Cost Accounting Exam 1 Study Guide - 692 Words

Test 1 Review Use the following information to answer questions 1-3. Tee Times, Inc. produces and sells the finest quality golf clubs in all of Clay County. The company expects the following revenues and costs in 2004 for its Elite Quality golf club sets: Revenues (400 sets sold @ $600 per set) $240,000 Variable costs 160,000 Fixed costs 50,000 1. How many sets of clubs must be sold for Tee Times, Inc. to reach their breakeven point? a. 400 b. 250 c. 200 d. 150 2. How many sets of clubs must be sold to earn a target operating income of $90,000? a. 700 b. 500 c. 400 d. 300 3. What amount of sales must Tee Times, Inc. have to earn a target net income of $63,000 if they have a tax rate of 30 percent? a. $489,000†¦show more content†¦Estimate total cost of utilities for the month. *Know basic concepts and terms from CVP chapter in your book. Also, make sure you understand the SEWMEX concepts and problems. Answers 1. Variable costs per unit = $160,000/400 units sold = $400 Contribution Margin = $600 – 400 = $200 per unit Breakeven point = $50,000/$200 = 250 units 2. TOI = $50,000 + $90,000/$200 = 700 units 3. TNI = $50,000 + $63,000/(1 – .30)/$200 = 700 units Ãâ€" $600 = $420,000 4a. Sales ($68 per unit Ãâ€" 410,000 units) $27,880,000 Variable costs ($60 per unit Ãâ€" 410,000 units) 24,600,000 Contribution margin $ 3,280,000 4b. Contribution margin (from above) $3,280,000 Fixed costs 1,640,000 Operating income $1,640,000 5a. Sales (from above) $27,880,000 Variable costs ($54 per unit Ãâ€" 410,000 units) 22,140,000 Contribution margin $ 5,740,000 5b. Contribution margin $5,740,000 Fixed costs 5,330,000 Operating income $ 410,000 6. Operating income is expected to decrease by $1,230,000 ($1,640,000 − $410,000) if Ms. Schoenen’s proposal is accepted. The management would consider other factors before making the final decision. It is likely that product quality would improve as a result of using state of the art equipment. Due to increased automation, probably many workers will have to be laid off. Garrett’s management will have to consider the impact of such an action on employee morale. InShow MoreRelatedACC 290 new Final Exam Guide New1260 Words   |  6 Pagesï » ¿ACC 290 Final Exam Study Guide Let’s get started†¦ Q 8 – Under IFRS Comparative prior-period information must be presented and financial statements must be provided annually. Explanation: See IFRS financial reporting requirement here: http://www.iasplus.com/en/standards/ias/ias1 Q 10 - Similarities between International Financial Reporting Standards (IFRS) and U.S. GAAP include all of the following except: Both IFRS and U.S. GAAP allow revaluation of items such as land and buildings to fairRead MoreBusiness 115 Final Exam Study Guide Essay1334 Words   |  6 PagesBUSN115 Final Exam Study Guide The BUSN115 final exam is 3 pages long. 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Accountancy Students6080 Words   |  25 PagesCHAPTER I INTRODUCTION Accountancy or Accounting is said to be the â€Å"language of business†. It is the art of communicating in terms of financial aspects in the business world. It communicates in the form of financial statements that shows the income, assets, expenses, liabilities and capital of a certain business. It is a branch of mathematical science that shows the reason behind the excellent success of a company, as well as its downfall or failure. Accountancy qualifies as a profession because