Essay about Study Guide

Production requirements (LO2) Vitale Hair Spray had sales of 8,000 units in March. A 50 percent increase is expected in April. The company will maintain 5 percent of expected unit sales for April in ending inventory. Beginning inventory for April was 400 units. How many units should the company produce in April?

In this case, you will be able to cover all of your fixed costs only by changing of sales mix, without changing the prices. Please keep in mind that you have some more variable operating costs, not covered by this calculation (see Table on p. 2). They can amount to more than $1,000, if you add depreciation for equipment and truck.

1. If a coffee company purchases paper cups at a cost of x cents for a package of ten and lids at a cost of y cents per dozen, which of the following represents its material cost, in cents, of c cups of coffee?

If variable costs drop to $36 per patient day, what increase in fixed costs can be tolerated without changing the break-even point as determined in part (a)? $45-$36=$9.00 increase

First of all I have to calculate the portion that the intracompany sales cover of the fixed costs.

The planned volume was 150,000 units and the actual units produced was 160,000. Since the units produced was higher than what was expected, the volume decreased the fixed cost per unit and the volume variance is

If the company sells 172,983 units of the Velcro product, 211,801 units of the Metal product, and 268,943 units of the Nylon product, the company will indeed break even overall. However, the apparent break-evens for two of the products are higher than their normal annual sales.

Next we will subtract the annual fixed costs previously figured to be $120,000 from the gross profit:

The unit selling price at 150,000 units is $0.17. The expected unit selling price for 25,000 units is $0.1.

22. Variable costs ________. A. are fixed per unit and vary in total B. are fixed in

Analysis - First, in the scenario, we do see some economies of scale that should be mentioned. At 25,000 units, the cost per unit is about $65; when that amount is doubled, it drops to $45. However, looking at Q1 we see sales costs as $20/unit; but the reporting directions kept the unit sales and marketing costs identical, which is highly unlikely since to double volume, there would likely need to be more sales calls made, increased costs, etc.

Mysti Farris (See problem 1-19) is considering raising the selling price of each cue to $50 instead of $40. If this is done while the costs remain the same, what would the new breakeven point be? What would the total revenue be at this breakeven point? (Given in problem 1-19: fc of 2400 and vc of 25)

It is assumed that the increase in revenue, salaries and supply expenses per year are 20%, 10% and 5 % respectively. It’s also assumed that travel, maintenance, contracts, marketing, miscellaneous and salaries as a percentage of revenue are 1, 1, 4, 0.5, 2 and 75% respectively.

A number of managers are in favor of this strategy, as they believe it is important to reduce costs.

In order for Mr. Bury to improve the technology of his product, he will need to hire additional labor to run the conversion process and assist in researching and securing copyrighted material appropriate for conversion. While this will increase his variable costs, it will allow Mr. Bury to increase production, thereby increasing revenue. In addition, he will likely need to secure a more suitable location to operate his business. A larger space will be better able to accommodate additional workers and equipment. These additions will increase his total costs and will factor into the price he sets for his product. In order for Mr. Bury to determine an appropriate price, he will need to add all of his variable costs then divide by the number of units sold. This will give him the cost per unit. This cost should remain constant, regardless of how few or how many units he sells (Business Owner's Toolkit, 2010).