Exer1-4Chapter 4Exercises 1-4Exercise 4-1Fixed and variable costsExercise 4-2Cost structure at MicrosoftExercise 4-3Contribution margin from the Men's Wearhouse annual reportExercise 4-4$540,000480000420,000360,000300,000240,000180, 000120,00060,00030,0000Units Produced 3,000 4,000 5,000 6,000

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Exer5-6Chapter 4Exercises 5-6Exercise 4-5High $ 20,000 - low $ =High machine hours 8,000 - low machine hours =Change in $ divided by change in machine units= per unit costTotal cost High LowVariable costsFixed costsExercise 4-6a.High $ 28,000 - low $ =High cost - low cost =Change in $ divided by change in cost units= per unit costTotal cost High LowVariable costsFixed costsb.c.

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Exer7-8Chapter 4Exercises 7-8Exercise 4-7a.$11,0009,0007,0000$100,000 $150,000 $200,000 $250,000Salesb.Exercise 4-8a. Account analysisVariable Cost EstimateStaff salariesProductionVariable cost per unitFixed Cost EstimateDepreciationShare of building costb. 60 more employeed in Junec. 10 more employeed in May

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Exer9-10Chapter 4Exercises 9-10Exercise 4-9a. Account analysisVariable Cost EstimateCleaning suppliesProductionVariable cost per unitFixed Cost EstimateRentUtilitiesDepreciationb. Contribution margin?Exercise 4-10Variable Cost Fixed CostMaterial $ 30,000Direct labor 20,000DepreciationPhoneOther UtilitiesSupervisory salariesEquipment repairIndirect materialsFactory maintenanceTotalProduction 1,000 unitsVariable cost per unit

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Exer11-13Chapter 4Exercises 11-13Exercise 4-11a.Selling price = $800Variable cost = 300Contribution margin $500Fixed cost per month $50,000b.Exercise 4-12a.Fixed costs per month $200,000/ variable cost per dollar or contribution margin ratiob.c.Exercise 4-13a. Selling price = $800Variable cost = 300Contribution marginb.

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Exer14-17Chapter 4Exercises 14-17Exercise 4-14a.Selling price = $800Variable cost = 300Contribution margin $500/Sales $800b.Exercise 4-15a.b.Exercise 4-16Selling price = $1,000Exercise 4-17a.b. Breakeven Fixed 178,000/ ? =c.

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Exer18-21Chapter 4Exercises 18-21Exercise 4-18a.Fixed costs 103,000/ ? =b.c.Exercise 4-20a.Dept. A Dept. B Dept C TotalProfit $99,000 $255,000 $88,000 $442,000Divided bySales $265,000 $850,000 $900,000 $2,015,000Percentage of sale 37.3%b.Dept. A Dept. B Dept C TotalProfitDivided bySales $265,000 $850,000 $900,000 $2,015,000Percentage of saleExercise 4-21a.b.

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P1Chapter 4Problem 4-1Royal Desert HotelFixed (F) variable (V) or mixed (M)a. Depreciationb. Salaries of staffc. Salaries of administrative staffd. Soap, shampooe. Laundry costsf. Food and beverageg. Grounds maintenance

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P2Chapter 4Problem 4-2Rykor Electronicsa. 140 unitsVariable costsComponent costs $68,000SuppliesAssembly laborShippingTotalFixed CostsRentSupervisor salaryElectricityTelephoneGasAdvertisingAdministrative costsTotal fixedb.c. Sales $1,200Less variable costsContribution margind. Sales 150 units x $1,200Less part bTotal profite.

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P3Chapter 4Problem 4-3Rykor Electronicsa.High cost $134,700 - low cost = change in costHigh units sold 165 - low units = change in unitsb.Sales $1,200Less variable costsContribution marginc.d. Sales of 150 unitse.

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P4Chapter 4Problem 4-4a.Use regression analysis on the dataFixed = $Variable = $b.Variable FixedAccount analysisHigh-LowRegression

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P5Chapter 4Problem 4-5Peterson Island Aira.Number of current round trips 6 per week x 52 weeks=Total revenueTotal revenue per trip __________Variable costs:FuelMaintenanceVariable cost per trip _________Contribution margin per trip __________Fixed costs:SalaryDepreciation of plane 20,000Depreciation of office equipmentRent expenseInsuranceMiscellaneousTotal fixed costs===========Breakeven tripsb.c.d.

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P6Chapter 4Problem 4-6Regal Hotela. Account analysisFixed CostsDepreciation $10,000Day manager salary $4,000Night manger salary $Variable costsCleaning staff $15,000Food & beveragesTotal variableNumber of rooms 1,500Variable costs per roomb.High -lowc. April revenue per occupied room $85Less variable costsContribution margin per occupied room

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P7Chapter 4Problem 4-7Cindy Mathers Jewlerya.Consider which costs are variable and fixedb.Forecast plus 20%Sales $18,624Cost of Jewlery soldGross marginRegistration fee 1,000Booth rental (5% of sales)Salary of Jane Kramer 300Before tax profit=========

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P8Chapter 4Problem 4-8Premier Custom ComputersSales $1,000,000 1,100,000 1,200,000 1,300,000 1,400,000Cost of sales 700,00070%Gross ProfitStaff salaries 180,000 180,000 180,000 180,000 180,000Rent 24,000Utilities 3,600Advertising 2,000Operating profit 90,400before bonusesStaff bonuses 40% 36,160Profit before taxes andOwner's drawing:$54,240======= ====== ========= ======== ==========

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P9Chapter 4Problem 4-9Xeroc, Inc.a.High units in sales and production 150 - low units =High units in production costs $95,000 - low units =High units in selling costs $16, 000 - low units =Change in $/change in units = variable costsHigh Production Low High Selling LowTotal costs 95,000 16,000Variable costsPer unit x highPer unit x lowTotal fixed costsb.1,400 units x $800 = revenuesd. Profit of $1,500,000e. Break out each department

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P10Chapter 4Problem 4-10Ballard HiFiProfitability AnalysisFor the Year Ended 12/31/03a.Audio Video Car TotalContribution margin $1,080, 000 460,000 570,000 $2,110,000Divided bySales $3,000,000 1,800,000 1,200,000 6,000,000CM ratio 36.00% 35.16%b.$100,000 times the applicable CM ratioc.Fixed costs $690,000/contribution margin ratiod. Profit of $1,500,000e. Break out each department

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P11Chapter 4Problem 4-11RealTime Servicea.Consulting Training Repair TotalSales $600,000 $480,000 $360,000 $1,440,000Less variable costsSalaries 300,000Supplies parts 24,000Other 1,200Total costs 325,200Contribution margin 274,800Less fixed common costs 263,000Profit=========b.

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P12Chapter 4Problem 4-12Sercon, Inc. and Zercon, Inc.a.Which company has the highest operating leverage?b.Sercon, Inc. 10% increase 10% decrease in salesSales $80,000,000 88,000,000Less variable costs 20,000,000Less fixed costs 50,000,000 50,000,000 50,000,000Profit $10,000,000========== =========== ==============Zercon, Inc. 10% increase 10% decrease in salesSales $80,000,000 88,000,000Less variable costs 50,000,000Less fixed costs 20,000,000 20,000,000 20,000,000Profit $10,000,000========== =========== ==============c.

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P13Chapter 4Problem 4-13Xenoc, Inc.a.Current profit $400,000 /2,000 units = $200 profit per unit$200 profit per unit/$50 assembly per hour = 4 hours per unitb.c.

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P14Chapter 4Problem 4-14Pacer Running Shoesa.110,000 assembly hours available to produce two lines: Master & FinisherHow many pairs of each model should be produced in the coming year?b.Suppose management decises that at least 4,00 pairs of each model must beproduced. What is the opportunity cost of this decision versus only 2,000 pairs?

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P15Chapter 4Problem 4-15Casper's SeafoodBased on the limited information provided, provide Bob with an estimate of thenet effect of the coupon campaign on annual profit (ignore taxes).Increase in normal sales $2,500,000Less discountIncrease in sales after discountLess incremental costsIncremental profit=================

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Case 4-1Chapter 4Case 4-1WENDELL ROBERTS CONSULTINGRequiredExplain why William's assumption leads to a higher claim. Is his behavior ethical?

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Case 4-2Chapter 4Case 4-2ROTHMUELLER MUSEUMa.Revenue:b.Breakeven pointFixed costs:Contribution margin

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Case 4-3Chapter 4Case 4-3MAYFIELD SOFTWARE CUSTOMER TRAININGa.Consider the fixed costs:b.Calculate the contribution marginRevenue:Less:Variable costsContribution marginc.Consider trainer costs.d.

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Case 4-4Chapter 4Case 4-4KROG'S METALFAB, INC.a.Step 1Step 2Step 3b.c.

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Case 4-5Chapter 4Case 4-5SEATTLE ESPRESSO, INC.Forecast with more laborJan. Feb. March April May JuneRevenuesCosts of goods soldLaborUtilitiesNet profitJuly Aug. Sept Oct. Nov. Dec.RevenuesCosts of goods soldLaborUtilitiesNet profit

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