Exam 7: Job Costing Systems

List the limitations of the Cost-Volume-profit graph.

Rothe Company manufactures and sells a single product that it sells for £90 per unit and has a contribution margin ratio of 35%. The company's fixed expenses are £46,800. If Rothe desires a monthly target net operating income equal to 15% of sales, sales will have to be (rounded)

Everton Furniture Company produces two kinds of chairs: an oak model and a chestnut wood model. The oak model sells for £60 and the chestnut wood model sells for £100. The variable expenses are as follows: -Expected sales in units next year are: 5,000 oak chairs and 1,000 chestnut chairs. Fixed expenses are budgeted at £135,000 per year. The yearly break-even point in total sales for the expected sales mix is:

During March, Adams Company had sales of £5,000,000, variable expenses of £3,000,000, and fixed expenses of £1,500,000. Assume that cost behaviour and unit selling price remain unchanged during Aril. In order for the company to realise net operating income of £300,000 for April, sales would have to be

Explain the advantages and limitations of using the variable costing approach to decision making. When is it useful, when is it not?

Turner Company's contribution margin ratio is 15%. If the degree of operating leverage is 12 at the £150,000 sales level, net operating income at the £150,000 sales level must equal

Moon Company sells its product for £6 a unit. Next year, fixed expenses are expected to be £200,000 and variable expenses are estimated at £4 a unit. How many units must Moon sell to generate net operating income of £40,000

The European Electronics Company has 3 divisions. The following budgeted data is available. German Italian Sweden Sales 2,500 units 2,500 units 2,500 units Selling price £ 80 per unit £85 per unit £ 90 per unit Variable expense £ 35 per unit £ 40 per unit £ 38 per unit Fixed expense £ 37,500 £ 40,000 £ 50,000 -Sweden Division: If the sales volume decreases by 25%, the variable expense per unit increases by 15%, and all other data remain as in the budget, net operating income will be:

Garth Company sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then

The management accountant at Essex Engineering has prepared the budget for 2003. All managers are concerned about the possibility of recession in Europe. -In the last financial year nearly 80% of total output was exported to Europe. The break-even sales in units is

Which of the following formulas is used to calculate the break-even point in terms of sales pounds

A company produces and sells two products with the following details: Product X Product Y Selling Price £1 £1 Variable costs £0.45 £0.60 Fixed costs £1,212,000 per period Total sales revenue is currently generated by the two products in the following proportions: Product X 70 per cent Product Y 30 per cent Required: Calculate the break-even sales units per period, based on the sales mix assumed above.

The following information relates to a month's production of WER Ltd, a small manufacturing company mass-producing a single product. Materials £4.00 Labour per unit £6.00 Fixed costs per month £40,000 Production capacity per month 10,000 units Selling price per unit £17.00 Current level of sales per month 7,000 units Required a) Calculate the break-even point in units and Calculate the current level of profit per month b) The Marketing Manager of ABC Ltd. suggests that the company should increase the product's selling price to £20 and upgrade the quality of the product by spending an additional £2.00 per unit on materials. Fixed costs would be increased by £2,000. It is estimated that sales per month would drop to 6,500 units. What would be the effect on ABC Ltd's profitability of implementing the above policy?

The contribution margin ratio is 25% for Grain Company and the break-even point in sales is £200,000. If Grain Company's target net operating income is £60,000, sales would have to be

Using your own words, analyse the situation that Prem Narayan finds himself in, and suggest a solution.

The variable expense per unit is £12 and the selling price per unit is £40. Then the contribution margin ratio is 70%

The margin of safety can be defined as the amount by which sales can decrease before losses are incurred by the company.

Contribution margin is the amount remaining after

The European Electronics Company has 3 divisions. The following budgeted data is available. German Italian Sweden Sales 2,500 units 2,500 units 2,500 units Selling price £ 80 per unit £85 per unit £ 90 per unit Variable expense £ 35 per unit £ 40 per unit £ 38 per unit Fixed expense £ 37,500 £ 40,000 £ 50,000 -German Division: If the unit contribution margin is increased by 10%, the total fixed expense is decreased by 20%, and all other data remain as in the budget, net operating income will be:

Sinclair Company's single product has a selling price of £25 per unit. Last year the company reported a profit of £20,000 and variable expenses totaling £180,000. The product has a 40% contribution margin ratio. Because of competition, Sinclair Company will be forced in the current year to reduce its selling price by £2.00 per unit. How many units must be sold in the current year to earn the same profit as was earned last year