ACCT 212 Connect Homework 4 Liberty Solution

Question 1

Blanchard Company manufactures a single product that sells for $200 per unit and whose total variable costs are $160 per unit. The company’s annual fixed costs are $532,000.

Question 2

Blanchard Company manufactures a single product that sells for $110 per unit and whose total variable costs are $88 per unit. The company’s annual fixed costs are $308,000.

(1) Prepare a contribution margin income statement for Blanchard Company at the break-even point.

(2) Assume the company’s fixed costs increase by $125,000. What amount of sales (in dollars) is needed to break even?

Question 3

Blanchard Company manufactures a single product that sells for $190 per unit and whose total variable costs are $152 per unit. The company’s annual fixed costs are $562,400. Management targets an annual pretax income of $950,000. Assume that fixed costs remain at $562,400.

Question 4

Blanchard Company manufactures a single product that sells for $190 per unit and whose total variable costs are $180 per unit. The company’s annual fixed costs are $639,000. The sales manager predicts that annual sales of the company’s product will soon reach 40,900 units and its price will increase to $209 per unit. According to the production manager, variable costs are expected to increase to $149 per unit but fixed costs will remain at $639,000. The income tax rate is 40%. What amounts of pretax and after-tax income can the company expect to earn from these predicted changes?

Question 5

Bloom Company management predicts that it will incur fixed costs of $254,000 and earn pretax income of $411,600 in the next period. Its expected contribution margin ratio is 64%.

1. Compute the amount of total dollar sales.

2. Compute the amount of total variable costs.

Question 6

Cooper Company expects to sell 120,000 units of its product next year, which would generate total sales of $9,240,000. Management predicts that pretax net income for next year will be $1,170,000 and that the contribution margin per unit will be $33.

Question 7

Hudson Co. reports the contribution margin income statement for 2017.

1. Compute Hudson Co.'s break-even point in units and.

2. Compute Hudson Co.'s break-even point in sales dollars.

Question 8

Hudson Co. reports the contribution margin income statement for 2017.

1. Assume Hudson Co. has a target pretax income of $165,000 for 2018. What amount of sales (in dollars) is needed to produce this target income?

2. If Hudson achieves its target pretax income for 2018, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.)

Question 9

Hudson Co. reports the contribution margin income statement for 2017.

Assume the company is considering investing in a new machine that will increase its fixed costs by $42,000 per year and decrease its variable costs by $9 per unit. Prepare a forecasted contribution margin income statement for 2018 assuming the company purchases this machine.

Question 10

Hudson Co. reports the contribution margin income statement for 2017.

If the company raises its selling price to $240 per unit.

1. Compute Hudson Co.'s contribution margin per unit.

2. Compute Hudson Co.'s contribution margin ratio.

3. Compute Hudson Co.'s break-even point in units.

4. Compute Hudson Co.'s break-even point in sales dollars.