Task Team of FUNdaMENTAL aCCOUNtIng School of Business. Sun Yat-sen University Lesson 14 Managerial Accounting I: Applications ercise 1. XYZ Company's most recent contribution format income statement is presented below: $250000 ess: Variable Expenses $l5000 $l000 ss: Fixed Expenses $l2000 The company sells its only product for $50 per unit There were no beginning or ending Inventories Required (1) Compute the company's break-even point in units sold (2) Compute the total variable expenses at the break-even point (3) How many units would have to be sold to earn a target profit of $30000? 4) The sales manager is convinced that a $20000 increase in the advertising budget would increase total sales by $90000. Would you advise the increased advertising outlay? 2. XYZ Company operates a local parcel delivery service. The company keeps detailed records relating to operating costs of trucks, and has found that if a truck is driven 220000 kilometres per year, the operating cost is 15 cents per kilometre. This cost increases to 17.5 cents per kilometre if a truck is driven 120000 kilometres Required Estimate the cost formula for truck operating costs using the high-low method
Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University Lesson 14 Managerial Accounting II: Applications Exercise 1. XYZ Company's most recent contribution format income statement is presented below: Sales $250000 Less: Variable Expenses $150000 Contribution Margin $100000 Less: Fixed Expenses $120000 Net Loss $(20000) The company sells its only product for $50 per unit. There were no beginning or ending inventories. Required: （1） Compute the company's break-even point in units sold. （2） Compute the total variable expenses at the break-even point. （3） How many units would have to be sold to earn a target profit of $30000? （4） The sales manager is convinced that a $20000 increase in the advertising budget would increase total sales by $90000. Would you advise the increased advertising outlay? 2. XYZ Company operates a local parcel delivery service. The company keeps detailed records relating to operating costs of trucks, and has found that if a truck is driven 220000 kilometres per year, the operating cost is 15 cents per kilometre. This cost increases to 17.5 cents per kilometre if a truck is driven 120000 kilometres per year. Required: Estimate the cost formula for truck operating costs using the high-low method