Purchase Solution

Three cost accounting problems

Not what you're looking for?

Ask Custom Question

Problem 1 Bradford Products has the following product information available:

Sales price $25.00 per unit
Variable costs $15.00 per unit
Fixed Costs (total) $50,000

Required: Answer each of the following independent questions.

A.What is the contribution margin per unit?
B.What is the contribution margin ratio?
C.How many units must be sold in order to break-even?
D.How many units must be sold in order to earn a target profit of $400,000? (ignore taxes)
E.Bradford is considered an advertising campaign that has a cost of $70,000. The marketing department estimates that the campaign will increase sales by $250,000. Should the company have the advertising campaign? Why or why not? Show your calculations.

Problem 2
For each of the following statements, fill in the blank with either the word increase, decrease, or stay the same.

a.All else being equal, as the sales price per unit increases, the contribution margin per unit will _________________.
b.All else being equal, as variable costs per unit increase, the contribution margin per unit will _________________.
c.All else being equal, as total fixed costs increase, the contribution margin per unit will ________________.
d.All else being equal, as sales volume increases, total fixed costs will _______________.
e.All else being equal, as sales volume increases, total variable costs will _____________.

Problem 3

A manager is considering a special project. Corporate policy dictates that all special projects must generate an after-tax profit of $21,000. If the company expects costs related to the project to be equal to $43,000, what is the before-tax cash sales price that should be charged in order to adhere to corporate policy assuming the company has a tax rate of 30%?

Attachments
Purchase this Solution

Solution Summary

The solution tackles three cost accounting problems including one on Bradford Products,

Solution Preview

Problem 1
A. contribution margin per unit?=Sales price - variable cost = 25-15=$10.00
B. contribution margin ratio?=Contribution Margin per unit / Selling price = 10/25 = 40%
C. BEP=Fixed costs/ Contribution margin per unit = 50000/10=5000 units
D. Number of units = (Fixed costs + target profits)/ Contribution margin per unit
...

Purchase this Solution


Free BrainMass Quizzes
Learning Lean

This quiz will help you understand the basic concepts of Lean.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.