Accounting for Decision Makers Assignment
Question 1
The XYZ Corporation sells only one product. The following is budgeted information for the product:
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Annual Production and Sales Capacity (Units)
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50,000
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Budgeted Selling Price
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$ 200 Per Unit
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Variable Cost of Goods Sold
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$ 75 Per Unit
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Fixed Manufacturing Cost
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$ 600,000
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Variable Selling and Administrative Costs
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$ 30 Per Unit
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Fixed Selling and Administrative Costs
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$ 500,000
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The company's Corporate Tax Rate is 40%
1. How many units does the company need to sell to breakeven?
2. How much revenue does the company need to generate to breakeven?
3. How many units does the company need to sell to earn an operating profit (before taxes) of $500,000 ?
4. How much revenue does the company need to generate to earn net income (after taxes) of $750,000 ?
5. Assume the company is currently producing and selling 50,000 Units
By what percentage will operating income change if sales increase by 5% from the 50,000 Units? Be sure to provide figures to justify your answer
6. Assume the company is currently producing and selling 50,000 Units By what percentage will operating income change if sales decrease by 3% from the 50,000 Units Be sure to provide figures to justify your answer
Question 2
A production company is planning to sell tickets to a show for the price of $ 175.00 each Budget for the variable costs per ticket are while its total fixed costs have a budget of $ 60.00 $ 90,000 per attendee Safety issues with the theater limits capacity to 700 people What should the production company do and give reasons for your answer Be specific in your response.
Question 3
The following is budgeted information for the XYZ Corporation
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Product 1
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Product 2
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Annual Production and Sales Units
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3,000
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1,000
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Independent Variable X
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Projected Selling Price
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$55
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$120
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Variable
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Direct Production Cost Information
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Materials (per unit)
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$9
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$16
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Variable
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Direct Labor (per unit)
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$15
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$25
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Variable
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Additional Information:
Selling and administrative costs (a mixed cost) are budgeted to be $75,400 at the production and sales listed above
The variable component cost (for both products) / unit = $4 Given (Multiply this x units = total variable cost)
Manufacturing overhead cost (a mixed cost) are budgeted to be $90,000 at the production and sales listed above
The fixed component = $66,000 Given (Therefore the difference must be total variable cost)
Each product uses the same amount of variable manufacturing overhead per unit.
Assuming the budgeted sales mix remains intact, how many units of each product does XYZ need to sell in order to break even?
Preliminary Goals:
Preliminary Goal 1: Find total Fixed Costs and Variable Costs/Unit.
Preliminary Goal 2: Find contribution margin per unit to determine break even units.