Depreciation expense = $13,000

We know that under straight-line depreciation method, depreciation expense remains same in each year. That means, 2021 depreciation expense = $13,000

Net Income in 2021 = Total revenue - Depreciation expense (assume there is no other expenses)

Net Income in 2021 = $45,000 - $13,000 = $32,000

Therefore, Retained earnings = Beginning retained earnings of 2021 + net income - dividend. (Assume there is no dividend and beginning retained earnings).

Retained earnings = 0 + $32,000 - 0 = $32,000

Requirement 2

<em>Company B</em> = Double-declining depreciation method

We know, Depreciation expense under straight-line depreciation method = (Purchase value of truck ÷ useful life) × 2.

Depreciation expense = ($56,000 ÷ 4) × 2.

Depreciation expense for 2018 = $28,000

We know that under double-declining depreciation method, depreciation expense changes in each year. Therefore, we have to calculate 2019-2021 depreciation expense.

2019 depreciation expense = ($56,000 - 28,000) × 2/4

2019 depreciation expense = $28,000 × 2/4 = $14,000

Book value of truck = $28,000 - $14,000 = $14,000

2020 depreciation expense = $14,000 × 2/4 = $7,000

2021 depreciation expense = $(14,000 - $7,000) × 2/4 = $3,500.

As it is higher than the salvage value, we have to take <em>$3,000 as depreciation expense for 2021</em>. The calculation has been given below:

Total Accumulated depreciation = $28,000 + $14,000 + $7,000 + $3,500 = $52,500

Cost price = $56,000

Salvage value = $4,000

Therefore, book value = $56,000 - $52,500 = $3,500. It exceeds the salvage value, therefore, we have to deduct 500 to keep the expense same.

Net Income in 2021 = Total revenue - Depreciation expense (assume there is no other expenses)

Net Income in 2021 = $45,000 - $3,000 = $42,000

Therefore, Retained earnings = Beginning retained earnings of 2021 + net income - dividend. (Assume there is no dividend and beginning retained earnings).

Retained earnings = 0 + $42,000 - 0 = $42,000

Requirement 3

<em>Company C</em> = units-of-production depreciation method

We know, Depreciation expense rate under units-of-production depreciation method = (Purchase value of truck - Salvage value) ÷ useful usage.

Depreciation expense rate = ($56,000 - $4,000) ÷ 250,000

Depreciation expense rate = $0.208

Depreciation expense for 2021 = $0.208 × 72,000 miles = $14,976

Net Income in 2021 = Total revenue - Depreciation expense (assume there is no other expenses)

Net Income in 2021 = $45,000 - $14,976 = $30,024

Therefore, Retained earnings = Beginning retained earnings of 2021 + net income - dividend. (Assume there is no dividend and beginning retained earnings).

Retained earnings = 0 + $30,024 - 0 = $30,024

3 0
3 years ago
Anthony Inc. reported net income of $270,000. Beginning balances in Accounts Receivable and Accounts Payable were $17,000 and $2
Natalka [10]

Answer:

$268,500

Explanation:

When you use the indirect method to calculate net cash flows, you start with net income and then adjust it by:

  • adding the amount by which accounts receivable decreased = ($17,000 - $10,500) = $6,500
  • deducting the amount by which accounts payable increases = ($21,000 - $29,000) = -$8,000

net cash flow from operating activities = $270,000 + $6,500 - $8,000 = $268,500

3 0
3 years ago
When a certain portion of the end product must consist of domestically produced goods or that a certain portion of the final cos
Kamila [148]

Answer:

Local Content Requirements

Explanation:

Local content requirements are policies used by both developing countries and developed countries aiming at promoting the use of local inputs and fostering growth of domestic industries. It requires that a certain agreed upon percentage of intermediate goods or inputs used in the production process be gotten from local or domestic manufacturers.

Government imposes these local content requirements in order for foreign companies to be able to operate in their economy. When it is done properly, there's usually increases in the aspect of local employment with industrial and technological growth of the local manufacturers.

5 0
3 years ago
Assume that output was 1,000 units in January and 3,500 units in February, utility cost is a mixed cost, and the fixed cost of u
kiruha [24]

Answer:

$0.60

Explanation:

Missing Information: Table is missing, hence, attached with the answer.

Variable cost = Total utilities cost - Fixed cost

                      = $2,600 - $2,000

                      = $600

Variable rate per unit = Variable cost ÷ No. of units produced

                                    = $600 ÷ 1000

                                    = 0.6

Thus, variable rate per unit of output for utilities cost is $0.60.

6 0
3 years ago
Which of the below statements is inaccurate?
Nataliya [291]
Answer c is the most inaccurate
3 0
3 years ago
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