If the Lumber Division sells to the Construction Division, $0.35 per board foot can be saved in shipping costs. If the Lumber Division has sufficient excess capacity to fulfill the Construction Division's needs, what will be the effect on th company's overall contribution margin? O Decrease by $30000 O Decrease by $84000 Increase by $156000
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- Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each of the following costs, identify the cost graph that best illustrates its cost behavior as the number of units produced increases: A. Total direct materials cost B. Electricity costs of 1,000 per month plus 0.10 per kilowatt-hour C. Per-unit cost of straight-line depreciation on factory equipment D. Salary of quality control supervisor, 20,000 per month E. Per-unit direct labor costKatayama 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?Aldovar Company produces a variety of chemicals. One division makes reagents for laboratories. The divisions projected income statement for the coming year is: Required: 1. Compute the contribution margin per unit, and calculate the break-even point in units. (Note: Round answer to the nearest unit.) Calculate the contribution margin ratio and use it to calculate the break-even sales revenue. (Note: Round contribution margin ratio to four decimal places, and round the break-even sales revenue to the nearest dollar.) 2. The divisional manager has decided to increase the advertising budget by 250,000. This will increase sales revenues by 1 million. By how much will operating income increase or decrease as a result of this action? 3. Suppose sales revenues exceed the estimated amount on the income statement by 1,500,000. Without preparing a new income statement, by how much are profits underestimated? 4. Compute the margin of safety based on the original income statement. 5. Compute the degree of operating leverage based on the original income statement. If sales revenues are 8% greater than expected, what is the percentage increase in operating income? (Note: Round operating leverage to two decimal places.)
- Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects to sell 28,700 units at 32 each. Kallings controller provided the following information for the coming year: Required: 1. Calculate the cost of one unit of product under absorption costing. 2. Calculate the cost of one unit of product under variable costing. 3. Calculate operating income under absorption costing for next year. 4. Calculate operating income under variable costing for next year.Variable-Costing and Absorption-Costing Income Borques Company produces and sells wooden pallets that are used for moving and stacking materials. The operating costs for the past year were as follows: During the year, Borques produced 200,000 wooden pallets and sold 204,300 at 9 each. Borques had 8,200 pallets in beginning finished goods inventory; costs have not changed from last year to this year. An actual costing system is used for product costing. Required: 1. What is the per-unit inventory cost that is acceptable for reporting on Borquess balance sheet at the end of the year ? How many units are in ending inventory? What is the total cost of ending inventory? 2. Calculate absorption-costing operating income. 3. CONCEPTUAL CONNECTION What would the per-unit inventory cost be under variable costing? Does this differ from the unit cost computed in Requirement 1? Why? 4. Calculate variable-costing operating income. 5. Suppose that Borques Company had sold 196,700 pallets during the year. What would absorption-costing operating income have been? Variable-costing operating income?Bolger and Co. manufactures large gaskets for the turbine industry. Bolgers per-unit sales price and variable costs for the current year are as follows: Bolgers total fixed costs aggregate to 360,000. Bolgers labor agreement is expiring at the end of the year, and management is concerned about the effects of a new labor agreement on its break-even point in units. The controller performed a sensitivity analysis to ascertain the estimated effect of a 10-per-unit direct labor increase and a 10,000 reduction in fixed costs. Based on these data, the break-even point would: a. decrease by 1,000 units. b. decrease by 125 units. c. increase by 375 units. d. increase by 500 units.
- produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The following data have been gathered for the coming period: Lumber Division: Capacity 200,000 board feet Price per board foot P2.00 Variable production cost per bd. f. P1.00 Variable selling cost per bd. f. P0.40 Construction Division: Board feet needed 60,000 Outside price paid per bd. $ P1.60 If the Lumber Division sells to the Construction Division, P0.30 per board foot can be saved in shipping costs. If current outside sales are 130,000 board feet, what is the minimum transfer price that the Lumber Division could accept?The Lumber Division of Paul Bunyon Homes Inc. produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The fllowing data have been gathered for the coming period: Lumber Division: Capacity Price per board foot Variable production cost per bd. ft. Variable selling cost per bd. ft. 200,000 board feet $2.50 $1.25 50,50 Construction Division: Board feet needed 60,000 Outside price paid per bd. ft. $2.00 If the Lumber Division sells to the Construction Division, $0.35 per board foot can be saved in shipping costs. if current outside sales are 150,000 board feet, what is the minimum transfer price per board foot that the Lumber Division could accept?The Lumber Division of Coronado Industries produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The following data have been gathered for the coming period: Lumber Division: Capacity Selling price per board foot Variable production cost per bd. ft. Variable selling cost per bd. ft. Construction Division: Board feet needed Outside price paid per bd. ft. 220000 board feet $2.50 $1.25 $1.75 O $1.40 O $2.50 O $1.25 $0.50 40000 $5.00 If the Lumber Division sells to the Construction Division, $0.35 per board foot can be saved in shipping costs. If current outside sales are 120000 board feet, what is the minimum transfer price that the Lumber Division should accept?
- The Post Division of Awal Company produces basic posts, which can be sold to outside customers or sold to the Lamp Division of Awal Company. The following data are available for last year's activities of the Post Division: The Post Division: Capacity in units.......... Selling price per post to outside customers. Variable costs per post. Fixed costs, total. 300,000 posts $1.75 $0.90 $150,000 The Lamp Division Number of Units needed .... Purchase Price from Outside Suppliers 25,000 posts $1.5 Required: 1. Suppose that the Post Division sells to outside customers 270,000 units. What is the lowest transfer price that would not reduce the profits of the Post Division? And what is the range of transfer? 2. Suppose that the Post Division sells to outside customers 300,000 units and the cost of packing and shipping the posts for outside customers is $0.1 per unit, these packing and shipping costs would not have to be incurred on sales of the posts to Lamp Division. What is the lowest transfer…Required information [The following information applies to the questions displayed below.] Hudson Company reports the following contribution margin income statement. HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales (9,600 units at $225 each) Variable costs (9,600 units at $180 each) Contribution margin Fixed costs Income. 1. Amount of sales 2. Margin of safety 1. Assume Hudson has a target income of $162,000. What amount of sales dollars is needed to produce this target income? 2. If Hudson achieves its target income, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.) $ 2,160,000 1,728,000 432,000 324,000 $ 108,000 %The Lyn Division of Rosal Homes Inc. produces and sells lumber that can be sold to outside customers or within the company to the Mel Division. The following data have been gathered for the coming period: Lyn Division: Capacity 100,000 board feet Price per board foot P4.00 Variable production cost per board foot P2.00 Variable selling cost per board foot P0.70 Mel Division: Board feet needed 40,000 Outside price paid per board foot P3.50 If the Lyn Division sells to the Mel Division, P0.40 per board foot can be saved in shipping costs. If Lyn Division has sufficient excess capacity to fulfill the Mel Division’s needs, what will be the effect on the…