Rendell Compan Accounting Help With Solution

Posted on April 18, 2017

Rendell Compan Accounting Help With Solution

 

Get Fit Now Company Manufactures fitness equipment. One of the company’s products is a Tread Machine.
 
The following is Information concerning the Sales of Tread Machines
Selling Price Per Machine $ 800
Variable Expenses per Machine $ 600
Fixed Expenses $ 240,000
 
REQUIRED:
 
1) Compute the Contribution Margin Per Unit
 
2) Compute the Contribution Margin Ratio
 
3) Compute Break Even in Sales Dollars
 
4) Compute Break Even in Sales Units
 
5) Compute the Sales Units needed to be sold to reach a Target Profit of $180,000

 

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Related Services

 
2. The most recent contribution margin income statement for Bartram & Logan Company, located southwest Philadelphia, is shown on the worksheet below (the Base year’s CVP Scenario). In each of the following scenarios, calculate the values indicated. (IN PARTS (B), (C), (D) 7 (E) CALCULATE THE NEW NET INCOME BASED ON THE CHANGES FROM THE ORIGINAL SCENARO OF NUMBERS SHOWN – the BASE CVP SCENARIO SHOWN BELOW. EACH SCENARIO IS INDEPENDENT!)
 
A) The breakeven point in sales units. (Use the Worksheet below for your answer)

 
B) The sales volume increases by 50% and the selling price per unit decreases by $4.00 per unit. Calculate new Net Income. (Use the Worksheet below for your answer)

 
C) The selling price per unit decreases $5.00 per unit, fixed expenses increase by $120,000, and the sales volume increases by 100%. Calculate new Net Income. (Use the Worksheet below for your answer)

 
D) The selling price per unit increases by 35%, variable expense per unit increases by $6.50 per unit, and the sales volume decreases by 20%. Calculate new Net Income(Use the Worksheet below for your answer)

 
E) The selling price per unit increases by $4.50 per unit, variable cost per unit increases by $6.25 per unit, fixed expenses increase by $42,400, and sales volume decreases by 22%. Calculate ne Net Income. (Use the Worksheet below for your answer)

 
The Rendell Company, located in the Port Richmond section of Philadelphia (not far from the original Taconelli’s Pizzeria on Somerset Street) operated at full capacity in 2014, selling 90,000 music CD’s at $10 per CD.
 
The following is the 2014 Income Statement under Generally Accepted Accounting Principles:
 
The Rendell Company
Income Statement For the Year ended December 31, 2014
Sales $ 900,000
Cost of Goods Sold 540,000
Gross Profit 360,000
 
Operating Expenses Selling & Administrative Expenses
225,000
Net Income $ 135,000

 
The Rendell Company has hired you, a Chestnut Hill graduate, to do a Cost/Volume Profit Analysis so that the Company can determine its break even and potential Profits at the current level. In addition,
the Rendell Manufacturing Company’s management has proposed new Marketing Program for year 2015 that is forecasted to increase Sales by 15,000 music CD’s from its current level of 90,000 music CD’s.The proposed Marketing Program for 2015 would increase Fixed Expenses by $50,000.
 
Variable Expenses per unit will not change under the new proposal.
 
To help you in your Analysis Rendell Company. has compiled the following:
 
Variable and Fixed Costs are divided by the following Percentages from the information
given in ABC’s Income Statement:
 
Fixed Costs Variable Costs
Cost of Goods Sold 10% 90%
Administrative Expenses 80% 20%

 

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