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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

Required:

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.

Required:

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.

Required:

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.

Required:

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.

Required:
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.