ACT 5140 Accounting for Decision Makers - Homework 5
Question 1
The XYZ Corporation sells only one product. The following is budgeted information for the product: Annual Production and Sales Capacity (Units)
Budgeted Selling Price
Variable Cost of Goods Sold
Fixed Manufacturing Cost
Variable Selling and Administrative Costs
Fixed Selling and Administrative Costs
The company's Corporate Tax Rate is $
$
$
$
$ 60,000
280 Per Unit
90 Per Unit
750,000
36 Per Unit
625,000 36% 1. How many units does the company need to sell to breakeven? (Round your answer up to the nearest whole unit) 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 $600,000 ? 4. How much revenue does the company need to generate to earn net income (after taxes) of
(Take your answer to dollars and cents) $900,000 ? 5. Assume the company is currently producing and selling
60,000 Units
By what percentage will operating income change if sales increase by
Be sure to provide figures to justify your answer
Round your percentage answer out 2 more decimal places (i.e. xx.xx%) 6. Assume the company is currently producing and selling
60,000 Units
By what percentage will operating income change if sales decrease by
Be sure to provide figures to justify your answer
Round your percentage answer out 2 more decimal places (i.e. xx.xx%) 6% from the 60,000 Units? 4% from the 60,000 Units Question 2
A production company is planning to sell tickets to a show for the price of
$ 210.00 each
Budget for the variable costs per ticket are
$
90.00 per attendee
while its total fixed costs have a budget of
$
80,000
Safety issues with the theater limits capacity to
750 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 Annual Production and Sales Units
Projected Selling Price Product 1
4,000
$50.00 Direct Production Cost Information
Materials (per unit)
Direct Labor (per unit) $9.00
$15.00 Additional Information:
Selling and administrative costs (a mixed cost) are budgeted to be
The variable component cost (for both products) / unit = $4.00 Rules for rounding:
1 Round monetary numbers to dollars and cents
2 Round % calculations to 4 decimal places (i.e. xx.xx%)
Product 2
3 Round units up to nearest whole unit
1,000 Independent Variable X
$120.00 Variable $16.00 Variable
$25.00 Variable $75,000.00 at the production and sales listed above
Given (Multiply this x units = total variable cost) Manufacturing overhead cost (a mixed cost) are budgeted to be
$91,000.00 at the production and sales listed above
The fixed component =
$61,000.00 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

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