ACCT 301 ASSIGNMENT 2
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ACCT 301 ASSIGNMENT 2
COST ACCOUNTING
ACCT 301
ASSIGNMENT 2
You are required to work in this
assignment individually. Any suspicious activities or cheating will
result zero grade in this assignment.
Q1 CVP
analysis has a number of uses. Describe two of these. [1 Point]
Q2
Suppose a service organization has a mixed
cost function. When it experiences a 5% increase in sales, income increases by more
than 5%. Explain why this occurs. [1 Point]
Q3
ABC Compagny is selling the unit of final product for $70. The projected
income statement for 2014 follows:
Sales
$4,000,000
Variable costs
(2,000,000)
Contribution
Margin
2,000,000
Fixed
costs
(1,500,000)
Pretax
profit
$ 500,000
- Compute the contribution margin per unit and the number
of units that must be sold to break even. [1 Point]
- Compute the contribution margin ratio and the breakeven
point in total revenue (in $).[1 Point]
- What is the margin of safety in number of units? [1
Point]
- Assume a tax rate of 25%. How many units must be sold
to earn an after-tax profit of $300,000? [1 Point]
Q4.
RSE Corporation sells its product for $11 per unit. Its variable cost is
$2 per unit, and total fixed costs are $600. Assuming next period’s
estimated sales are 240 units and that 240 units is within the relevant range,
calculate the following amounts:
- Degree of operating leverage [1 Point]
- Margin of safety in units [1 Point]
- Margin of safety in revenues (in $) [1 Point]
- Estimated income or loss (indicate which) [1 Point]
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