Management anticipates fixed costs

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Reference no: EM13841303

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1. Atlanta Co. expects to sell 5,903 units of its product at $32 per unit. Pretax income is predicted to be $8,235. If the variable costs per unit are $13, total fixed costs must be: Answer to nearest whole dollar without any commas or decimal points eg. 1000 not 1,000.00 Enter a negative number as -10 not (10)

Note: 

Note: Pretax Income = Revenue - variable costs - fixed costs

Therefore, fixed costs = revenue - variable costs - pretax income

Contribution margin = Revenue (price x units) - variable costs

2. Management anticipates fixed costs of $7,503 and variable costs equal to 43% of sales. What will pretax income equal if sales are $23,999? Answer to nearest whole dollar without any commas or decimal points eg. 1000 not 1,000.00 Enter a negative number as -10 not (10).

Note: pretax income = sales - fixed cost - variable costs

3. Star Company's product sells at $64 per unit and has a $37 per unit variable cost. The company's total fixed costs are $12,391. The contribution margin per unit is: Answer to nearest whole dollar without any commas or decimal points eg. 1000 not 1,000.00 Enter a negative number as -10 not (10)

  • Note: contribution margin per unit = selling price per unti - variable costs per unit
  • 4. Arkansas  Co. has total fixed costs of $14,044 and a contribution margin ratio of 39%. Assume that an additional advertising expenditure of $3,627 would increase sales by $9,045. The company wants to know if they should spend this additional amount on advertising. What would be the net increase or decrease in income if they make the additional expenditure? Answer to nearest whole dollar without any commas or decimal points eg. 1000 not 1,000.00 Enter a negative number as -10 not (10). Indicate an increase as a positive number and a decrease as a negative number.

Note: increase in sale x contribution margin ratio = increase in contribution margin

  • increase in contribution margin - increase in advertising costs = increase in income
  • 5. Bongo produces specialty logo cups for a variety of customers. Selected cost data for Bongo's follows: direct materials cost $1,766; sales commissions, $222; depreciation on equipment, $2,717; factory labor, $6,449; factory lease, $4,407. If Bongo's sells 2,763 cups at an average price of $7 for each cup, what is the company's contribution margin? Answer to nearest whole dollar without any commas or decimal points eg. 1000 not 1,000.00 Enter a negative number as -10 not (10).

Note: sale less variable costs = contribution margin

6. Costs for Robot Inc. follow:

Production costs can be expressed as Y=$29,100 + $65X

 

Selling and administrative costs are expressed as Y=$7,719 + $3X

If sales revenue per unit is $215 and 634 units are sold, what is the income for Robot Inc.? Answer to nearest whole dollar without any commas or decimal points eg. 1000 not 1,000.00 Enter a negative number as -10 not (10).

 

7. Copy of Costs for Robot Inc. follow:

Production costs can be expressed as Y=$26,522 + $87X

 

Selling and administrative costs are expressed as Y=$5,941 + $5X

If sales revenue per unit is $208 and 598 units are sold, what is the contribution margin for Robot Inc.? Answer to nearest whole dollar without any commas or decimal points eg. 1000 not 1,000.00 Enter a negative number as -10 not (10).

Reference no: EM13841303

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Management anticipates fixed costs : 1. Atlanta Co. expects to sell 5,903 units of its product at $32 per unit. Pretax income is predicted to be $8,235. If the variable costs per unit are $13, total fixed costs must be: Answer to nearest whole dollar without any commas or decimal points..
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