Chapter 16-2 Accounting Case

Doyles office shore is : Selling price per calamity$9.60100% Variable cost per box$5.76 60% contribution margin per box$3.84 40% Break-even volume = Fixed Costs social unit role = 1,056,0003.84 = 275,000 To incubate a 15% plus in shifting toil costs of candy and still maintain the sleep together 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 change in the new VC in the above equation: UR = 6.481 - .40 =UR = 6.48.60 =$10.80 The construe income statement for Doyle, absent any change s, is presented below: Assuming a constant tax place, I = [(UR - UVC) (X)] - FC ;where, X = production in units; FC = fixed costs; and, I = income to begin with 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 fool that the assumption of a constant tax rate was prerequisite 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 tax income as a percentage of Sales changed in the projected income statement, but Tax as a percentage of Income before Tax did non 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 ane 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 motive to set about a full essay, order it on our website: BestEssayCheap.com

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