The crossover point is that production quantity where total costs for one process equal total costs for another process. Hence, option D is correct.
<h3>What is crossover point?</h3>
Financial independence is secured when investment income exceeds regular income. In financial jargon, this is known as the "cross over point."
When the production expenses for one product are the same as those for another product, there is an added benefit to selling any product because the cost is the same and the income will be higher from each unit, independent of the number of units sold.
Thus, option D is correct.
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All options are missing firm the question-
a. variable costs of one process equal the variable costs of another process.
b. fixed costs of a process are equal to its variable costs.
c. total costs equal total revenues for a process.
d. total costs for one process equal total costs for another process.
e. the process no longer loses money.
Answer:
Madison Corporation
The contribution margin per composite unit for the current sales mix is:
= $26.
Explanation:
a) Data and Calculations:
Products M N O
Current sales mix 3 1 2
Unit sales price $16 $11 $13
Unit variable costs 10 9 10
Unit contribution $6 $2 $3
Contribution margin per
composite unit $18 $2 $6
= ($6 * 3) ($2 * 1) ($3 * 2)
b) The contribution margin per composite unit is computed as the addition of the contribution margin per composite unit for each product. Each product's contribution margin per composite unit is calculated as the contribution per unit multiplied by the sales mix for each product.
<u>Solution:</u>
The price per variable unit is set at 1.5 times the cost; the VC / unit is estimated at $2.50.
Price = 2.5 * 2.50 = $6.25
Variable cost = $2.50
Fixed cost = $220,000
Break-Even Volume = Fixed cost / (Price - Variable cost)
= $220.000 / (6.25 - 2.50)
Break-Even Volume = 58,667 units
Answer and Explanation:
The preparation of the cash budget for the month of March ended is presented below:
Cash Budget
Particulars Amount ($)
Opening Cash Balance 72,000
Add: Cash Receipts from Sales 300,000
Total Cash Available 372,000
Less:
Cash Payments
Purchases 140,000
Salaries 80,000
Cash Expenses 45,000
Repayment of Bank Loan 20,000
Total Payments -285,000
Closing Cash Balance 87,000
We simply deduct the all payments from the total cash available so that the ending balance of cash could come
Answer and Explanation:
The computation of the depreciation expense for 2017 and 2018 under the following methods
a. Straight-line method
= (Purchase cost - residual value) ÷ (estimated life)
= ($400,000 - $100,000) ÷ (5 years)
= $60,000
Since the depreciation expense under this method would remain the same for the remaining useful life
So for 2017 and 2018, the depreciation expense i.e. $60,000 would be charged every year.
b. Under the sum-of-the-year-digits method
For 2017,
= ($400,000 - $100,000) × 5 years ÷ ( 5 + 4 + 3 + 2 + 1)
= $300,000 × 5 years ÷ 15 years
= $100,000
For 2018, the book value is
= $400,000 - $100,000
The $100,000 is the depreciation expense of 2017 year
= $300,000 × 4 ÷ 15
= $80,000
