# Week 2 Chapte3 Cost-Volume Relationship Managerial Accounting for

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Need help on my assignment 7 pages Week 2 Chapter 3 Assignment.docx Week 2 Chapte3 Cost-Volume Relationship Managerial Accounting for Managers 3rd Edition, Noreen, Brewer,Garrison Problem 3-22 Marlin Company Sales Mix; Multiproduct Break-Even Analysis (LO 3-9) 1. Marlin Company, a wholesale distributor, has been operating for only a few months. The company sells three products – sinks, mirrors, vanities. Budgeted sales by product and in total for the coming month are shown below: Product Sinks Mirrors Vanities Total Percentage of sales……… 48% 20% 32% Sales……………………………. \$ 240,000 100% \$100, 000 10% \$160, 000 100% \$500, 000 100% Variable expenses………. 72,000 30% 80, 000 80% 88, 000 55% 240, 000 48% Contribution Margin….. \$ 168,000 70% \$ 20,000 20% \$ 72,000 45% 260, 000 52% Fixed expenses…………… 223, 600 Net operating income…. \$ 36, 400 Dollar sales to break-even = Fixed Expenses = CM ration \$223,600 = \$430,000 0.52 As shown by these data, net operating income is budgeted at \$36,400 for the month, and break-even at \$430,000. Assume that actual sales for month total \$ 500,000 as planned. Actual sales by products are: Sink, \$160,000; Mirror, \$200,000; and vanities, \$140,000 Required: 1. Prepare a contribution format income statement for the month based on actual sales data Present the income statement in the format shown above. 2. Compute the Break-Even Point in sales dollars for the month, based on your actual data. 3. Considering the fact that the company met its \$500,000 sales budget for the month, the president is shocked at the results shown on your income statement in (1) above. Prepare a brief memo for the president explaining why both the operating results and the Break-Even-Point in sales dollars are different from what was budgeted. Problem : 3 – 25 Break-Even Analysis: Pricing ( LO 3-1, LO 3-4, LO 3-6) Demer holdings AG of Zurich, Switzerland has just introduced a new fashion watch for which The company is trying to find an optional selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each SFr 2 per unit reduction in the selling price. (SFr2 denotes 2 Swiss Francs). The company ‘s present selling price is SFr90 per unit, and variable expenses are SFr60 per unit. Fixed expenses are SFr840,000 per year. The present annual sales volume (at the SFr90 selling price) is 25,000 units. Required: 1. What is present yearly net operating income or loss? 2. What is the present Break – Even –Point in units and in Swiss Francs sales? 3. Assuming that the marketing studies are correct, what is the maximum profit that the company can earn yearly? At how many units, and at what selling price per unit would the company generate this profit? 4. What would be the Break-Even-Point in units and in Swiss Francs sales using the selling price you determined in (3) above (i.e., the selling price at the level of maximum profits) ? Why is this Break-Even-Point different from the Break-Event-Point you computed in (2) above? Problem 3 – 26 Changes in cost Structure; Break-Even Analysis; Operating Leverage; Margin of Safety ( LO 3 -4, LO 3 -6, LO 3 – 7, LO 3 -8) Frieden Company’s contribution format income statement for the most recent month is given below: Sales (40,000 units) ……………………………………….. \$ 800, 000 Variable expenses ………………………………………….. 560, 000 Contribution margin ……………………………………….. 240, 000 Fixed expenses ………………………………………………. 192, 000 Net operating income …………………………………….. \$ 48, 000 The industry in which Frieden Company operates is quite sensitive to cyclical movements in the economy. Thus profits vary considerable from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits. REQUIRED: 1. New equipment has come on the market that would allow Frieden Company to automate a portion of its operations. Variable expenses would be reduced by \$6 per unit. However, fixed expenses would inc