18 May Question9-33 CVP AnalysisLawn Master company, a manufacturer of riding lawn mowers, has a p
Question
9-33 CVP Analysis
Lawn Master company, a manufacturer of riding lawn mowers, has a projected income for 2013 as follows:
Sales 46,000,000
Operating expenses:
Variable expenses $32,200,000
Fixed expenses $7,500,000
Total expenses 39,700,000
Operating profit $6,300,000
9-33 questions:
1. Determine the breakeven point in sales dollars.
2. Determine the required sales in dollars to earn a before tax profit of $8,000,000.
3. What is the breakeven point in sales dollars if the variable cost increases by 12%?
10-55
Kelly Company is a retail sporting goods store. Facts regarding Kelly’s operations are as follows:
– Sales, all on account, are budgeted at $220,000 for December and $200,000 for January.
– Collections are expected to be 60% in the month of sale an= d 38% in the month following the sale.
-Gross margin is 25% of sales.
– A total of 80% of the merchandise sold in a month is purchased in the month prior to the month of sale and 20% is purchased in the mo= nth of sale. Payment for purchased merchandise is made in the month following the purchase.
– Other expenses [selling and administrative] to be paid in = cash each month are $22,600.
– Annual depreciation is $216,000, one-twelfth of which= is reflected as part of monthly operating expenses.
Kelly Company’s statement of financial position at the close of business on November 30 as follows:
Kelly Company
Statement of Financial Position
November 30, 2013
Assests
Cash = $22,000
Accounts receivable(net of $4,000 = 76,000
Allowance for doubtful accounts)
Inventory = 132,000
Property, plant, and equipment(net of $680,000 accumulated depreciation) 870,000=
Total Assets $1,100,= 000
Liabilities and Stockholders Equity
Accounts payable $162,000
Common stock = 800,000
Retaining earnings = 138,000
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