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    Blankinship, Inc., Alex Miller, Inc., Bob's Textile Company, Amigo Corporation: breakeven, cost volume profit, disbursements

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    1. Blankinship, Inc., sells a single product. The company's most recent income statement is given below.

    Sales $200,000
    Less variable expenses (120,000)

    Contribution margin 80,000
    Less fixed expenses (50,000)

    Net income $ 30,000


    a. Contribution margin ratio is
    b. Breakeven point in total sales dollars is
    c. To achieve $40,000 in net income, sales must total
    d. If sales increase by $50,000, net income will increase by

    2. Alex Miller, Inc., sells car batteries to service stations for an average of $30 each. The variable cost of each battery is $20 and monthly fixed manufacturing costs total $10,000. Other monthly fixed costs of the company total $8,000.


    a. What is the breakeven point in batteries?
    b. What is the margin of safety, assuming sales total $60,000?
    c. What is the breakeven level in batteries, assuming variable costs increase by 20%?
    d. What is the breakeven level in batteries, assuming the selling price goes up by 10%, fixed manufacturing costs decline by 10%, and other fixed costs decline by $100?

    3. Bob's Textile Company sells shirts for men and boys. The average selling price and variable cost for each product are as follows:

    Men's Boys
    Selling Price $28.80 Selling Price $24.00
    Variable Cost $20.40 Variable Cost $16.80

    Fixed costs are $38,400.


    a. What is the breakeven point in units for each type of shirt, assuming the sales mix is 2:1 in favor of men's shirts?
    b. What is the operating income, assuming the sales mix is 2:1 in favor of men's shirts, and sales total 9,000 shirts?

    4. The following information pertains to Amigo Corporation:

    Month Sales Purchases
    July $30,000 $10,000
    August 34,000 12,000
    September 38,000 14,000
    October 42,000 16,000
    November 48,000 18,000
    December 60,000 20,000

    ? Cash is collected from customers in the following manner:
    Month of sale (2% cash discount) 30%
    Month following sale 50%
    Two months following sale 15%
    Amount uncollectible 5%
    ? 40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.


    a. Prepare a summary of cash collections for the 4th quarter.
    b. Prepare a summary of cash disbursements for the 4th quarter.

    Madzinga's Draperies manufactures curtains. A certain window requires the following:

    Direct materials standard 10 square yards at $5 per yard
    Direct manufacturing labor standard 5 hours at $10

    During the second quarter, the company made 1,500 curtains and used 14,000 square yards of fabric costing $68,600. Direct labor totaled 7,600 hours for $79,800.

    a. Compute the direct materials price and efficiency variances for the quarter.
    b. Compute the direct manufacturing labor price and efficiency variances for the quarter.

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