Chapter 16-2 Accounting Case

Doyles donation marge is : Selling price per chance$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 bosom a 15% make up in shifting issue costs of candy and still maintain the spirited 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 sub in the new VC in the above equation: UR = 6.481 - .40 =UR = 6.48.60 =$10.80 The find income statement for Doyle, absent any changes, i s presented below: Assuming a constant taxation yard, I = [(UR - UVC) (X)] - FC ;where, X = production in units; FC = fixed costs; and, I = income so singler 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 trademark that the assumption of a constant tax rate was bounden 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 assess as a percentage of Sales changed in the projected income sta! tement, 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. at that place are several reasons for this, but it is done primarily because...If you compliments to set about a full essay, order it on our website: BestEssayCheap.com

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