Graded Disoussion #3_cVPAnalysisBenoit Manufacturing Company manufactures and sells parts for various musical gadgets. The followinginformation to a single part which is used in the production of a wind instrument. The business eamedOperating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is underpressure from shareholders to increase operating income in 2020 and is therefore considering theimplementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data forvariable cost per unit and total fixed costs were as follows:Variable expenses per unit:Direct MaterialDirect LabourVariable Manufacturing Overhead $48$58$74Fixed Manufacturing OverheadFixed Selling CostsFixed Administrative CostsFixed expenses:$215,000$65,000$160,000Required:a)Compute the selling price per unit in 2019, using the equation method.Given the sales of 3,000 units and the selling price calculated in (a), prepare a contribution marginincome statement for the year ended December 31, 2019, detailing the components of total fixed costsand clearly showing contribution and net income.b)c)Calculate Benoit's break-even point in units and in sales dollars.d)Calculate the margin of safety in units and in sales dollars.e)The President of Benoit is under pressure from shareholders to increase operating income by 50% in2020. Management expects per unit data and total fixed costs to remain the same in 2020. Computethe number of units that would have to be sold in 2020 to reach the shareholders desired profit level. Isthis a realistic goal?f)Assume that as a result of reorganizing the production process, the management of BenoitManufacturing was able to reduce direct material cost per unit by $5 due to a change in the supplier ofthe raw material used in the production process. Variable manufacturing overhead per unit would alsodecrease by $3. The business is also considering paying additional annual commission of $36,400 toits sales team as part of the sales expansion effort, which should result in an increase in sales revenue.The head of the marketing department has indicated that the effort of the sales team should result in a5% increase in sales volume. What must the new selling price per unit be if the company wishes tomeet the shareholders desired profit level for 2020? Is this a viable option?mag)Briefly explain the impact of each of the following scenarios on the break-even point and the margin ofsafety:() Increase in sales volume(i) Increase in total fixed costs(i) Increase in selling price per unit(iv) Decrease in variable costs per unit

Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The following information to a single part which is used in the production of a wind instrument. The business eamed Operating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is under pressure from shareholders to increase operating income in 2020 and is therefore considering the implementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data for variable cost per unit and total fixed costs were as follows: $58 $74 Direct Material Direct Labour Variable Manufacturing Overhead $48 Fixed Manufacturing Overhead Fixed Selling Costs Fixed Administrative Costs Variable expenses per unit: Fixed expenses: $215,000 $65,000 $160,000 Required: a) Compute the selling price per unit in 2019, using the equation method. b) Given the sales of 3,.000 units and the selling price calculated in (a), prepare a contribution margin income statement for the year ended December 31, 2019, detailing the components of total fixed costs and clearly showing contribution and net income. c) Calculate Benoit's break-even point in units and in sales dollars.

Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The following information to a single part which is used in the production of a wind instrument. The business eamed Operating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is under pressure from shareholders to increase operating income in 2020 and is therefore considering the implementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data for variable cost per unit and total fixed costs were as follows: $58 $74 Direct Material Direct Labour Variable Manufacturing Overhead $48 Fixed Manufacturing Overhead Fixed Selling Costs Fixed Administrative Costs Variable expenses per unit: Fixed expenses: $215,000 $65,000 $160,000 Required: a) Compute the selling price per unit in 2019, using the equation method. b) Given the sales of 3,.000 units and the selling price calculated in (a), prepare a contribution margin income statement for the year ended December 31, 2019, detailing the components of total fixed costs and clearly showing contribution and net income. c) Calculate Benoit's break-even point in units and in sales dollars.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 95.1C

See similar textbooks

Similar questions

On March 3, 2016, Zad Company was established to produce and sell plastic products. The company produces a full line of plastic products included customized orders. The Chief Executive Officer of the company is working hard to enhance profitability and liquidity. Recently, you have been hired as the Financial Director of the company. 1. On March 8, 2020, the Chief Financial Officer stated to you that she wishes to reduce the company's investment in current assets since those assets provide little, if any, return to the firm. How would you respond to this statement? 2. On September 17, 2020, the Chief Financial Officer stated to you that as long as the company maintains a positive cash balance, why is it essential to review the firm's cash flows? 3. On January 5, 2021, the Chief Financial Officer wishes to expand the company's operations and are trying to determine the amount of debt financing the company should obtain versus the amount of equity financing that should be raised. The…
Various Contingency Issues Skinner Company has the following contingencies: 1. Potential costs due to the discovery of a possible defect related to one of its products. These costs are probable and can be reasonably estimated. 2. A potential claim for damages to be received from a lawsuit filed this year against another company. It is probable that proceeds from the claim will be received by Skinner next year. 3. Potential costs due to a promotional campaign in which a cash refund is sent to customers when coupons are redeemed. Skinner estimated, based on past experience, that 70% of the coupons would be redeemed. Forty percent of the coupons were actually redeemed and the cash refunds sent this year. The remaining 30% of the coupons are expected to be redeemed next year. Required: 1. How should Skinner report the potential costs due to the discovery of a possible product defect? Explain why. 2. How should Skinner report this year the potential claim for damages that may be received next year? Explain why. 3. This year, how should Skinner account for the potential costs and obligations due to the promotional campaign?
One of the major advantages of small businesses is that the investment for running the business is not a major issue this statement is a.Fully false b.Partly false c.Fully true d. Partly true In one of the reputed firm total number of employees were more than 150 and the annual sales in 2019 was around 5 million OMR. In 2020 the company had a huge crisis because of the Corona pandemic which leads them to decrease their number of workers to 55, as a cosuquance their annual sales drop to 723,000 OMR. Based on last year data and according to the Ministry of commerce and industry the business will be categorized under a.None of the given options b.Micro business enterprise c.Small business enterprise d.Medium business enterprise Which of the following Statement(s) is/are Correct? Statement 1: Entrepreneurship is a systematic process of applying creativity and innovation to needs and opportunities in the marketplace Statement2: Entrepreneurship involves using old ideas to create a product…
control risk, inherent risk, detection risk, RMM? Explain why? IR/CR yes or no? RMM and DR increase,decrease or no effect? Factor IR Factor CR Factor Why? Comments Impact on RMM Impact on DR 1 Apollo advanced $1.25 million to Larry Lancaster’s secretary. 2 Apollo does not have adequate documentation supporting customer returns of product. 3 Apollo has maintained a positive trend in net income over the past several years, and has a strategic emphasis on meeting profitability targets. 4 Apollo has not allowed your firm to speak with the predecessor auditor about their withdrawal after last year’s engagement. 5 Apollo installed a new computer system mid-year.
Making decisions about dropping a product Members of the board of directors or Security Check have received the following operating income data for the year ended May 31, 2018: Members of my board are surprised that the industrial systems product line is not profitable. They commission a study to determine whether the company should drop the line. Company accountants estimate that dropping industrial systems will decrease the fixed cost of goods sold by $580,000 and decrease fixed selling and administrative expenses by $12,000. Requirements Prepare a differential analysis to show whether Security Check should drop the industrial systems product line. Prepare contribution margin income statements to show Security Check’s total operating income under the two alternatives: (a) with the industrial systems line and (b) without the line. Compare the difference between the two alternatives’ income numbers to your answer to Requirement 1. What have you learned from the comparison in…
Making decisions about dropping a product Members of the board of directors of Security Team have received the following operating income data for the year ended March 31, 2018: Members of the board are surprised that the industrial systems product line is losing money. They commission a study to determine whether the company should drop the line. Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $81,000 and decrease fixed selling and administrative expenses by $15,000. Requirements Prepare a differential analysis to show whether Security Team should drop the industrial systems product line. Prepare contribution margin income statements to show Security Team’s total operating income under the two alternatives: (a) with the industrial systems line and without the line. Compare the difference between the two alternatives’ income numbers to your answer to Requirement l. What have you learned from this comparison in Requirement 2?
Ethics, CVP analysis. Megaphone Corporation produces a molded plastic casing, M&M101, formany cell phones currently on the market. Summary data from its 2017 income statement are as follows:Revenues $5,000,000Variable costs 3,250,000Fixed costs 1,890,000Operating income $ (140,000)Joshua Kirby, Megaphone’s president, is very concerned about Megaphone Corporation’s poor profitability.He asks Leroy Gibbs, production manager, and Tony DiNunzo, controller, to see if there are ways toreduce costs.After 2 weeks, Leroy returns with a proposal to reduce variable costs to 55% of revenues by reducingthe costs Megaphone currently incurs for safe disposal of wasted plastic. Tony is concerned that this wouldexpose the company to potential environmental liabilities. He tells Leroy, “We would need to estimate someof these potential environmental costs and include them in our analysis.” “You can’t do that,” Leroy replies.“We are not violating any laws. There is some possibility that we may have to…
please choose the correct answer Imagine you are a manager. Your company has an opportunity to venture out into a new market with a new product. However, your current resources are limited. In order to take the opportunity, you need to discontinue the production of one of your existing products. Your company’s accountant provided you with the following information to help you decide which product to discontinue. Product A Income 5,000,000 Expenses 4,800,000 Product B Income 3,500,000 Expenses 2,275,000 Product C Income 2,100,000 Expenses 630,000 A. Product AB. Product BC. Product CD. All them
b) Oman Flour Company provides its top managers with bonus on the basis of reportedprofit. During 2018 the management showed a decline in the final profit. In order tocontinue paying bonus the company attempt to adopt different accounting policies thatresulted in higher profits.c) In 2019, Zain Oil company was being sued for damages the seaside because itschemical material dropped to the sea. The settlement of which could threaten thefinancial stability of the company. The company decided to choose non-disclosure withthe hope that its lawyer may win the case at court.d) In 2018 AXA Company faced serious liquidity problems. Management decided towindow dress the financial statements in a manner that improved the company's currentratios in order to hide the liquidity problem of the situation. However, in 2019 the company came out of liquidity problem and stopped window dressing practice. You are required to identify and explain in brief the suitable qualitative characteristics ofuseful…
May I ask for an explanation and solution to the question for a better understanding. Thank you! 1. The owners would like to know what reasons caused the current performance of the company and ask your opinion. Through review of the complete records you were able to obtain this additional information: (1) The selling price for every unit is P7.20 during 2018 and; (2) The marketing department did a tremendous job and was able to increase sales units by 20% during 2019. The increase (decrease) in gross profit because of the change in units sold is: a. P(4,320) b. P5,400 c. P14,400 d. P23,400
Direction: Read the following independent cases given below. Provide necessary answer for all issues being asked. Provide a separate answer sheet for all your specific answers. A. The DIGITAL Company provided you with the following comparative Income Statement for your analysis. He wants you to enlighten the management on why the net profit decline. Sales Cost of Sales Gross Margin Operating Expenses Net Profit 2020 P680,000 170,000 P510,000 210,000 P300000 2021 P 570,000 200,000 P 370,000 100,000 P 270.000 Required: 1. Using Horizontal Analysis, calculate the peso change and the percentage changes. 2. Using Vertical Analysis, prepare the comparative common-size Income Statements. 3. Evaluate the results of your Analysis and explain to the management why the net profit declined.
Using the preceding information, calculate EVA, and discuss which division manager will get the bonus. 3. What nonfinancial measures could CarniTrin use to evaluate divisional performances?