ASSIGNMENT: Accounting for Managers
Part A: Using CVP analysis to find breakeven points and target profit volumes
Mimi Incorporated has a targeted operating income of $518,000 for the upcoming year. The selling price of its single product is $40.50 each, while the variable cost per unit is $12.50. Fixed costs total $182,000.
Calculate the following:
a. Contribution margin per unit
b. Breakeven point in units
c. Units to be sold to earn the targeted operating income
Part B: Factoring resource constraints into product mix decisions
Rose Incorporated manufactures two types of vases, small and large. The following per-unit data are available.
Small Vase Large Vase
Sale price $60 $100
Variable costs $35 $60
Machine hours required for 1 vase 1 2
Total fixed costs are $600,000, and Rose Incorporated can sell a maximum of 25,000 units of each type of vase annually. Machine hour capacity is 50,000 hours per year.
a. Determine the contribution margin per unit for each type of vase.
b. Determine the contribution margin per machine hour for each type of vase.
c. Determine the number of units of each style of vase that Rose Incorporated should produce to maximize operating income.
d. What is the dollar amount of the maximum operating income as calculated in C above?
Part C: Deciding whether to discontinue a product, department, or store
The income statement for Germain Appliances is divided by its two product lines, Toasters and Microwaves, as follows:
|
Toaster
|
Microwave
|
Total
|
|
Sales revenue
|
$620,000
|
$255,000
|
$875,000
|
|
Variable expenses
|
$440,000
|
$210,000
|
$650,000
|
|
Contribution margin
|
$180,000
|
$15,000
|
$225,000
|
|
Fixed expenses
|
$75,000
|
$75,000
|
$150,000
|
|
Operating Income (loss)
|
$105,000
|
$(30,000)
|
$75,000
|
If Germain Appliances can eliminate fixed costs of $34,000 and increase the sale of Toasters by 6300 units at a selling price of $30 per unit and a contribution margin of $12 per unit, then discontinuing the Microwaves should result in what difference in total operating income?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.