Question 1

Ellis Electrical Products serves both residential and commercial clients. Annual financial information for Ellis is as follows:  If total sales revenues increase by 10%, what operating profit can Ellis expect to generate?

Accepted Answer

The answer of Ellis Electrical Products serves both residential and...

Question 2

Ajax Company has operating income of $4,000 and a degree of operating leverage (DOL) of 3.0 anticipates an increase of 10% in sales revenues next month. The company can expect to generate what amount of operating income next month?

Accepted Answer

The answer of Ajax Company has operating income of $4,000...

Question 3

Catherine Consulting Inc. had service revenues last month of $30,000, variable costs of $15,000 and fixed selling and administrative expenses of $5,000. What is the firm's degree of operating leverage (DOL)?

Accepted Answer

The answer of Catherine Consulting Inc. had service revenues last...

Question 4

Catherine Consulting Inc. had service revenues last month of $30,000, variable costs of $15,000 and fixed costs of $5,000. If the firm anticipated service revenue growth ser service serof 10% next month, what would be its anticipated operating profit?

Accepted Answer

The answer of Catherine Consulting Inc. had service revenues last...

Question 5

Philabundance provides charitable meals to the families in need in the Delaware Valley. Weekly, the nonprofit entity provides 90,000 meals to families. The variable cost per meal is $3.00 and the weekly total fixed costs for the organization are $5,000. How much funding is needed by the Philabundance organization on a weekly basis to support its operations? (Hint: Compute Break-even Sales at net income = $0)

Accepted Answer

The answer of Philabundance provides charitable meals to the families...

Question 6

ZZZ Best CPAs provides the following accounting services to its customers: tax preparation and audits. The sales mix for the services is 70% tax preparation and 30% audits. If the contribution margins per unit for tax preparation is $100 and for audits, is $300, what is the break-even point for ZZZ Best CPA's if its annual fixed costs are $900,000?

Accepted Answer

The answer of ZZZ Best CPAs provides the following accounting...

Question 7

Joey plans to start his own snow-shoveling business to help save for his college fund. He plans to charge customers $30 per driveway. To begin his business, he has purchased the necessary equipment which will result in monthly fixed costs of $100. His variable costs include fuel and oil for the equipment, which translates to a unit variable cost of $5 per customer. If Joey projects that he can provide services to his neighborhood, with weekly snowfalls, of 20 customers per week, or 80 customers per month, what amount of operating income will Joey recognize in his first month of operations?

Accepted Answer

The answer of Joey plans to start his own snow-shoveling...

Question 8

Emerald City Jewelers has two products it is currently producing and selling. One is a necklace, and one is a bracelet. Information on these two items follows: 
Necklace: Total fixed costs are $70,000, variable costs are $50 per unit, and the unit selling price is $120. 
Bracelet: Total fixed costs are $60,000, variable costs are $40 per unit, and the unit selling price is $100. What is the break-even point in units for each of these jewelry items?

Accepted Answer

The answer of Emerald City Jewelers has two products it...

Question 9

As a result of cost increases imposed by its primary supplier, Fly Fishing Fanatics Supplies Inc. has experienced an increase in its variable direct per unit costs that will result in a contribution margin ratio that is 3 percentage points lower than previous levels. Operating income last month, before the cost increase, was $5,500 based on sales revenues of $50,000 and fixed costs of $20,000. If sales revenues increase next month by 5%, and the new variable costs come into effect, what can Fly Fishing Fanatics anticipate in terms of operating profit?

Accepted Answer

The answer of As a result of cost increases imposed...

Question 10

Zapple, Ltd. is producing and distributing a new computer-based game that it sells for $75 a unit. Zapple's fixed costs are $43,750 per month, and the company's accountants have determined that the monthly break-even in units is 1,250. What is the monthly unit variable cost and unit contribution margin for Zapple, Ltd.?

Accepted Answer

The answer of Zapple, Ltd. is producing and distributing a...

Question 11

Crest Canoe Co. produces and distributes three types of oars to accompany its various canoe product lines. Financial information for the past year on these three products is as follows:  Assuming that Crest's overall sales mix for its oars remains the same, calculate and provide the following additional information: 
a. What is the current weighted average contribution margin per unit? (Round to 2 decimal places)
b. What is the break-even point in sales units?
c. What is the current overall gross profit margin?

Accepted Answer