### Variable selling & administrative costs

Assignment Help Cost Accounting
##### Reference no: EM13921755

Problem - I

Reavis Company prepared the following income statement for 2012:

REAVIS COMPANY

Income Statement

For the Year Ended December 31, 2012
_________________________________________________________
Sales (20,000 units) ....................................... \$600,000
Variable expenses .......................................... 360,000
Contributio..................................................... 240,000
Fixed expenses ............................................. 180,000
Net income ................................................... \$ 60,000

Instructions

What is the company's break-even point in units?

Cuál es el punto de empate en unidades?

How many more units would the company have had to sell to earn net income of \$90,000 in 2012?

Cuántas unidades adicionales tiene que vender la compañía para obtener una ganancia de \$90,000 en el 2012?

If the company expects a 25% increase in sales volume in 2013, what would be the expected net income in 2013?

Si la compañia espera un aumento de 25% en el volumen de ventas en el 2013, cuál sería la ganancia esperada para el2013?

How much sales dollars would the company have to generate in order to earn a target net income of \$110,000 in 2013?

Cuántas ventas en dólares tiene que generar la compañía para obtener una ganancia de \$110,000 en el 2013?

Problem I - Solution - Cost-Volume-Profit

1

2

3

4

5

Problem II

ROMALY Company bottles and distributes Frapes, a flavored summer beverage.

The beverage is sold for \$1.50 per 8-ounce bottle to retailers. Management estimates the following revenues and costs at 100% of capacity.

Net sales

\$3,150,000

Selling expenses-variable

\$110,000

Direct materials

600,000

Selling expenses-fixed

90,000

Direct labor
500,000

100,000

580,000

80,000

310,000

Instructions

How much is net income for the year using the CVP approach?

Cuánto es la ganancia neta para el año usando el formato de CVP?

How much is the contribution margin ratio?

Cuánto es el % de Margen de Contribución?

Compute the break-even point units and dollars.

Compute el punto de empate en unidades y en dólares?

Solution to Problem II - ROMALY Company

A

VARIABLE COSTING INCOME STATEMENT

Dollars

Per Unit

\$

\$

\$

\$

\$

B

BEP in units:

BEP in dollars:

C

Contribution Margin Ratio:

Problem III

MACARY Music, Inc. produces a hip-hop CD that is sold for \$15. The contribution margin ratio is 30%.

Fixed expenses total \$6,750.

Instructions

A. Compute the variable cost per unit.

Compute el costo variable por unidad?

B. Compute how many CDs that MARCARIE will have to sell in order to break even.

Compute cuántas unidades de CDs MARCARIE tiene que vender para salir empate (sin ganancias ni pérdidas)?

Compute how many CDs that MARCARIE will have to sell in order to make a target net income of \$16,200.

Compute cuántos CDs MARCARIE tiene que vender para obtener una ganancia de \$16,200?

Solution to Problem III - MARCARY Music, Inc.

A.

B.

C.

Chapter 6 - Apendice - Absorption and Variable Costing

Problem IV - Ex. 102

Momentum Bikes manufactures a basic road bicycle. Production and sales data for the most recent year are as follows (no beginning inventory):

Variable production costs \$90 per bike

Fixed production costs \$450,000

Variable selling & administrative costs \$22 per bike

Fixed selling & administrative costs \$500,000

Selling price \$200 per bike

Production 20,000 bikes

Sales 17,000 bikes

Instructions

Prepare a brief income statement using variable costing.

Prepare un Estado de Ingresos simple usando el formato de costo variable?

Solution Problema IV - Ex. 102

a. Income Statement variable costing.

Problema - V - Incremental Analysis

Anheiser has three divisions: Bud, Wise, and Er. The results of May, 2010 are presented below:

Bud

Wise

Er

Total

Units sold

3,000

5,000

2,000

10,000

Revenue

\$70,000

\$50,000

\$40,000

\$160,000

Less variable costs

32,000

26,000

16,000

74,000

Less direct fixed costs

14,000

19,000

12,000

45,000

Less allocated fixed costs

6,000

10,000

4,000

20,000

Net income

\$18,000

(\$5,000)

\$ 8,000

\$21,000

All of the allocated costs will continue even if a division is discontinued.

Anheiser allocates indirect fixed costs based on the

number of units to be sold. Since the Wise division has a net loss,

Anheiser feels that it should be discontinued. Anheiser feels

if the division is closed, that sales at the Bud division will increase by 20%, and that sales at the Er division will stay the same.

Instructions

Prepare an analysis showing the effect of discontinuing the Wise division.

Prepare un análisis demostrando el efecto de descontinuar la división Wise.

Should Anheiser close the Wise division? Briefly indicate why or why not.

Debe Anheiser cerrar la division Wise? Explique brevemente porqué o porqué no.

Problem - V - Incremental Analysis

A.

Bud

Wise

Er

Calculations

Revenue =

Variable costs =

Allocation of total allocated fixed costs:

To Bud =

To Er =

B.

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