Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1,780,200; and net loss $280,200. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,106,000 $598,000 $508,000 Selling expenses 522,200 95,000 427,200 Administrative expenses 152,000 57,000 95,000 $1,780,200 $750,000 $1,030,200 Management is considering the following independent alternatives for 2020. 1. Increase unit selling price 25% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $40,010 plus a 5% commission on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. (a) Compute the break-even point in dollars for 2019.
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Answer:
(a) the break-even point in dollars for 2019 = $2,060,400.00
Explanation:
Break Even Point in Dollars = Fixed Cost/Contribution margin
Contribution margin = (Sales - Variable Cost) as a portion of sales.
Total variable cost in 2019 = $598,000 + $95,000 + $57,000 = $750,000
Total sales for 2019 = $1,500,000
Contribution = $1,500,000 - $750,000 = $750,000
As a portion of sales = $750,000/$1,500,000 = 50%
Total Fixed Cost = $1,030,200
Therefore Break Even Point in Dollars for the year 2019 = $1,030,200/50% = $2,060,400
Final answer:
The break-even point in dollars for 2019 can be computed by finding the point at which the company's total costs and expenses equal its net sales. In this case, the break-even point is approximately $2,179,255.
Explanation:
The break-even point in dollars for 2019 can be computed by finding the point at which the company's total costs and expenses equal its net sales. In this case, the company operated at a loss, so the break-even point represents the level of sales needed to cover all costs and result in zero profit or loss. The break-even point can be calculated using the formula: Break-even point = Fixed costs / (Selling price per unit - Variable cost per unit)
Using the given information, the fixed costs are $1,030,200 and the selling price per unit is $1,500,000 / 75,000 units = $20. The variable cost per unit is ($1,106,000 - $508,000) / 75,000 units = $10.43. Substituting these values into the formula, we get: Break-even point = $1,030,200 / ($20 - $10.43) ≈ 108,962.75 units.
To calculate the break-even point in dollars, we multiply the break-even point in units by the selling price per unit: Break-even point in dollars = 108,962.75 units * $20 ≈ $2,179,255.
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Related Questions
Dana wants to give Fleesum's employees more freedom to schedule when they begin and end their work days. Her plan still requires employees to work eight hours per day, but allows them to start as early as 7:00 a.m. or as late as 9:00 a.m., and leave as early as 4:00 p.m. or as late as 6:00 p.m. Her plan also requires all workers to be on the job between 9:00 a.m. and noon, and between 2:00 p.m. and 4:00 p.m. The type of plan Dana wants to implement is known as a:
For fiscal year 2016, Nancy calculated the following costs for Choco-rama’s manufacturing process. Beginning work in process inventory, $22,655 Ending work in process inventory, $28,207 Beginning raw materials inventory, $42,385 Ending raw materials inventory, $44,299 Raw materials purchased, $387,521 Office supplies purchased and used, $15,274 388,400 man-hours of factory labor incurred at $23.60/hour 14,200 man-hours of factory oversight labor incurred at $28.75/hour Administrative salaries, $392,000 Factory utilities, $18,500 Factory depreciation, $9,700 Factory repairs, $15,400
Financing that individuals or institutions have provided to a corporation is: Multiple Choice always classified as a liability. classified as a liability when provided by creditors and as stockholders' equity when provided by owners. always classified as equity. classified as a stockholders' equity when provided by creditors and a liability when provided by owners.
The net income reported on the income statement of Whispering Winds Corp. for the current year was $1251000. Depreciation recorded on plant assets was $236000. Accounts receivable and inventories increased by $66000 and $44000, respectively. Prepaid expenses and accounts payable decreased by $6000 and $61000, respectively. How much cash was provided by operating activities during the year
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Answer:
cash 900,000,000 debit
common stock 50,000,000 credit
additional paid-in 850,000,000 credit
--- Jan 9th issuance ---
Equipment 81,000 debit
Common Stock 4,500 credit
Addtional paid-in 76,500 credit
--- March 11th issuance ---
Equity at end of Year 1:
common stock 50,004,500 credit
additional paid-in 850,076,500 credit
Explanation:
cash proceeds: 50 millions x 18 dolllars = 900 millions
face value: 50 millions x 1 dollars = 50 million
additional paid-in 850 millions
Equipment: 4,500 x 18 = 81,000
face value 4,500 x 1 = 4,500
addiional 76,500
Equity at year-end will be the sum of both
Final answer:
The appropriate journal entries for the transactions related to shareholders' equity are provided for the first and second year of operations.
Explanation:
To record the transactions related to shareholders' equity for the first year of operations, the appropriate journal entries are as follows:
- January 9: Debit Cash for $900,000,000 and Credit Common Stock for $50,000,000 and Paid-in Capital in Excess of Par for $850,000,000
- March 11: Debit Custom-Made Equipment for $81,000 and Credit Common Stock for $81,000
For the second year of operations, the journal entries recorded by the new staff accountant are:
- January 12: Debit Land for $5,000,000 and Credit Paid-in Capital—Donation of Land for $5,000,000
- September 1: Debit Common Stock for $2,000,000, Debit Retained Earnings for $44,000,000, and Credit Cash for $46,000,000
- December 1: Debit Cash for $24,000,000, Credit Common Stock for $1,000,000, and Credit Gain on Sale of Previously Issued Shares for $23,000,000
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O Director of marketing
O Chief executive officer
O Salesperson in a retail store
Answers
The Director of marketing is an example of a middle manager. Thus, option B is correct.
Who is a manager?
A manager is a person who maintains the flow of the business, he is responsible for the smooth running of the business and coordinating between various departments. A manager tends to be the person who is delegating and is responsible for coordinating.
According to the hierarchical positions of the company, there are various positions that need to be filled like workers, staff, managers, executive managers, head of an office, CEO, etc.
From the given options, the middle manager will be the director of marketing the teller of the bank comes at a lower level, the chief executive officer will be at the top most level, and a salesperson will be at the lower middle level. Therefore, option B is the correct option.
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Answer:
Director of marketing
Explanation:
I just got it right in a test
Answers
A call bond option is termed as the option that implies the bondholder the right to purchase the bonds at the prevailing price in the market. A buyer of a bond call option in the secondary market forecasts a drop in investment substantial rise in bond prices.
The correct option is a. I, II, and III only
Option a. I, II, and III only is correct because The contract value will decline as it reaches maturation because it will become less unpredictable.
The goal of purchasing a call option is to benefit if the price of the underlying stock rises. The attractiveness of the callable bond falls as the price of bitcoin declines, and the worth of the call option reduces as well.
The exercise price is the price where the individual who acquires a call option will be able to acquire the underlying shares. If this price is too high, the benefit from buying the stock at maturity will be too little, diminishing the value of the specified call option.
To know more about the listed call option, refer to the link below:
Answer: a. I, II, and III only
Explanation:
The exercise price refers to the amount that the person who buys the call option will get to buy the underlying stock at. If this price is high, the profit from buying the stock at maturity will be less so the value of the listed call option reduces.
As the contract approaches maturity, the value will decrease because it will be less volatile as it approaches maturity.
The purpose of buying a call option is so that a profit can be made if the underlying stock increases in value. If the stock decreases in value, the allure of the call option decreases so therefore will the value.
Weight per engine 22 pounds
Order processing cost $125 per order
Inventory carry cost 20 percent of the average value of inventory per year
Assume that half of lot size is in inventory on average (1,000/2 = 500 units).
Two qualified suppliers have submitted the following quotations:
ORDER QUANTITY SUPPLIER 1 UNIT PRICE SUPPLIER 2 UNIT PRICE
1 to 1,499 units/order $510.00 $505.00
1,500 to 2,999 units/order 500.00 505.00
3,000 + units/order 490.00 488.00
Tooling costs $22,000 $20,000
Distance 125 miles 100 miles
Your assistant has obtained the following freight rates from your carrier:
Truckload (40.000 lbs. each load): $0.80 per ton-mile
Less-than-truckload: $1.20 per ton-mile
Required:
a. Calculate the total cost for each supplier.
b. Which supplier would you select?
c. If you could move the lot size up to ship in truckload quantities, calculate the total cost for each supplier.
d. Would your supplier selection change?
Answers
Answer:
a. Cost of Supplier 1 : $6,214,300 per year
Cost of Supplier 2 : $6,147,840
b. Supplier 2 will be selected as it costs $66,460 less than supplier 1.
c. 1,818
d. No.
Explanation:
Supplier : 1 ; 2
Unit price : $510 ; $505
Annual Purchase cost: $6,120,000 ; $6,060,000
One time cost: $22,000 ; $20,000
Orders per year: 12 , 12
Order processing cost: $1,500 ; $1,500
Inventory carrying cost: $51,000 ; $50,500
Distance: 125 ; 100
Weight per load: 22000
Transportation: $19,800 ; $15,840
Total Cost : $6,214,300 ; $6,147,840
Annual Purchase Cost = Demand * Units price
Orders per year = Demand / Lot size
Inventory Carrying cost = [ Lot size / 2 ] * Carrying cost * unit price
Order processing cost = Number of orders * order processing cost.
c. Required lot size for truck : 40,000 / 22 ≈ 1,818
Final answer:
To select a supplier for engines, the total cost for each supplier is calculated based on various factors such as order quantity, unit price, tooling costs, distance, freight rates, order processing cost, and inventory carry cost. Supplier 2 is selected as the preferred choice due to its lower total cost. If the lot size is increased to ship in truckload quantities, the total cost for both suppliers changes, but the supplier selection remains the same.
Explanation:
To calculate the total cost for each supplier, we need to consider the order quantity, unit price, tooling costs, distance, freight rates, order processing cost, and inventory carry cost. By multiplying the order quantity by the unit price and adding the tooling costs, we can calculate the total cost. For supplier 1, the total cost is $488,000 and for supplier 2, the total cost is $487,625. Considering the lower total cost, supplier 2 would be selected. If the lot size is increased to ship in truckload quantities, the freight rates will change. With a truckload rate of $0.80 per ton-mile, the total cost for supplier 1 becomes $486,650 and for supplier 2 becomes $486,794. Therefore, the supplier selection remains the same, with supplier 2 as the preferred choice.
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Answers
Answer:
$1,539 million
Explanation:
The accounting principle states that assets must equal liabilities plus owner's equity. If assets increased by $534 million and liabilities increased by $261 million, the amount by which equity increased is:
If the initial equity was $1,266 million, JetBlue's equity at the end of the year was:
Answers
Answer:
$50
Explanation:
Solution
Recall that:
The company plans on giving out $50 million by repurchasing stock hence, number of stock to be purchased = 50/50 = 1 million
The Number of share bought back = 300-1 = 299
Thus
$20,000 + $1,000 - $6000 = $15,000
$15,000 / 300 shares = $50
Before Repurchase After the repurchase
Value of operations 20000 20000
Short-term investments 1000 950
Less : Debt 6000 6000
Intrinsic value of equity 15000 14950
Number of shares 300 299
Intrinsic value per share 50 50
Therefore the intrinsic per share stock price be immediately after the repurchase is $50