Chapter 16-2 Accounting Case

Doyles component part boundary line is : Selling price per contingency$9.60100% Variable cost per quoin$5.76 60% contribution coast per box$3.84 40% Break-even peck = Fixed Costs unit of measurement role = 1,056,0003.84 = 275,000 To think up a 15% ontogenesis in shifting action costs of candy and keep mum maintain the live contribution margin voice: If shifting production costs augment 15%: VCNew = (VCOld) (1.15) VCNew = (4.80)(1.15) VCNew = 5.52 Total shifting costs per whole atomic number 18: VC = 5.52 (production costs) + .96 (selling costs) VC = 6.48 Contribution margin per centum (CMP) is calculated as follows: CMP = UR - UVCUR where, UR = Unit revenue and UVC = Unit protean costs Solving for UR, this becomes: UR = UVC1 - CMP subbing in the new VC in the in a higher place equation: UR = 6.481 - .40 =UR = 6.48.60 =$10.80 The project income mastery for Doyle, absent any changes, is presented beneath: Assuming a immutable revenue enhancement income rate, I = [(UR - UVC) (X)] - FC ;where, X = production in units; FC = mend costs; and, I = income forwardshand taxes To maintain live nett income onwards 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 mark that the impudence of a uniform tax rate was obligatory if Doyles information was prep ared considering sort out Income after tax revenue. timbre that because we faux a constant tax rate shoot the breeze and Net Income after task as a parting of Sales changed in the project income statement, but task as a percentage of Income before Tax did not change. That is, because we faux a constant tax rate, we were calculating Income before Tax in the above formula. It is real-life problems such as the one fatten up for Doyles, it is common to use Income before Taxes in the calculations. There are several reasons for this, but it is through primarily because...If you want to circumstances about a honorable essay, order it on our website: Ordercustompaper.com

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