1. QuizJadara Inc. makes travel bags that sell for $56 each. For the coming year, managementexpects fixed costs to total $320,000 and variable cost to be $42 per unit. Compute thefollowing before change and after change on Break Even Point:1- The price increase in raw materials which include travel bags expect the variable costincrease $3 to be $45.2- The company want to enter new machine to improve the product (travel bags) &expect this machine increase fixed cost about $30000 to be $350000 with remain salesprice & variable cost per unit not change.3- The sales price increase $4 to be $60 with remain variable cost per unit and fixed costnot change.

Break Even Point :— Break Even Point is the Volume of production or sales where there is no Profit…

1. Quiz Jadara Inc. makes travel bags that sell for $56 each. For the coming year, management expects fixed costs to total $320,000 and variable cost to be $42 per unit. Compute the following before change and after change on Break Even Point: The price increase in raw materials which include travel bags expect the variable cost increase $3 to be $45. 1- 2- The company want to enter new machine to improve the product (travel bags) & expect this machine increase fixed cost about $30000 to be $350000 with remain sales price & variable cost per unit not change. 3- The sales price increase $4 to be $60 with remain variable cost per unit and fixed cost not change.

1. Quiz Jadara Inc. makes travel bags that sell for $56 each. For the coming year, management expects fixed costs to total $320,000 and variable cost to be $42 per unit. Compute the following before change and after change on Break Even Point: The price increase in raw materials which include travel bags expect the variable cost increase $3 to be $45. 1- 2- The company want to enter new machine to improve the product (travel bags) & expect this machine increase fixed cost about $30000 to be $350000 with remain sales price & variable cost per unit not change. 3- The sales price increase $4 to be $60 with remain variable cost per unit and fixed cost not change.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2CE

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Katayama Company produces a variety of products. One division makes neoprene wetsuits. The divisions projected income statement for the coming year is as follows: Required: 1. Compute the contribution margin per unit, and calculate the break-even point in units. Repeat, using the contribution margin ratio. 2. The divisional manager has decided to increase the advertising budget by 140,000 and cut the average selling price to 200. These actions will increase sales revenues by 1 million. Will this improve the divisions financial situation? Prepare a new income statement to support your answer. 3. Suppose sales revenues exceed the estimated amount on the income statement by 612,000. Without preparing a new income statement, determine by how much profits are underestimated. 4. How many units must be sold to earn an after-tax profit of 1.254 million? Assume a tax rate of 34 percent. (Round your answer up to the next whole unit.) 5. Compute the margin of safety in dollars based on the given income statement. 6. Compute the operating leverage based on the given income statement. (Round to three significant digits.) If sales revenues are 20 percent greater than expected, what is the percentage increase in profits?
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