Question 1 - Scattergraph
Reef Office Supplies is interested in estimating the relationship between customer service costs and sales. The following data are available:
|
Month
|
Customer
Service
Cost
|
Sales
|
|
May
|
$9,740
|
$170,000
|
|
June
|
$10,100
|
$210,000
|
|
July
|
$10,690
|
$230,000
|
|
August
|
$12,750
|
$255,000
|
|
September
|
$13,830
|
$275,000
|
Required - Prepare a scattergraph of customer service cost (vertical axis) and sales (horizontal axis).
Question 2 - CVP Analysis, Profit Equation
Lake Stevens Marina has estimated that fixed costs per month are $350,000 and variable cost per dollar of sales is $0.30.
Required
a. What is the break-even point per month in sales dollars?
b. What level of sales is needed for a monthly profit of $70,000?
c. For the month of July, the marina anticipates sales of $1,000,000. What are expected level of profit?
Question 3 - Account Analysis, High-Low, Contribution Margin
Information on occupancy and costs at the Light House Hotel for April, May, and June are indicated below:
|
April
|
May
|
June
|
|
|
Occupancy
|
1,700
|
1,850
|
1,950
|
|
|
Day manager salary
|
$4,500
|
$4,500
|
$4,500
|
|
|
Night manager salary
|
3,900
|
3,900
|
3,900
|
|
|
Cleaning staff
|
15,960
|
16,275
|
16,590
|
|
|
Depreciation
|
12,500
|
12,500
|
12,500
|
|
|
Complimentary continental breakfast: food and beverages
|
5,050
|
5,205
|
5,225
|
|
|
|
Total
|
$41,910
|
$42,380
|
$42,715
|
|
Required - a. Calculate the fixed costs per month and the variable cost per occupied room using account analysis for April.
b. Calculate the fixed costs per month and the variable cost per occupied room using the high-low method.
c. Average rates per room are $120 per night. What is the contribution margin per occupied room? In answering this question, use your variable cost estimate from Part b.
Question 4 - High-Low, Profit Equation
Crux, Inc. produces amplifiers. Each unit sells for $900. Below is information on production/sales and costs for 2016:
|
Production and
Sales in Units
|
Production
Costs
|
Selling and
Admin. Costs
|
|
January
|
105
|
$88,860
|
$23,570
|
|
February
|
117
|
97,600
|
25,200
|
|
March
|
97
|
83,007
|
22,495
|
|
April
|
106
|
89,600
|
23,720
|
|
May
|
115
|
96,200
|
24,950
|
|
June
|
125
|
103,500
|
26,250
|
|
July
|
128
|
105,670
|
26,690
|
|
August
|
132
|
108,550
|
27,200
|
|
September
|
138
|
112,978
|
28,030
|
|
October
|
126
|
104,200
|
26,400
|
|
November
|
124
|
102,750
|
26,150
|
|
December
|
108
|
91,050
|
23,990
|
|
Total
|
1,421
|
$1,183,965
|
$304,645
|
|
Average cost per unit
|
$833.19141
|
$214.38776
|
Required
a. Use the high-low method to identify the fixed and variable cost components for both production costs and selling and administrative costs.
b. The company estimates that production and sales in 2017 will be 1,650 units. Based on this estimate, forecast income before taxes for 2017.
Question 5 - Multiproduct, Contribution Margin Ratio
Computer Guard offers computer consulting, training, and repair services. For the most recent fiscal year, profit was $328,100, as follows:
|
Consulting
|
Training
|
Repair
|
Total
|
|
Sales
|
$ 600,000
|
$ 525,000
|
$ 375,000
|
$ 1,500,000
|
|
Less variable costs:
|
|
|
|
|
|
Salaries
|
300,000
|
210,000
|
225,000
|
735,000
|
|
Supplies/parts
|
24,000
|
39,000
|
75,000
|
138,000
|
|
Other
|
1,200
|
2,700
|
5,000
|
8,900
|
|
Contribution margin
|
$274,800
|
$273,300
|
$70,000
|
618,100
|
|
Less common fixed costs:
|
|
|
|
|
|
Rent
|
|
|
|
55,000
|
|
Owner's salary
|
|
|
|
212,000
|
|
Utilities
|
|
|
|
13,000
|
|
Other
|
|
|
|
10,000
|
|
Profit
|
|
|
|
$328,100
|
Required
a. Linda O'Flaherty, the owner of ComputerGuard, believes that in the coming year, she can increase sales by 15 percent. Assuming the current mix of services, what will be the percentage increase in profit associated with a 15% increase in sales.
b. If Linda were to focus on the contribution margin per unit (rather than the contribution margin ratio), what would be a likely unit of service?
Attachment:- Assignment File.rar