Chapter 16-2 Accounting Case

Doyles part delimitation is : Selling price per misadventure$9.60100% Variable cost per box$5.76 60% contribution margin per box$3.84 40% Break-even volume = Fixed Costs social unit role = 1,056,0003.84 = 275,000 To teetotum a 15% annex in shifting output signal costs of candy and still maintain the run short contribution margin voice: If variable production costs increase 15%: VCNew = (VCOld) (1.15) VCNew = (4.80)(1.15) VCNew = 5.52 Total variable costs per whole atomic number 18: VC = 5.52 (production costs) + .96 (selling costs) VC = 6.48 Contribution margin percentage (CMP) is calculated as follows: CMP = UR - UVCUR where, UR = Unit revenue and UVC = Unit variable costs Solving for UR, this becomes: UR = UVC1 - CMP interchange in the new VC in the above equation: UR = 6.481 - .40 =UR = 6.48.60 =$10.80 The fuddle income statemen t for Doyle, absent any changes, is presented below: Assuming a constant appraise reckon, I = [(UR - UVC) (X)] - FC ;where, X = production in units; FC = fixed costs; and, I = income ahead taxes To maintain live net income before taxes: 441,600 = [(9.60 - 5.

76)(x)] - 1,056,000 3.12 x = 1,056,000 - 441,600 3.12 x = 1,497,600 x = 480,000 chump that the assumption of a constant tax rate was necessary if Doyles information was prepared considering Net Income after tax revenue. step that because we faux a constant tax rate impose and Net Income a fter tax revenue as a percentage of Sales c! hanged in the projected income statement, but Tax as a percentage of Income before Tax did non change. That is, because we assumed a constant tax rate, we were calculating Income before Tax in the above formula. It is real-life problems such as the peerless expound for Doyles, it is common to use Income before Taxes in the calculations. there are several reasons for this, but it is done primarily because...If you demand to set about a full essay, order it on our website: BestEssayCheap.com

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