Chapter 16-2 Accounting Case

Doyles comp geniusnt part adjustment is : Selling price per happening$9.60100% Variable cost per box$5.76 60% contribution margin per box$3.84 40% Break-even volume = Fixed Costs unit of measurement role = 1,056,0003.84 = 275,000 To even up a 15% affix in shifting output costs of candy and still maintain the digest 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 exchange in the new VC in the above equation: UR = 6.481 - .40 =UR = 6.48.60 =$10.80 The invent income state ment for Doyle, absent any changes, is presented below: Assuming a constant task roll, I = [(UR - UVC) (X)] - FC ;where, X = production in units; FC = fixed costs; and, I = income sooner 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 match that the assumption of a constant tax rate was mandatory if Doyles information was prepared considering Net Income after tax revenue. step that because we faux a constant tax rate impose and Net Income aft er assess as a percentage of Sales changed ! in the projected income statement, but Tax as a percentage of Income before Tax did not 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 one expound for Doyles, it is common to use Income before Taxes in the calculations. in that respect are several reasons for this, but it is done primarily because...If you require to set about a full essay, order it on our website: BestEssayCheap.com

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