Chapter 16-2 Accounting Case

Doyles percentage borderline is : Selling price per fortuity$9.60100% Variable cost per box$5.76 60% contribution margin per box$3.84 40% Break-even volume = Fixed Costs unit role = 1,056,0003.84 = 275,000 To even up a 15% affix in shifting yield costs of candy and still maintain the zippy 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 are: 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 meet income statement for Doyle, absent any changes, is pre sented below: Assuming a constant revenue tramp, I = [(UR - UVC) (X)] - FC ;where, X = production in units; FC = fixed costs; and, I = income out front 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 gelt that the assumption of a constant tax rate was imposed if Doyles information was prepared considering Net Income after tax revenue. step that because we faux a constant tax rate impose and Net Income after task as a percentage of Sales chan ged in the projected income statement, but T! ax 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 matchless expound for Doyles, it is common to use Income before Taxes in the calculations. on that point are several reasons for this, but it is done primarily because...If you fatality to set about a full essay, order it on our website: BestEssayCheap.com

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