Managerial Accounting Problem
Not what you're looking for?
Cost Volume Profit Analysis
You are considering the purchase of a hotel with 20 rooms. If you buy it ,the fixed costs are expected to be $200,000 per year. The variable costs of renting a room for one night include $20 for maid service and $5 for utilities and other costs. Assume no taxes.
a If you expect to rent the rooms for $90 how many rooms must you rent during the year?
b. If you want to have a profit of $50,000 and expect to be at 70% of capacity for the 365 days of the year, what price per room would you expect to have to change?
You perform the following profitability analysis on the products that you manufacture
Product A Product B Product C
Revenues 300,000 800,000 100,000
Variable Costs 200,000 500,000 40,000
Fixed Costs 100,000 100,000 100,000
Profit 0 200,000 $40,000
Number of units made and sold 1,000 10,000 100
Fixed costs are sunk and there is excess capacity.
a. Should product C be dropped? Capacity.
b. Which product would provide the most profit if one more unit were sold?
Purchase this Solution
Solution Summary
This solution is comprised of a detailed calculation and explanation for cost volume profit analysis in text file.
Solution Preview
You are considering the purchase of a hotel with 20 rooms. If you buy it the fixed costs are expected to be $200,000 per year. The variable costs of renting a room for one night include $20 for maid service and $5 for utilities and other costs. Assume no taxes.
a If you expect to rent the rooms for $90 how many rooms must you rent during the year?
Breakeven point (units) = Total Fixed Costs
Contribution Margin per Unit
= $200,000
$90 - ($20 + ...
Purchase this Solution
Free BrainMass Quizzes
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Learning Lean
This quiz will help you understand the basic concepts of Lean.