Reference no: EM13503537

Problem 1:

Glacial Company estimates that variable costs will be60% of sales, and fixed costs will total $926,000. The selling price of the product is $5.
Compute the break-even point in (1) units and (2) dollars.

(1) Break-even sales units

(2) Break-even sales $

Compute the margin of safety in (1) dollars and (2) as a ratio, assuming actual sales are $2,930,380.(Round ratio to 0 decimal places, e.g. 20%.)

(1) Margin of safety $
(2) Margin of safety ratio %

Problem 2:

Telly Savalas owns the Bonita Barber Shop. He employs6barbers and pays each a base rate of $1,300per month. One of the barbers serves as the manager and receives an extra $520per month. In addition to the base rate, each barber also receives a commission of $5.90per haircut.

Other costs are as follows.

Telly currently charges $11.70per haircut.

Determine the variable cost per haircut and the total monthly fixed costs.(Round variable costs to 2 decimal places, e.g. 2.25.)

Total variable cost per haircut $
Total fixed $

Compute the break-even point in units and dollars.(Round answers to 0 decimal places, e.g. 1,225.)

Break-even point haircuts
Break-even point $

Determine net income, assuming2,370haircuts are given in a month.

Net income $

Problem 3:

Dousmann Corp.'s sales slumped badly in 2014. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling618,000units of product: sales $2,472,000; total costs and expenses $2,616,200; and net loss $144,200. Costs and expenses consisted of the amounts shown below.

.

Management is considering the following independent alternatives for 2015.

1. Increase unit selling price24% with no change in costs, expenses, and sales volume.

2. Change the compensation of salespersons from fixed annual salaries totaling $154,500to total salaries of $61,800plus a6% commission on sales.

(a) Compute the break-even point in dollars for 2014.(Round final answer to 0 decimal places, e.g. 1,225.)

(b)Compute the contribution margin under each of the alternative courses of action.(Round final answer to 0 decimal places, e.g. 1,225.)

Contribution margin for alternative 1 %
Contribution margin for alternative 2 %

Compute the break-even point in dollars under each of the alternative courses of action.(Round selling price per unit to 2 decimal places, e.g. 5.25 and other calculations to 0 decimal places, e.g. 20% and also final answer to 0 decimal places, e.g. 1,225.)

Break-even point for alternative 1 $
Break-even point for alternative 2 $

Which course of action do you recommend?Alternative 1Alternative 2

Problem 4:

The Green Acres Inn is trying to determine its break-even point. The inn has 50 rooms that it rents at $75a night. Operating costs are as follows.

Determine the inn's break-even point in (1) number of rented rooms per month and (2) dollars.
(1) Break-even point rooms
(2) Break-even point $

Problem 5:

Kare Kars provides shuttle service between four hotels near a medical center and an international airport. Kare Kars uses two 10-passenger vans to offer 12 round trips per day. A recent month's activity in the form of a cost-volume-profit income statement is shown below.

(a) Calculate the break-even point in (1) dollars and (2) number of fares.

(1) Break-even point $

(2) Break-even point fares

(b) Without calculations, determine the contribution margin at the break-even point.