Cost Accounting

In: Business and Management

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Assignment 3 will account for 1.75% of your final grade. It consists of three questions from Chapter 5. The assignment is due by October 29. Please complete the assignment with a computer and turn in a hard copy.
Question 1: Requirements 1, 2, 3 and 5 of Exercise 5-11 (pp. 215-216)
Question 2: Requirements 1, 2, and 4 of Exercise 5-12 (p. 216)
Question 3: Problem 5-21 (pp. 220-221) Hint: To answer question 6 of the problem, you need to find the change in contribution margin using the incremental analysis. Profit would remain unchanged if the change in fixed costs (advertising exp.) equals the change in contribution margin.

1. Breakeven point and sales

sales 600k 40$/unit

Variable expense 420k $28/unit

CM 180k $12

Fixed expense 150k

NOI $30k

Fixed exp/ (cm/unit)= 150k/12= 12500 products

Sales=12500*$40= $500,000

2. Total contribution margin is 150K at break-even point, which is equal to fixed expense

3. Target profit of $18,000

Fixed exp + profit (18k) = CM/unit *Q

150k+18k= 12*Q


Sales=40* 14000= 560000

V Exp= 28* 14000= 392000

CM 168,000

Fixed exp 150,000

Profit 18,000

5. CM Ratio

CM= CM/ Sales per unit

= 12/40 *100= 30%

If monthly sales is increased by 80,000. NOI?

30%*80,000= 24,000

NOI would increase by $24,000



sales 90/ unit

v exp 63/ unit

CM 27/ unit

f exp 135,000

break-even= fixed exp= CM*Q

135,000/27= Q= 5000 products

Sales= 5000*90 = $450,000

2. If Variable exp increase, it will result higher break even point. If Variable exp increase, it will cause CM to be lower, which requires more units to be sold in order to match Fixed exp(break-even point)


New price= 81 sales / unit

25% increase in sales

CM= 81-63= 18 /unit

Fixed exp+ profit(NOI)=…...

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