Questions of cvp

Assignment Help Managerial Accounting
Reference no: EM1349417

1. The rapid meal has two restaurants that are open 24 hours. Fixed costs for the two restaurants together total $450,000 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $8.00. The average cost of food and other variable costs for each customer is $3.20. The income tax rate is 30%. Target net income is $105,000.

1. Compute the revenues needed to earn the target net income.

2. How many customers are needed to break even? To earn net income of $105,000?

3. Compute net income if the number of customers is 150,000.

2. Color Rugs is holding a two-week carpet sale at Jerry's club, a local warehouse store. Color Rugs plans to sell carpets for $500 each. The company will purchase the carpets from a local distributor for $350 each, with the privilege of returning any unsold units for a full refund. Jerry's club has offered Color Rugs two payment alternatives for the use of space.
Option 1: A fixed payment of $5,000 for the sale period
Option 2: 10% of total revenue earned during the sale period
Assume color rugs will incur no other costs.

1. Calculate the breakeven point in units for (a) option 1 and (b) option 2

2. At what level of revenues will Color Rugs earn the same operating income under either option?

a. For what range of unit sales will color rugs prefer option 1?
b. For what range of unit sales will Color rugs prefer option 2?

3. Calculate the degree of operative leverage at sales of 100 units for the two rental options.

4. Briefly explain and interpret your answer to requirement 4.

Reference no: EM1349417

Questions Cloud

Explain the resort''s objective is to maximize long-term : Explain The resort's objective is to maximize long-term profits by attracting repeat and new customers. Should they price their services separately or bundle them
Question on net cost of call premium : Buchanan Corp. is refunding $12 million worth of 10% debt. The corporation's tax rate is 35%. The call premium is 9%. What is the net cost of the call premium? Please show ALL work of how the answer was composed.
Find the original speed of the bullet : A 7 g bullet collides horizonally with a 43 g block resting on a frictionless horizontal surface as shown in the accompany diagram. The bullet remain embedded in the block and subsequently causes the block to slide down a frictionless slope onto a..
Find the price for imm : Underwood Industries just paid a dividend of $1.45 each share. The dividends are expected to grow at 25 percent rate for the next eight years and then level off to a 7 percent growth rate indefinitely.
Questions of cvp : The rapid meal has two restaurants that are open 24 hours. Fixed costs for the two restaurants together total $450,000 per year. Service varies from a cup of coffee to full meals.
Organizational change - how would the scope of change : Organizational Change - How would the scope of change ? unit, department, or entire organizationâ?"alter the allocation of resources?
Explaining final results in cell to a percentage : Second quarter revenue total has increased from first quarter revenue total by 60.16%. Make sure to change cell format for final results in the cell to a percentage.
Morals-values-ethics of forensic psychology : Analyze the role of personal ethics by explaining their role and importance to you as a forensic psychology professional.
How many electrons does this represent : A frictionless block of mass 1.95 is attached to an ideal spring with force constant 340 . At the spring is neither stretched nor compressed and the block is moving in negative direction at a speed of 12.6.

Reviews

Write a Review

 

Managerial Accounting Questions & Answers

  What is full costing

What is full costing? Define and compare job order costing and activity-based costing.

  Budget constraints in two period model

Explain how the budget constraint of househould in two-period model is affected by each of the following changes. In each case, do you think the household is better off or worst off or is the answer ambiguous?

  Sharing of non-private demographic information

Your supervisor recently instituted a plan that encourages her managers to share non-private demographic characteristics voluntarily provided by those who purchase your firm's final product.

  Discuss the management and risk at each level

Discuss how the management and risk at each level of the corporation is brought together into a comprehensive risk management program.

  Prepare general journal entries in general journal form

Prepare general journal entries in general journal form

  Examining the cvp

Please give a 4-6 page with references about the information attached. This information will be employed as informative guidance to assist me completing the work prescribed. In particular analyzing and explaining financials.

  Determining cost of goods manufactured and sold

The following information pertains to pandey manufacturing company for March 2012. Assume actual overhead equaled applied overhead.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Marginal analysis for optimal decisions

Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing air problem in its mines.

  Budget variance analysis

Assume that for the second quarter in row, profits are down at Waterfall division. Division Management budgeted $250,000 in profits for the second quarter but actual results were only $197,000 in profits.

  Three planned promotion displays

Home Auto has not yet purchased any of the promotion items for next week. Should management substitute the Armadillo car wax for one of the three planned promotion displays? If so, which one?

  Cost volume profit of procter and gamble company

Procter & Gamble Company is a Cincinnati-based company that produces household products under brand names such as Gillette, Bounty, Crest, Folgers, and Tide. The company's 2006 income statement showed the following (in millions):

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd