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Your company charges off overhead expense based on the number of people in each department. Whal - percent should be charged to each department if advertising has 8...

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Your company charges off overhead expense based on the number of people in each department. Whal - percent should be charged to each department if advertising has 8 people sales has people, payroll has peopl accounting has people and admninistration has People'?An item was sold for S142.65 including 5% sales tax, How much was the amount paid for sales tax? 10t'5 '[ /0b.5 6065 iDo Ii Onb 5 Issk Qvt2 tx 42.e5 ~3,7 Prfke wkX 1D6,5% Isk Pre vy 0l5 Xz 065 142,65 You have gone to work f

Your company charges off overhead expense based on the number of people in each department. Whal - percent should be charged to each department if advertising has 8 people sales has people, payroll has peopl accounting has people and admninistration has People'? An item was sold for S142.65 including 5% sales tax, How much was the amount paid for sales tax? 10t'5 '[ /0b.5 6065 iDo Ii Onb 5 Issk Qvt2 tx 42.e5 ~3,7 Prfke wkX 1D6,5% Isk Pre vy 0l5 Xz 065 142,65 You have gone to work for company that pays you commission of 5.2% based on your sales. If you wanL 10 earn 532,000,how much must Sell Lo earn thal much commission? found that salaries accounted for S6% of the total expenses If the company amounted to S782,530, what were the total expenses? salaries Mark $ up furniture 220% ofthe cost At what price will the 10. Your comgell y chairswhich costs them $58.502 compan} sell



Answers

The HighStep Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. HighStep is considering opening another store that is expected to have the revenue and cost relationships shown here. Consider each question independently. 1. What is the annual breakeven point in (a) units sold and (b) revenues? 2. If 8,000 units are sold, what will be the store's operating income (loss)? 3. If sales commissions are discontinued and fixed salaries are raised by a total of $\$ 15,500,$ what would be the annual breakeven point in (a) units sold and (b) revenues? 4. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $\$ 2.00$ per unit sold, what would be the annual breakeven point in (a) units sold and (b) revenues? 5. Refer to the original data. If, in addition to his fixed salary, the store manager is paid a commission of $\$ 2.00$ per unit in excess of the breakeven point, what would be the store's operating income if 12,000 units were sold?

Mm.

So the work right shoe company operates a chain of shoe stores That sells 10 different styles of inexpensive men's shoes with identical units, cost and selling price is now a unit is defined as a pair of shoes and it starts as a stop. It started, the store manager always paid a fixed salary. Individual sales people receive a fixed salary and sales commission, World crisis. Considering opening another store that is expected to have the revenue and cost relationships showed in the table below were given the unit available data, propel shoot and the annual fixed cost. So that's the answer the following questions. And I'll be honest, you know, one x 1. Now the first question is what is the animal break even points in units sold and also in revenues? So we're gonna start with animal break even points and we're gonna start with units and revenues. So we have annual break even points. So first of all the selling price power units, S P PI units is $30 from the from the table was done with subtract or less. The variable costs per unit. And the very because by units is $21. So let's start and then what we get with difference. And that would be the contribution margin by units. And that is $9 Right? Because 30 -21 is nine. So therefore the contribution imagine ratio the contribution imagine ratio. It's equal to the contribution margin divided by selling price. So therefore we're going to have $9 contribution margin is $9. Selling price is $30 So. So nine divided by 30 billion contribution margin ratio. And that would be that c percent. Now the first question which is the break even the in our break even point in units. So therefore the break even point in unit. Which is the first part of the question would be the total fixed cost divided by the contribution of merging per unit. So yeah, we're going to have The total fixed costs were giving the table is 360,000 And the contribution margin per unit is $9 that were given. So When we divide this hour, break even points in units would be 40,000 units. And the b part of the question says the break even point in revenue. So it's gonna be a similar way to find that. So break even a revenue will basically be the fixed cost divided by the contribution imagine ratio. And then this is the cost to 360,000 Divided by the contribution margin ratio is 30%, which we just found. So when divide these events have 1,200,000. And that will be the break even point in revenues. Sure. So the next question question too says If 35,000 units are sold. So we sell that 5000 units. What is the we'll be the stars operating income or loss. So the operating um, the operating income or loss is all we're going to find And we saw 35,000 units. So number of units Sewed is 35 1000 units. Rights. Right. So moving on the contribution imagine Pygmies that we found before. It's $9. And mind you CMS contribution. Imagine so we don't forget. So contribution margin per unit is $9. Then the total imagine nick total contribution imagine will be close to 35,000 basically multiply the number of units times the contribution margin per unit. So that 5000 units Multiplied by $9. And that will give you 315 $1,000. So I'm not going to last the fixed costs and Meiji fixed cost is $3.60,000. Right? So when we less this from these, you're going to have minus because 3 15,000 minus 3 16 we give you minus. So to remind us 45 thousands. So obviously this is not a profit. This is going to be a net loss. Right? Right. So this is the operating loss, not the operating income. So we have an operating loss of $45,000. We've been answering the next question. Um, it says if sales commissions are discontinued And fixed salaries are raised by total of $81,000, what would be the annual break even points in units sold and in revenues? So basically we're going to find that too. So, um, the sales commissions are just continue to fix salaries are raised by $81,000 to finally break even pointing you need. So I'm in revenues. So I was finding new big big evil points in essence, then you break evil point. So basically the revised the device fixed cost is equals to $360,000 Plus $81,000. Because the $81,000 comes from the fixed salaries that are raised by 81,000. So we have a race in fiscal in the fixed salary By 81,000. Right? So at that the revised fixed costs and will give To give us $4.41,000. And then the revised variable costs per unit. Okay to be $21 which was before -1.50 And then just give you $19.50. Now the revised contribution imagine B equals two Taxi dollars, I was minus 1950 right from here And then just give you $10 50 cents. Now the contribution imagine ratio Will be equals to $10.50 cents Divided by $30 and now which is right here and now this is going to give you 35%. So therefore answering the question by giving the new break even point in units. The break even in units will be closed to 44-1000 which is a revised fixed cost divided by $10.50. And this is where he came from the device contribution imagine. And this gave you 42 1000 units because it's in units right now the break even point which is a part of the question. The revenues we'll give you everybody I'm sorry mm We'll give you 441,000 which is the revised fixed costs Divided by 35%. And this will give you one million to $60,018. Now moving on to the 4th question, Okay. He says referred to the original data if in addition to is fixed salary. If an addition to his fixed salary, the store manager has paid a commission of 30 cents by units sold. What would be the annual break evil points in units and in units sold and revenues. So I have to find the additional sales commission. So now the revised contribution emerging We cost to $9 miners 0.5 cents On this give you 8.50 cents right? The revised contribution imagine ratio will be hosted 858.50 I was before divided by $30 and this will give you 28 points 33%. Yeah. So now asking the question the break even in you need to be closed to Yeah 3 60,000 divided by The 8.50 which is the revised contribution margin. And just to give you 42,000 3 55. Three 0.94. And then this is the units. Mhm. Now the break even point in revenues will be closed to 3 60,000 Divided by 28 points 33%. And this will give you one million to 70,000 5 88. And this is in dollars. So now moving on to the 5th question, the last final question. And this is Refer to the original data if an addition to South Africa salary the store manager has paid a commission of 30 cents per unit. So we are getting an additional commission of 30 cents per unit in excess of the breakdown minute points. What would be the stores operating income if 50,000 units were sold? So as to find the additional commission after a break even. So the contribution margin per unit up to break even is Is $9. And the contribution margin brian it's after break even Is $8.50. Right? So therefore the total contribution margin We cost to 40,000 units Multiplied by $9. Close 10,000 units multiplied by $8.50. And then If you add this together, this will give you 445 1000. So then we less fixed costs and fixed costs is 3 60,000 And then the operating income will be equals two. Yeah, the operating income really different and that will be $85,000. So as for the question, this will be the stores operating income of 50,000 minutes were sold. That's the answer to the entire question.

So the first question say, How would the answer to problem 2 34 be modified if you are asked for its shadow off cost of goods manufactured on sold instead of a shadow off cost of goods manufactured? Be specific. So this should do that is walked out in the problem to 24 can be walked out for the shadow off cost of goods manufactured on the cost of goods sold. So this new shadow can be changed by adding the beginning on the ending finished goods so junior shadow can be changed by I didn't beginning on ending finished goods. Eventually, Sudanese should do, of course, of good suit cost off good suits on cost of goods manufactured. So the cost of goods manufactured means that the goods which are ready to be sold during the, um, accounting period and sometimes sometimes some costs which I killed during the manufacturing of products I regarding I regarded as the ending working process on some cost which I and killed in the beginning, considered as the cost are considered in the cost of goods manufactured. So moving onto the second question mhm well, the sales manager salary be accounted for any differently if the our cooperation where a merchandizing sexual company, instead off a manufacturing sector company, used the flow of manufacturing cost Outlining exhibits to nine describe how the wages of an assembler in the plants will be accounted for in this manufacturing company. So in both the companies, maybe the manufacturing or the merchandizing company, the salaries off the sales manager is sticking in stock out of the marketing costs, the salary off money jazz It's taken as the market scene costs in manufacturing a merchandizing. So the item of the marketing and the advertisement costs is taking us the operation operating costs in the income statement. So market scene on advertisement cost he's taking as the operating costs in the income statement. Now the wages off a worker would come on that specific tax which he or she is doing and therefore the daily wages is going to be treated as the cost in walking process in progress and will continue to the goods are committed into the finished goods are ready for the still so daily wages I treated as a costs in the work in progress on sue until the goods are combated to finish bills. So the Todd one plants supervised three salaries I usually regarded as manufacturing overhead costs. When might some of these costs be regarded as direct manufacturing costs? Give an example. So planting plants summarizing salaries can be regarded as very manufacturing costs. Aunt to know whether this voracious salaries, which does the direct cost during direct cost, would depend on the type of transactions that don't. So if it works, guys, I add for a project on the contract basis, then the wage regional as direct costs only for that particular contract. So, for example, so in essence, it would depend on the type of transactions. Don't. Yeah, So even Walker is, I add, for a project on contract, then the wages of digital has direct costs for that contract. Maybe not in the next question, suppose that both direct materials used on the plants on the equipments the position and related to the manufacturer off one million units off products. What is the unit cost for the direct materials assigned to those units? On what is the unit cost off plants and equipment deposition. I assume that yearly plants and equipment the position is completed on a straight line basis. So first we're going to calculates we're going to calculate the direct materials used as direct Matt Syria's used. So we have 3. 20 million divided by one milion units on this is going to be close to 3 $20 hi units. So now that the position will not be 80 million $80 million divided by one million units on this because $80 pi units So that's the answer now moving on to the next question. Okay, assume that the employee cost behavior patterns in requirement for persist that is direct material cost behave as a variable cost on plants and equipment. The position behave as fixed cost repeated re pretty competitions requirement for assuming that the costs have been predicted for the manufacture of 1.2 million units off products I would have total Cosby affected. So the direct material you need cause to remain on change art units cost remains unchanged. Adds 3 $20 on the position caused by UNIX is equals to $80 million divided by one million sue 100 1000 on this is equal to 66 0.67 cents by units now the total direct material costs to rise by 20% so to hotel direct material costs would rise by 20%. So 3. $84 million because 3 20 the last by units multiplied by 1,000,200 is 33 84,084 milion. So the total the position would be unaffected. Yeah, at $80 million. So now the final question. Yes. As a management, accountants explain concisely to the president's why the unit cost ified. You require my four or five. So the reason is, um, the unions cost the average of the cost for a single unit off the product on for completing the total cost required. The direct material units cost off 3 $20. We can start direct material unit costs because direct materials are a variable cost. So the cost of direct materials changes the level of output. So that's why the unit deferred. So the cost off directs materials changes with the level off outsports

So we've discussed some important details regarding profit revenue and costs. You know that cost is equal to fix costs plus variable cost times whatever are variable is usually that's the number of units that we're making. Then we have revenue is equal to the the selling costs. So when you go to the store and you buy the price, that's revenue from for the store and that's the selling cost times the number of units. And that our profit is how much we've brought in through revenue minus how much we've had to spend through either making the product or any um employee costs or anything like that. So one other way that we find revenue though is through the demand function. So our demand functions usually a function p with respect to act. It doesn't have to be, but it's important to know that the revenue function is equal to our demand function P of X times X. Um That is really important to know um The demand function is usually a price function with respect tax. So we call it P. Of X. For price. So this is how we find revenue which will allow us to put it into the profit function. That's going to be our final answer


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