Lesson 14
Managerial Accounting II,Applications
Exercise
1,XYZ Company's most recent contribution format income statement is presented below:
Sales
$250000
Less,Variable Expenses
$150000
Contribution Margin
$100000
Less,Fixed Expenses
$120000
Net Loss
$(20000)
The company sells its only product for $50 per unit,There were no beginning or ending inventories.
Required:
Compute the company's break-even point in units sold.
Compute the total variable expenses at the break-even point.
How many units would have to be sold to earn a target profit of $30000?
The sales manager is convinced that a $20000 increase in the advertising budget would increase total sales by $90000,Would you advise the increased advertising outlay?
2,XYZ Company operates a local parcel delivery service,The company keeps detailed records relating to operating costs of trucks,and has found that if a truck is driven 220000 kilometres per year,the operating cost is 15 cents per kilometre,This cost increases to 17.5 cents per kilometre if a truck is driven 120000 kilometres per year.
Required:
Estimate the cost formula for truck operating costs using the high-low method.
Managerial Accounting II,Applications
Exercise
1,XYZ Company's most recent contribution format income statement is presented below:
Sales
$250000
Less,Variable Expenses
$150000
Contribution Margin
$100000
Less,Fixed Expenses
$120000
Net Loss
$(20000)
The company sells its only product for $50 per unit,There were no beginning or ending inventories.
Required:
Compute the company's break-even point in units sold.
Compute the total variable expenses at the break-even point.
How many units would have to be sold to earn a target profit of $30000?
The sales manager is convinced that a $20000 increase in the advertising budget would increase total sales by $90000,Would you advise the increased advertising outlay?
2,XYZ Company operates a local parcel delivery service,The company keeps detailed records relating to operating costs of trucks,and has found that if a truck is driven 220000 kilometres per year,the operating cost is 15 cents per kilometre,This cost increases to 17.5 cents per kilometre if a truck is driven 120000 kilometres per year.
Required:
Estimate the cost formula for truck operating costs using the high-low method.
