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Eva8 [605]
3 years ago
5

Sheridan Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports G

ear. Sheridan incurs $7215000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. The break-even point in dollars is
a. $18037500.
b. $19500000.
c. $2669550.
d. $16779070.
Business
2 answers:
BigorU [14]3 years ago
7 0

Answer:

b. $19500000.

Explanation:

Break-even point is the level of sales on which business has no profit no loss situation. The business only covers the variable and fixed cost at this point.

Total Contribution can be determined by calculating adding estimated contribution of each division.

Total Contribution ratio = (65% x 30%) + (35% x 50%) = 19.5% + 17.5% = 37%

Fixed cost = $7,215,000

Break-even point = Fixed cost / Contribution margin ratio = $7,215,000 / 37% = $19,500,000

Rama09 [41]3 years ago
7 0

Answer:

The break even in dollars is $19500000 and option B is the correct answer.

Explanation:

The break even point in dollars is the amount of revenue where total revenue equals total cost. It is the amount of revenue which produces no profit or no loss. The break even in dollars is calculated by dividing the fixed cost by the weighted average contribution margin ratio.

Break even in dollars = Fixed costs / Weighted average contribution margin ratio

Weighted average contribution margin ratio is the contribution margin ratio of each products multiplied by the products weight in the sales mix.

Weighted average contribution margin ratio = Weight in sales mix of Product A * contribution margin ratio of product A + Weight in sales mix of Product B * Contribution margin ratio of Product B

Weighted average contribution margin ratio = 0.65 * 0.3 + 0.35 * 0.5  = 0.37

Break even in dollars = 7215000 / 0.37

Break even in dollars = $19500000

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Bartosiewicz Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 3,100 client-visits,
Degger [83]

Answer:

$354 Favorable

Explanation:

Net Operating Income in Planned budget = Revenue - Total Expense

Net Operating Income in Planned budget = (3,100*$35.10) - (3,100*$17.40 + $44,400)

Net Operating Income in Planned budget = $108,810 - $98,340

Net Operating Income in Planned budget = $10,470

Net Operating Income in Flexible budget = Revenue - Total Expense

Net Operating Income in Flexible budget = (3,080*$35.10) - (3,080*$17.40 + $44,400)

Net Operating Income in Flexible budget = $108,108 - $97,992

Net Operating Income in Flexible budget = $10,116

Activity variance for net operating income = Net Operating Income in Planned budget - Net Operating Income in Flexible budget

Activity variance for net operating income = $10,470 - $10,116

Activity variance for net operating income = $354 Favorable

7 0
3 years ago
he St. Augustine Corporation originally budgeted for $360,000 of fixed overhead at 100% normal production capacity. Production w
OLga [1]

Answer:

$9000 (unfavorable).

Explanation:

Given: Budgeted fixed overhead= $360000.

          Actual fixed overhead=$ 360000.

          Actual production= 11,700 units.

         The variable overhead rate was $3 per hour.

         The standard hours for production were 5 hours per unit.

The fixed factory overhead volume variance is difference between actual production volume and budgeted production. It help in measuring the effecient use of fixed resources. It is termed as favourable if actual fixed overhead exceed the budgeted amount, however, it is unfavorable if the actual fixed overhead is less than budgeted amount.  

Now, lets calculate the Actual fixed overhead cost.

Actual fixed overhead cost= \textrm{actual fixed overhead}\times \frac{Actual\ production}{Budgeted\ production}

∴ Actual fixed overhead cost= \$ 360000\times \frac{11700}{12000} = \$ 351000.

Actual fixed overhead cost= $351000.

Next calculating the fixed factory overhead volume variance.

The fixed factory overhead volume variance= \textrm{Actual fixed overhead cost}-\textrm{budgeted fixed overhead}

We know, Budgeted fixed overhead= $360000 and Actual fixed overhead cost= $351000

∴ The fixed factory overhead volume variance= \$351000-\$360000= \$ 9000 (unfavorable)

The fixed factory overhead volume variance= $9000 (unfavorable)

6 0
3 years ago
At the end of the current year, Accounts Receivable has a balance of $590,000; Allowance for Doubtful Accounts has a debit balan
denpristay [2]

Answer and Explanation:

a. The computation of uncollectible accounts and Journal entry is shown below:-

Bad Debt expenses Dr, $6,650

($2,660,000 × 1 ÷ 4× 1%)

       To Allowance for doubtful accounts $6,650

(Being uncollectible accounts is recorded)

b. The computation of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense is shown below:-

Accounts receivable = $590,000

Allowance for Doubtful Accounts = (Sales of the year × 1 ÷ 4 × 1%) - Credit balance

= ($2,660,000 × 1 ÷ 4 × 1%) - $5,500

= $6,650 - $5,500

= $1,150

Bad debt expenses = Sales of the year × 1 ÷ 4 × 1%

= $2,660,000 × 1 ÷ 4 × 1%

= $6,650

c. The computation of net realizable value of accounts receivable is shown below:-

Net realizable value = Accounts receivable - Allowance for Doubtful Accounts

= $590,000 - $1,150

= $588,850

6 0
3 years ago
How does price discrimination help cover fixed costs?
Svetradugi [14.3K]
For the case of a consumer with an inelastic demand curve, it is less costly to cater for them, hence reducing the production fixed cost. given that different customers will be charged differently for the same product, it is easy to cover for a low profit range.
3 0
3 years ago
Suppose the wholesale market for corn is a perfectly competitive market, and all firms in the corn industry are profit-maximizin
Ainat [17]

Answer:

Therefore option A is correct.

All firms selling corn must have the same MC regardless of each firms cost structure

Explanation:

In the perfectly competitive market, for profit maximization we set P = MC

In the perfectly competitive market, firms are price taker so demand curve is same for every firm and price is same too, so MC must be same for every firm

Therefore option A is correct ie. all firms selling corn must have the same MC regardless of each firms cost structure.

7 0
3 years ago
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